Amazon Sales Take a Hit in States With Online Tax

[Purveyor]

By Adam Satariano Apr 22, 2014 12:01 AM ET

Amazon.com Inc. (AMZN) is taking a hit in states that are collecting an online sales tax.

In one of the first efforts to quantify the impact of states accruing more tax revenue from Web purchases, researchers at Ohio State University published a paper this month that found sales dropped for Amazon when the online charge was introduced. In states that have the tax, households reduced their spending on Amazon by about 10 percent compared to those in states that don’t have the levy. For online purchases of more than $300, sales fell by 24 percent, according to the report titled “The Amazon Tax.”

The findings add to concerns about how much the world’s largest online retailer can expand. The Seattle-based company, which reports quarterly earnings on April 24, has been grappling with decelerating revenue growth amid heavy spending by Chief Executive Officer Jeff Bezos on new initiatives. Amazon has enjoyed an edge against brick-and-mortar retailers because consumers didn’t have to pay a sales tax for purchases from the e-commerce site, yet that has eroded as states including California and Texas have unveiled the levies.

“There is no ambiguity,” Brian Baugh, one of the report’s authors from Ohio State’s Fisher College of Business, said in an interview yesterday. “It has been their competitive advantage.”

more...

http://www.bloomberg.com/news/2014-04-22/amazon-sales-take-a-hit-in-states-with-online-tax.html

[Hip_Flask]

1. I believe it...

It has slowed down my amazon purchases...

[dilby]

2. Why would sales tax stop people from buying?

Even with a sales tax they still have the best deals in town.

[dixiegrrrrl]

5. FWIW...

In my county, we have a 9.5% sales tax.
any widget I buy locally costs 10% more than it does in fla., next door, which has no sales tax
Plus, because we are in a very rural area, most items sell here for 10 to 20% more than in the nearest city 90 miles away.

On amazon, I can order widgets and usually get free shipping and no sales tax, a very signifcant saving.
If they charge me for our sales tax, I have less incentive to shop amazon.

[Sunlei]

3. 10% down? not just the sales tax. some items are over priced/shipping costs are way to high.

[RebelOne]

4. I bought an item from Amazon last month,

and was not charged tax, only shipping. And I am in Georgia, which is one of the states that is supposed to charge tax.

[theboss]

6. Good

Amazon should not have an additional advantage over brick and mortar stores.

[Duckhunter935]

7. they do not

if you pay shipping they are at a disadvantage already.

[theboss]

9. Shipping is for the convenience of not leaving your house

I'm willing to pay shipping (sometimes) to not leave my house. (Though to be honest, I can't remember the last time I paid shipping for an online purchase).

But there is no reason for me to pay tax at Target but not with Amazon. It's a sales tax. It should be equal.

[jamzrockz]

12. Brick and Mortar

stores also pay shipping, rent, lots of insurance too and they are still asked to pay sale tax on their sales. If amazon cannot compete, then they can go out of business like the rest of the weak businesses.

Pay your damn tax Amazon

[Xithras]

8. Makes sense.

If you're comparing prices between retailers online, you're going to factor in tax and shipping costs. If Amazon has an item for $90 and you have to pay a 10% local tax and $5 shipping, and Newegg is selling the same item for $94 and $5 shipping without any tax, most people will buy it from Newegg to pocket the $5 in tax savings.

[Egnever]

11. I would pay the difference to get it from new egg

My experiences with them have always been excellent. Amazon not so much.

[williesgirl]

10. I live in VA & Amazon's been charging sales tax on my sruff