Tax free holidays can help retailers reach more back-to-school shoppers

Brands, it’s time to pick up your pencils and take notes, because we have a quick lesson for you on how tax free holidays will help you reach more back to school shoppers. According to the Sales Tax Institute, out of the 45 states that collect some sort of sales tax, 12 of them are […]

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tax free weekend, tax free holidays, back to school shopping

Brands, it’s time to pick up your pencils and take notes, because we have a quick lesson for you on how tax free holidays will help you reach more back to school shoppers.

According to the Sales Tax Institute, out of the 45 states that collect some sort of sales tax, 12 of them are holding sales tax holidays at various points in August. Mississippi and Tennessee also held sales tax holidays during the last weekend in July.

State Dates of Sales Tax Holiday
Arkansas August 3-4
Connecticut August 18-24
Iowa August 2-3
Maryland August 11-17
Massachusetts August 17-18
Missouri August 2-4
New Mexico August 2-4
Ohio August 2-4
Oklahoma August 2-4
South Carolina August 2-4
Texas August 9-11
Virginia August 2-4

The vast majority of these sales tax holidays apply to clothing and footwear, with a handful including other product categories such as school supplies, computer software, and other items that are exempt from sales tax during those periods.
Sales tax holidays provide retailers and brands an additional opportunity to engage with shoppers who live in those states, highlighting the savings on sales tax on those days, and building special offers and promotions on those days.

Here are some tips on how you can use your digital marketing tools to generate more sales from more shoppers on sales tax holidays.

sales tax holidays, tax free weekendKeep your calendar updated and know the rules

The Sales Tax Institute has a handy cheat sheet that tells you when each state’s sales tax holiday is, what product categories it covers, and what the maximum price-point is. For instance, during Iowa’s annual Back to School Holiday (August 2-3), all clothing and footwear items priced under $100 are exempt from sales tax, “regardless of how many items are sold on the same invoice to a customer,” according to the state of Iowa’s website.

Figure out what you want to promote

Maybe it’s a particular outfit, or maybe you want to offer a sweetener like free faster shipping if a shopper hits a certain price threshold. Even running a promotion like 10% off an order gets a boost from the sales tax the shopper doesn’t have to pay, meaning the shopper enjoys greater savings on their order without completely compromising your profit margins.

Engage, engage, engage

Sales success during a sales tax holiday begins with engaging shoppers in states where the event is being held. Analyze your email lists and send out promotional emails letting shoppers know you’re running sales that weekend. Geo target your display advertising efforts to show shoppers in those states what you are offering and when.

Get the word out to your partners

Work with all of the publishers in your affiliate program to make them aware of the promotion that you are running. Update text links and customize creative that supports your sales tax holiday strategy. Know which of your publishers have geo-targeting capabilities and explore paid placement opportunities with those publishers.

bundling deals, tax free holidaysEncourage bundling

While there is a limit on the price-point of individual items that are exempt from sales tax, in all states that have a sales tax holiday, there is no price limit on the total order. That gives retailers opportunities to create bigger basket sizes by bundling together products that are within the sales tax-exempt price range to create larger basket sizes by creating a sense of greater value in the mind of the shopper.

Create a sense of urgency

It is crucial to communicate with prospective customers upfront that these tax-free deals are available for a limited time only. Make sure in display ads and deals on affiliate sites that you communicate how long your sale is being offered and how much a shopper can save during that period in order to create a sense of urgency with the shopper.

Get them in store

Not all shoppers want to do their back to school shopping online because, while online has made a number of strides, it still hasn’t replicated the experience of seeing something in store. Store-based retailers can use this to their advantage during sales tax holidays by adjusting display advertisements to promote in-store-only specials during a state’s tax holiday. Or, utilize reserve online, try on in-store messaging on your website. This gives shoppers an incentive to visit your store location and potentially do some additional purchasing while there.

tax free holidays, back to school shoppingOr, create your own tax-free holiday

There’s no hard and fast rule that says only people who live in states that have sales tax holidays should be able to get a break during back to school season. Brands looking to win over more back to school shoppers can offer the equivalent to a sales tax discount – somewhere in the neighborhood of 7-10% — off all clothing and school supplies to ALL shoppers in order to appeal to those who might be more budget conscious.

Want to know more on how you can capitalize on the upcoming sales tax holidays? Rakuten Marketing’s digital marketing experts are here to help you get the most out of your digital marketing investments. Click here to contact us today.

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