I'll gladly pay an additional 6-10% to keep avoiding Wal-mart or Target or even Home Depot. There are people like me who just really hate having to suit up and go shopping. I don't like the traffic, I don't like getting ripped off, and I don't find in-store shopping a fun or magical experience like some do.
I can pull up Amazon and read ratings/reviews, see what kind of problems people ran into with products, and make a reasonably informed decision with my money.
In a big box store, I feel like I'm taking more of a chance unless I stop, scan the barcode, read through reviews. Meanwhile, I look like a silly guy who can't make up his mind.
Yes, I enjoy obsessively comparing reviews/ratings for potential purchases. Even the really cheap/insignificant ones...
If you walk into Bestbuy and show them the item you intend to purchase from Amazon, they'll match the price. With taxes, and assuming you don't have to drive out of your way, this can be more convenient than Amazon. If you need something overnight, it's actually cheaper than Amazon.
+1 for that. I find "shopping" in a physical space is more of a serendipitous, unpredictable experience. It's nice to get introduced to different products and engage with different brands. It's a totally different experience from getting something exact and specific that you need.
If I know I want exact product XYZ, need it on a time scale of 'days' and not 'hours/minutes', and don't have any other need to go out ... why not order it online?
I'd buy a LOT more from Amazon if I didn't live in Alaska and have to wait at least a week and a half for shipping. I hate shopping - if I could reliably get something in a couple days, I'd almost never even need to leave the house, except for groceries.
Home Depot still gets plenty of my business. I like to buy tools online- mostly for reviews- but lumber & hardware still belong in my local warehouse (or perhaps at a boutique lumber shop on the edge of town). Same goes for many home improvement supplies.
Basically, lots of stuff requires interaction (holding a bracket or a screw in my hand to determine if it will fit) and other stuff (2x10's, 48x96's, toilets, refrigerators etc) is simply unfriendly to shipping. Home Depot of course ships wood, but they specialize in that sort of thing and ship in great bulk.
I read the book "The Everything Store". There are large chunk of chapter devoted to how Bezos fought against paying tax. Originally, the argument was that online retailers don't use facilities provided by states so they are not obliged to pay any taxes to states. If I remember correctly, this follows almost directly from constitution. But then states like New York found a loophole which basically says if you have any affiliates in the state then you are physically in that state and so you are obliged to pay taxes. This thing is very messy because some regions not only have state tax but even district and city taxes. So calculating them is very complex task.
When I thought about the whole situation, it became apparent constitution has a bug here. The sales tax is not supposed to be levied because the state is providing some service to the business. It is levied because that's how states want to distribute the burden of taxes on two components: What you earn and what you spend. This way you can target most of the money flow that happens in the state even for edge cases where a person don't have regular income but spends a lot out of his or her inheritance.
So summary here is that online retailers got lucky from this bug in constitution. It was extremely unfair to brick-and-mortar guys who not only have to spend lot of capital but also pay full taxes losing their competitive edge even faster.
Note: Above are just observations and logical arguments. Personally I don't have lot of respect for current tax system.
It's bullshit anyway. If the state had no infrastructure essential to Amazon, that person couldn't get online, the package couldn't be delivered to them by truck, etc.
The push to tax Amazon is so online and brick-and-mortars are treated equally in a tax sense. Yet the states that have enacted taxes on Amazon, do not collect taxes unanimously from all businesses selling online within their borders. It seems to me that states need to find a new method to treat all online sales equally as well, and not separate Amazon into its own tax bracket. Is each company that faces a legislature going to have to fight for its tax rate separately and work their won deals? This is ambiguous to buyers and hurts smaller businesses that don't have the legal funds or ability to negotiate.
The problem is taxes are incredibly complicated. There are companies that do "tax as a service"[1].
Governments should pass tax laws in some sort of industry standard tax rules specification[2]. This way, companies and the open source world can write rules engines to process taxes and online stores can pick among the competitors, not having to worry about the complexities themselves. Costs are reduced, competition increased, and consumers win.
Honestly, Amazon has a lot to offer even beyond "No Tax". And I say this as a Canadian who has had to pay taxes and duties on amazon orders since day 1.
People may gripe about it for a bit... but amazon is still the best way to shop, and also has the best selection and prices.
I agree that Amazon is often the most convenient option. But their prices simply aren't the best any more (at least for things other than books). Try a price comparison next time and see if you agree! (Another change is that Google Shopping has improved a lot over the last few years, so price comparison is less painful as well.)
One thing Amazon still does best: their deliveries arrive on time, and seem a lot less likely to get stuck in UPS limbo.
The biggest issue for me is that I need to do a lot of price comparison now. Especially with Prime, it's too easy to filter to Prime-only results and order the first one. But if I take the time to shop around, I can often find a much better price and that diminishes the value of Prime and Amazon to me.
Seriously, what a bunch of dorks. We had a good run. I knew for the longest time it was inevitable. The convenience factor outweighs the negligible sales tax that I would have to pay elsewhere anyway.
The biggest sales uptick -- 61 percent for big-ticket items -- went to merchants that use Amazon Marketplace...That means Amazon still indirectly benefits, since it collects a fee from merchants on its marketplace.
Not sure why they buried this at the end of the article. Amazon can still attract price-conscious shoppers by funneling them to marketplace sellers that don't collect sales tax, and can now invest in more fulfillment centers and other initiatives that require nexus (Amazon Fresh, etc.)
This does seem the most important conclusion. What's likely happening is Amazon is no longer showing themselves as the top seller in some cases. Consumers are still buying on Amazon, but from a different seller, who does not charge sales tax.
What would be impressive is if Amazon made an (algorithmic) judgment call, and showed price-sensitive shoppers that would otherwise go elsewhere the cheaper seller, and shoppers that would tolerate the tax the (presumably higher profit) Amazon offering.
Now, they need to offer marketplace sellers some type of 2nd-day delivery service at a reasonable price.
Having Amazon Prime and knowing I'll always get the item on the second shipping day means that I'll chose the Prime item even if the marketplace seller is cheaper.
Our data consist of daily transactions for 2,807,476 households from January 1, 2012 to
December 31, 2013, and include both banking (i.e., checking, savings, and debit card) and credit
card transactions. We observe the date, amount, and description of each transaction.
I'm a little disturbed that they had access to complete transaction information for roughly 2% of American households. Is it common practice for banks to share this data? Surely date + amount + description is personally identifiable in many situations.
Not to defend the banks, but in what situation could date/amount/description become personally identifiable? I guess it sort of depends on how descriptive the description field is, but if it just lists the product(s) then I don't really know how you'd ever be able to verifiably match it with a name.
They get hit with flack coming or going. If they're against online taxes, then they're accused of not doing their fair share to support government coffers, or they're accused of getting an unfair competitive advantage (per offline retailers).
It's similar to Walmart's minimum wage support. If Walmart were against minimum wage increases, their opponents would lambast them for it. If they're in favor of it, they get accused of only being in favor of it because they know they can more easily afford it compared to smaller retailers.
I wonder if the difference is really about the competitive advantage per se. The 10% difference is about the same as the difference in price with tax. It sounds like people are actually spending about the same amount, but now part of that budget is going to tax rather than actually being spent on goods.
They started collecting tax in NC in Feb and I'll be honest, I've bought less since then. Last year when I needed something I went to amazon first and if it was there ordered it. Now I shop around.
This is a good thing. It creates an enormous enforcement efficiency as now states can go after amazon (which they won't have to) and not individual tax dodgers. Not having to charge sales tax also creates an unfair business advantage against local stores.
All it would take is an Act of Congress, but it's political. Birmingham, Alabama has a sales tax of 10%. New Hampshire has no sales tax. How do you set the rate nationally without making enemies?
I'm curious, in states that have this, how does it work? Is it all online sellers that did not previously collect sales tax or just a few big ones like amazon? Does it show-up on your shopping cart directly or do you have to do forms quarterly say?
Amazon currently collects taxes if they (or the seller) has a physical presence in your state. Apple does the same thing. In my state, I'm required to pay taxes on every online purchase for which taxes have not already been charged to me.
I keep all my receipts for the year and split them between tax paid and not. I pay taxes on all of the online purchases I make during the year. Most people I know, even in states that require collection of taxes for online purchases, don't claim any at the end of the year. Given that out of state companies are under no compulsion to report purchases to state governments, there simply isn't a whole lot of way for states to know whether the information is accurate except through state tax agency audits.
[+] [-] gtaylor|12 years ago|reply
I can pull up Amazon and read ratings/reviews, see what kind of problems people ran into with products, and make a reasonably informed decision with my money.
In a big box store, I feel like I'm taking more of a chance unless I stop, scan the barcode, read through reviews. Meanwhile, I look like a silly guy who can't make up his mind.
Yes, I enjoy obsessively comparing reviews/ratings for potential purchases. Even the really cheap/insignificant ones...
[+] [-] bradgessler|12 years ago|reply
[+] [-] theorique|12 years ago|reply
If I know I want exact product XYZ, need it on a time scale of 'days' and not 'hours/minutes', and don't have any other need to go out ... why not order it online?
[+] [-] WalterBright|12 years ago|reply
[+] [-] benaiah|12 years ago|reply
[+] [-] middus|12 years ago|reply
[+] [-] sliverstorm|12 years ago|reply
Basically, lots of stuff requires interaction (holding a bracket or a screw in my hand to determine if it will fit) and other stuff (2x10's, 48x96's, toilets, refrigerators etc) is simply unfriendly to shipping. Home Depot of course ships wood, but they specialize in that sort of thing and ship in great bulk.
[+] [-] sytelus|12 years ago|reply
When I thought about the whole situation, it became apparent constitution has a bug here. The sales tax is not supposed to be levied because the state is providing some service to the business. It is levied because that's how states want to distribute the burden of taxes on two components: What you earn and what you spend. This way you can target most of the money flow that happens in the state even for edge cases where a person don't have regular income but spends a lot out of his or her inheritance.
So summary here is that online retailers got lucky from this bug in constitution. It was extremely unfair to brick-and-mortar guys who not only have to spend lot of capital but also pay full taxes losing their competitive edge even faster.
Note: Above are just observations and logical arguments. Personally I don't have lot of respect for current tax system.
[+] [-] mratzloff|12 years ago|reply
[+] [-] coreymgilmore|12 years ago|reply
[+] [-] bbq|12 years ago|reply
Governments should pass tax laws in some sort of industry standard tax rules specification[2]. This way, companies and the open source world can write rules engines to process taxes and online stores can pick among the competitors, not having to worry about the complexities themselves. Costs are reduced, competition increased, and consumers win.
[1] http://www.avalara.com/
[2] this might also make taxes simpler. If legislators can't encode (compile) it, they can't legislate it!
[+] [-] brc|12 years ago|reply
[+] [-] unknown|12 years ago|reply
[deleted]
[+] [-] venomsnake|12 years ago|reply
VAT works fine once you have the infrastructure in place.
[+] [-] mrcharles|12 years ago|reply
People may gripe about it for a bit... but amazon is still the best way to shop, and also has the best selection and prices.
[+] [-] justinsb|12 years ago|reply
One thing Amazon still does best: their deliveries arrive on time, and seem a lot less likely to get stuck in UPS limbo.
[+] [-] colinbartlett|12 years ago|reply
[+] [-] d23|12 years ago|reply
[+] [-] minouye|12 years ago|reply
Not sure why they buried this at the end of the article. Amazon can still attract price-conscious shoppers by funneling them to marketplace sellers that don't collect sales tax, and can now invest in more fulfillment centers and other initiatives that require nexus (Amazon Fresh, etc.)
[+] [-] justinsb|12 years ago|reply
What would be impressive is if Amazon made an (algorithmic) judgment call, and showed price-sensitive shoppers that would otherwise go elsewhere the cheaper seller, and shoppers that would tolerate the tax the (presumably higher profit) Amazon offering.
[+] [-] jnbiche|12 years ago|reply
Having Amazon Prime and knowing I'll always get the item on the second shipping day means that I'll chose the Prime item even if the marketplace seller is cheaper.
[+] [-] minouye|12 years ago|reply
Our data consist of daily transactions for 2,807,476 households from January 1, 2012 to December 31, 2013, and include both banking (i.e., checking, savings, and debit card) and credit card transactions. We observe the date, amount, and description of each transaction.
I'm a little disturbed that they had access to complete transaction information for roughly 2% of American households. Is it common practice for banks to share this data? Surely date + amount + description is personally identifiable in many situations.
[+] [-] gph|12 years ago|reply
[+] [-] bbq|12 years ago|reply
This would give Amazon a huge competitive advantage (given their existing infrastructure). Of course they support this.
[+] [-] adventured|12 years ago|reply
It's similar to Walmart's minimum wage support. If Walmart were against minimum wage increases, their opponents would lambast them for it. If they're in favor of it, they get accused of only being in favor of it because they know they can more easily afford it compared to smaller retailers.
[+] [-] chc|12 years ago|reply
[+] [-] Urgo|12 years ago|reply
[+] [-] shittyanalogy|12 years ago|reply
[+] [-] wycx|12 years ago|reply
Is this intractable?
[+] [-] AnthonyMouse|12 years ago|reply
[+] [-] pbreit|12 years ago|reply
[+] [-] mzs|12 years ago|reply
[+] [-] MisterBastahrd|12 years ago|reply
I keep all my receipts for the year and split them between tax paid and not. I pay taxes on all of the online purchases I make during the year. Most people I know, even in states that require collection of taxes for online purchases, don't claim any at the end of the year. Given that out of state companies are under no compulsion to report purchases to state governments, there simply isn't a whole lot of way for states to know whether the information is accurate except through state tax agency audits.
[+] [-] mutert2|12 years ago|reply