Mall operator: Amazon to open hundreds of bookstores

[LovesMacs]

I wonder if physical stores will give states more of an incentive to pursue the collection of sales tax on online orders?

[Cinisajoy]

Originally Posted by LovesMacs

I wonder if physical stores will give states more of an incentive to pursue the collection of sales tax on online orders?

LMAO as I already pay state tax on online orders. Except on certain items ordered from China.

[fjtorres]

Originally Posted by LovesMacs

I wonder if physical stores will give states more of an incentive to pursue the collection of sales tax on online orders?

Your terminology is off: states don't need incentives to go after their citizens' money.

The way online sales work, because of federal law and precedent, and constitutional issues, is that companies with a physical presence in the state (Amazon's warehouses, for example, or B&N stores) are required to collect sales tax from consumers on behalf of the state.

Those without a physical presence (Amazon in states where they don't have warehouses) have no obligation whatsoever to act as tax collectors for the state. Consumers in those states with a "Use Tax" are required by law to calculate that tax and pay it with their state income tax return. The onus is on the state resident, not the company.

There is a project before Congress to establish a uniform nationwide internet sales tax to be collected by retailers on behalf of the *federal* government. Amazon is on record as favoring it. It has gone nowhere and it will go nowhere.

Expect no change anytime soon.

[LovesMacs]

Originally Posted by fjtorres

Your terminology is off: states don't need incentives to go after their citizens' money.

The way online sales work, because of federal law and precedent, and constitutional issues, is that companies with a physical presence in the state (Amazon's warehouses, for example, or B&N stores) are required to collect sales tax from consumers on behalf of the state.

This is exactly what I meant, sorry for not being more precise.

[John F]

Originally Posted by fjtorres

...

The way online sales work, because of federal law and precedent, and constitutional issues, is that companies with a physical presence in the state (Amazon's warehouses, for example, or B&N stores) are required to collect sales tax from consumers on behalf of the state.

...

Depends?

My state has an "Amazon" warehouses, and yet "Amazon" didn't charge sales tax on many of my recent orders; I used "Amazon" Prime, I got 3% back on my "Amazon" credit card, and yet, they didn't have to charge sales tax (Due to being "fulfilled by "Amazon" Market Place"?).

[fjtorres]

Originally Posted by John F

Depends?

My state has an "Amazon" warehouses, and yet "Amazon" didn't charge sales tax on many of my recent orders; I used "Amazon" Prime, I got 3% back on my "Amazon" credit card, and yet, they didn't have to charge sales tax (Due to being "fulfilled by "Amazon" Market Place"?).

It has to be an Amazon LLC warehouse (owned and operated by them), not a subcontractor and, of course, it has to be a sale by Amazon, not a marketplace reseller selling through Amazon's site.

Don't forget that Amazon LLC isn't the only retailer doing business via Amazon.com. If the Marketplace vendor is in your state but Amazon isn't, the state is supposed to get their cut. Conversely, if Amazon has a presence but the seller doesn't, you don't. Like the Chinese vendors on ebay and Amazon.

There is a reason Amazon (officially) favors a *uniform* tax on internet sales. The current mix is a mess.

(Of course, since an internet sales tax is not passing anytime soon Amazon could just be posturing for PR purposes.)

Edit: adding to the chaos: not everything you buy from Amazon marketplace vendors passes through Amazon facilities. Sometimes it ships from the vendor.

[DuckieTigger]

Originally Posted by fjtorres

It has to be an Amazon LLC warehouse (owned and operated by them), not a subcontractor [...]

Far as I know it doesn't even have to be a place involved in warehousing and shipping. In Ohio ever since they built their giant data processing center sales tax is collected on select items. Not sure if we have a warehouse by now, but at first there wasn't any. Maybe the important factor is a physical location with employees.

[fjtorres]

Originally Posted by DuckieTigger

Far as I know it doesn't even have to be a place involved in warehousing and shipping. In Ohio ever since they built their giant data processing center sales tax is collected on select items. Not sure if we have a warehouse by now, but at first there wasn't any. Maybe the important factor is a physical location with employees.

No, it doesn't have to be a warehouse.
But they do have one in Ohio (Cincinnatti) and have for a while.
Their holiday "Amazon Air" effort ran from Wilmington, too.

http://www.dispatch.com/content/stor...r-freight.html

[theducks]

IIRC
It is a Sales Presence in the state.

A (Traveling or Manufacturers Rep) Salesman that makes a Sale Call in person is all that is needed to trigger that clause.

Note: There is no distinction between Wholesale and Retail presence.
Edit: or the amount of tine in state

[fjtorres]

Originally Posted by theducks

IIRC
It is a Sales Presence in the state.

A (Traveling or Manufacturers Rep) Salesman that makes a Sale Call in person is all that is needed to trigger that clause.

Note: There is no distinction between Wholesale and Retail presence.
Edit: or the amount of tine in state

For physical sales.
Online it is different. Online requires a physical presence, not just a sales presence.
(That was settled waaaay back in the mail order days. Mailing a catalog or answering a phone does not constuture presence, much less publishing a web site.)

Remember that for physical object sales online, the transaction is designated as happening at the physical location of the vendor--which is why the Book Depository is allowed to ship UK editions worldwide--whereas for digital it is designated as happening at the customer's location and Amazon UK (for example) can only sell ebooks to UK customers. Either way, the US Constitution's Commerce clause forbids the taxing of out of state business that don't set foot in their state. Only the Congress can tax/regulate interstate commerce.

The disconnect caused by online not counting as a physical presence despite being a sales presence is what the WalMarts and Targets were whining about with the tax collection issue. Now that they are actively trying to get a "piece of the action" they've shut up on the matter and without their money stirring the pot the issue is backburnered.

[Fbone]

Originally Posted by fjtorres

For physical sales.
Online it is different. Online requires a physical presence, not just a sales presence.
(That was settled waaaay back in the mail order days. Mailing a catalog or answering a phone does not constuture presence, much less publishing a web site.)

Not any more. This was settled by the Supreme Court in 2013. Amazon affiliates were determined to be "in-house sales force."

http://www.bloomberg.com/news/articl...york-sales-tax

[DuckieTigger]

Originally Posted by Fbone

Not any more. This was settled by the Supreme Court in 2013. Amazon affiliates were determined to be "in-house sales force."

http://www.bloomberg.com/news/articl...york-sales-tax

It is a smart move on Amazon's end. Think about it. They used to compete with B&M. Now they increasingly have to compete with other online services. Since Amazon never stands still and constantly innovates it is pretty hard for those other online stores to compete. Online store that only sells digital goods (e.g. ebook store) can't really compete against an everything store that also sells some ebooks on the side (in the greater scheme for Amazon).

Amazon is evolving like everybody else. Except instead of starting with B&M and slowly venturing into online sales, they started online and slowly built a delivery system that is fast and profitable even shipping to customers. Others catching up with some similiar benefits only to be slapped in the face with Amazon being able to just-in-time keeping a B&M store fully stocked without requiring much floor space. Crazy maybe, but what can you do with real time sales in a B&M store that will automatically restock and optimize delivery routes for multiple stores. Walmart? Holy cow, they sell out of something and you ask when they get more in: oh, it should be coming in the wednesday truck. (Maybe, if you're lucky ).

[fjtorres]

Originally Posted by Fbone

Not any more. This was settled by the Supreme Court in 2013. Amazon affiliates were determined to be "in-house sales force."

http://www.bloomberg.com/news/articl...york-sales-tax

That refers to affiliates, though.
Not the website.

In most states where they tried that, Amazon cut the affiliates loose and kept on doing business without becoming a tax collector. So the website by itself is still not presence.

[fjtorres]

Originally Posted by DuckieTigger

It is a smart move on Amazon's end. Think about it. They used to compete with B&M. Now they increasingly have to compete with other online services. Since Amazon never stands still and constantly innovates it is pretty hard for those other online stores to compete. Online store that only sells digital goods (e.g. ebook store) can't really compete against an everything store that also sells some ebooks on the side (in the greater scheme for Amazon).

Amazon is evolving like everybody else. Except instead of starting with B&M and slowly venturing into online sales, they started online and slowly built a delivery system that is fast and profitable even shipping to customers. Others catching up with some similiar benefits only to be slapped in the face with Amazon being able to just-in-time keeping a B&M store fully stocked without requiring much floor space. Crazy maybe, but what can you do with real time sales in a B&M store that will automatically restock and optimize delivery routes for multiple stores. Walmart? Holy cow, they sell out of something and you ask when they get more in: oh, it should be coming in the wednesday truck. (Maybe, if you're lucky ).

It's leverage.
Well run businesses always leverage their capabilities to the max, especially if it can get them into new markets or entire new businesses. Look at how they leveraged their inhouse IT expertise to develop a hosting business thst has evolved beyong website hosting into a full computing platform with its own distinct APIs. No surprise then that their biggest and closest competitor is Microsoft, another leverage expert. Oracle is a lot smaller but they are leveraging their installed base in the corporate world to bootstrap themselves into a cloud player. In fact, just about the only mayor tech firms *not* looking to leverage themselves into the cloud era are Facebook (who, like Twitter, are really a communications company) and Apple who are so unwilling to let go of their hardware roots they'd rather get into the car business. (That should be interesting.)

So, as you say, a company that can make money moving goods to consumers in a single day can just as easily make money moving them to their own stores. They already have the warehouses and logistics system in place so they are merely replacing a website storefront for a B&M storefront and a *paid* consumer delivery for a store delivery, probably using their own pipeline.

The only question Amazon needs to answer is: "can they move enough books at online prices from those stores to cover the operating costs and have enough left over to justify the effort?"

That should be interesting because to get there they need to get the per book storefront "tax" to roughly the same level UPS (or USPS) charges Amazon to deliver the book to consumers. In effect, Amazon is saying they can run an entire B&M bookstore just off what it costs to ship books to consumers via UPS.

And if they do, the question then becomes: if Amazon can run a store that efficiently, why can't others?

(Obviously, they will be cheating by doing the book logistics themselves instead of paying Ingram or B&T their profit-included fee for the books and by cherry-picking sales by not wasting floor space for long on slow movers which they can return to their warehouses instead of returning them to the publisher.)

In other words, what other stores pay their suppliers to do, Amazon can do by themselves. Then they can theoretically use those savings to run the store.

That is a non-trivial challenge.
But *if* they can do that for books...

Everything store indeed, huh?

[Fbone]

Originally Posted by fjtorres

That refers to affiliates, though.
Not the website.

In most states where they tried that, Amazon cut the affiliates loose and kept on doing business without becoming a tax collector. So the website by itself is still not presence.

I was referring to the sales person comment. Apparently, a sales person counts as a presence. And sales person definition is quite broad.

I don't understand the "the website by itself is still not presence" statement. Are there states that tax you for window shopping?