As Internet sales tax spreads, Amazon grows postal
Fast-growing warehouse network set to begin deliveries
As Internet sales tax spreads, Amazon grows postal
Joseph N. DiStefano
The days when Americans could avoid state sales taxes by buying online from Amazon.com are drawing toward a close.
"By the end of 2012, five additional states will force Internet sellers to collect taxes:" Texas and Utah in July, Pennsylvania and California in September, Georgia in October, reports analyst David Strasser of Janney Capital Markets in a report to clients. By year's end Internet sales tax will apply in states covering three-eights of the nation (measured by GDP), up from one-eighth last year. New York, Arkansas (home of Amazon rival Walmart), Connecticut, Illinois, Kansas, Kentucky, North Dakota, Vermont and Washington already have Internet tax collection requirements. New Jersey, Tennessee and Virginia are scheduled to start collecting Internet sales tax next year, Indiana and Nevada in 2014, South Carolina two years later. "These changes could ultimately cut a 6%-9% pricing advantage from Internet-only retailers," adds Strasser. "Our discussion with private online retailers has indicated that online sales slow by as much as 10% after a state starts collecting sales tax." But Strasser's Janney colleague Shawn Milne predicts only a "slight shift in the mixs of online sales to traditional retailers," citing survey results fromForrester/Bizrate Insights claiming "only 8% of consumers said that tax was a priority consideration when shopping online." More important are "convenience and selection;" big turn-offs including online shipping fees.
Milne expects online sales growth will remain at a "robust 15%+" per year, despite spreading sales taxes, thanks to increased smartphone shopping traffic and other "mutlilevel opportunities." Plus he expects Amazon will keep using the promise of building new "fulfillment centers" like the 1,000+-job center planned for Middletown in sales-tax-free Delaware this year "to strike further tax deals" delaying Internet tax collection in more states. Amazon's negotiated surrender to state sales taxes has been accompanied by a strategic expansion of its warehouse network to sites like San Bernardino, southern California, and Patterson, northern California, which will make possible Amazon "next day or even same day delivery" in metro Los Angeles, San Francisco and other major centers. Amazon's strategy starts to look clear: The company managed to delay sales taxes until it expanded its warehouse centers; it is by now nearly in position to replace the shrinking US Postal Service and for-profit rivals FedEx and UPS with its own Amazon deliveries. Amazon has 61 giant warehouses in 10 states (including 5 in PA's Allentown-to-Chambersburg warehouse belt and 2 bought from smaller companies in NY's NJ suburbs) at the end of 2011, and plans 15 more this year (including its second Delaware site).
even after the sales tax implementation cuts the price advantage of buying online, i will still buy online because i hate being bothered by retail salespeople who bug me to death in the store because they want to make a sale..— zwarte piet- A shame. I like dodging the tax. Amazon makes buying really easy.— Rahjr
- this doesn't hurt amazon - they still beat the brick and mortar stores in pricing on most items.
who it really hurts is the little mom and pop corner hardware store that makes a little extra money selling items online.. for them, calculating all these different taxes is a burden - the exact reason that interstate taxation is not supposed to happen.
also the first commenter is right. even if the prices were the same, the service and convenience from shopping amazon is not matched in retail stores. retail employees are HORRIBLE at their jobs, due to these corporations paying rock bottom salaries. no one cares. no one takes any pride in doing things right.
i bought an item today on amazon that was $1 more expensive than it is in Lowes. Would it be worth saving that dollar for me to drive to the store, wander around for 20 minutes trying to figure out the logic of where they might have put the item, or otherwise find one of the 3 employees wandering around the store and hoping they know? no, of course not.
with amazon, from the moment i typed ".com" in my browser it took all of 2 minutes for me to find the item i wanted, read reviews, and complete my purchase. and it will be in my hands on thursday afternoon.
so any retail stores thinking this is going to line their pockets, it won't.. unless you actually do something to compete. otherwise this is just a cash grab for the state.— fasterthantheworld - Just have it shipped to DE. There are ways around this.— OldCityJoe
- The state legislature pigs have finally found a way to seek the only viable part of this Drunk economy. OBama has done his part and now the state lawmakers are chimming in to do the rest. They were not content to bankrupt the states they are in they now want to hammer the final nail into the economy's coffin. Good job you num nuts— rduexpress
This is very disappointing, but what I'd expect from our government, who is always looking for ways to take our money.— Jean Valjean
Comment removed.- we are over-taxed in general. We need to take back our government.. our country is worth saving, isn't it?— USAFirst1
- This is going to cost Amazon my business. Hate paying tax dollars to PA so that it gets wasted on some absurdity. Will just go to DE and shop, when I get my wine and beer.— moretoit
- AJ, I'm sure you can't afford much if you're only paying $5 in sales tax. That's too bad. I save a lot more than $10 when shopping in DE.— OldCityJoe
Let's compromise: We pay sales tax on our online purchases, but you lower our state income taxes, even by 1%. Seems fair to me, the lowly, broke tax payer!— amd804- I'm bummed. Getting away with not paying the sales tax made me, if for just a moment, feel like a Limo Liberal getting the working stiff to pay his tab. Ah it was sweet.— Beethoven987
- let them pay like everyone else.— Paul Deon
- Viva la revolution!!!!!!!— WCJRJR
- The only way they get wealth is theft....and their greed knows no bounds.Not good government,just theft under color of law.
Land of the free,my arse.
— oakster - Every purchase you make at Amazon makes Jeff Bezos (their CEO)more of a billionaire - support your local businesses or you'll soon be wondering why all those storefronts in your community are boarded up and your local taxes are going up.— workin365
- This will help the smaller bookstores that outlasted the box stores. That is a good thing, although I will miss that discount.— KINGOFZED
