Sunday, June 30, 2013

Amazon and Taxes

Ran across an interesting article in Business Week recently on Amazon and how it influences our lives.  Roughly 36%  of all purchases made by Americans intersect with Amazon in some way.  Either you first find out about a product on Amazon or you do some research on it on Amazon or you make the final purchase on Amazon but over 1/3 of all purchases made  currently interact with Amazon at some time before the purchase concludes.  It amazes me that one company has so much influence on our lives.

Amazon is now wanting to influences your purchases even further, by increasing its ability to provide same day delivery of products.  Same day availability of products is the major advantage brick and mortar stores have over Amazon and other online retailers.  A customer can walk into a store, pick up a copy of Settlers of Catan or Get Bit and walk out with it the same day, playing it that evening.  Currently, you cannot do that with an online retailer.  With the exception of things such as software, movies, books and other items that can arrive electronically, the customer must wait at least 24 hours for delivery.  Amazon, as the article notes, wants to change that by allowing customers to order an item online in the morning and have the physical product delivered that afternoon.

This, by the way, is why Amazon has come to support ending Congress' exemption for online retailers from collecting sales taxes in local municipalities.  Online only retailers do not have to collect sales taxes in states in which they do not have a physical nexus, so Wal-Mart, with physical locations in every state, has to collect sales taxes for all online sales.  Amazon, which does not have such, only has to collect them in places where it has physical distribution centers, and in many cases, not even then.  However, in order to provide same day delivery, the company will have to have physical locations, exposing it to the requirement to collect sales taxes.  Ergo, it wants to make certain that other online retailers, not providing same day delivery, no longer have this competitive advantage.  For Amazon, it is another win.