Is Amazon’s Sales Tax Acceptance the Killshot to Offline Retail?

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Analyst, Software Advice

Amazon.com has always battled fervently to remain sales tax free–even going so far as to cut off its affiliates in California as recently as June, 2011. Avoiding this tax has helped Amazon entice customers with lower prices relative to brick-and-mortar retailers.

But Amazon is now making an abrupt about-face and will begin charging sales tax in more states. The suspected reason: Amazon wants to offer same-day shipping, which will require building distribution centers in metropolitan areas across the country. Those centers give Amazon nexus in those states and thus remove their immunity from collecting local sales tax.

This strategy-shift has big implications for retailers both online and off. Here’s what bloggers and analysts are saying on the subject.

Amazon Reversed its Stance on Sales Tax to Improve Shipping Times, writes Barney Jopson.

As Jopson explains, Amazon has changed its stance (even to the point of reversing its lobbying against an “e-Tax” on online shopping) in order to remove one of the company’s last hurdles to achieving ubiquitous same-day delivery.

Amazon, Jopson postulates, has determined that consumers value delivery time and convenience over paying sales tax. By moving its distribution centers closer to big cities, it becomes increasingly likely that an order received in the morning can be delivered to the customer that evening–a compelling offering that could help make Amazon even more competitive with brick-and-mortar retailers.

Farhad Manjoo Believes Same-day Delivery Will ‘Destroy Local Retail.’

Slate’s Manjoo profiles the sequence of Amazon’s recent moves that show the company’s dedication to reducing its delivery times and increasing the e-tailer’s convenience factor–from new shipping centers in six states, to the purchase of warehouse robot manufacturer Kiva Systems, to the placement of lockers in convenience stores in Seattle and New York.

Manjoo thinks Amazon is close to having the perfect offering to decimate local retail, because offline shopping isn’t as instant as many perceive:

…shopping offline isn’t really “instant”…Getting something shipped to your house offers gratification that’s even more instant: Order something in the morning and get it later in the day, without doing anything else. Why would you ever shop anywhere else?

Michigan Retailers Want a Level Playing Field, says Melissa Anders.

Anders spoke with the Michigan Retailers Association spokesman Tom Scott for his thoughts on the the current battle between online and brick-and-mortar retailers:

“We need to pass main street fairness legislation in Michigan so that Amazon plays by the same rules as our Michigan-based businesses,” Scott told Anders.

But will a same-day Amazon completely destroy local retail business? Anders asked the head of the Eastern Michigan University marketing department, Anne Balazs, and the response was: not necessarily.

“I think there will still be consumers who want to touch and feel and try on. It’s going to depend on the type of product,” said Balazs.

Anders’ article also includes a poll which asked readers, “Would you buy more from Amazon if the online retailer offered same-day delivery?” With over 850 votes in, the response thus far is:

Source: MLive.com

It’s noteworthy that price is still a more important factor than convenience, though clearly consumer support for local retail is tenuous at best.

How would a same-day shipping service from Amazon impact your shopping behavior? Leave your thoughts in the comments below.

Thumbnail image created by William Christiansen.

 
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