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> Amazon has long enjoyed an unbeatable price advantage over its physical rivals. When I buy a $1,000 laptop from Wal-Mart, the company is required to collect l

by Caerus 14y ago

> Amazon has long enjoyed an unbeatable price advantage over its physical rivals. When I buy a $1,000 laptop from Wal-Mart, the company is required to collect local sales tax from me, so I pay almost $1,100 at checkout. This is such an over blown argument. Sure, Amazon is ~7% (where I live) cheaper than traditional stores due to sales tax. But that $1000 Wal-Mart laptop has a $900 sticker price on Amazon, and most non electronic items are 20-40% cheaper than in stores. If laws change and I have to start paying sales tax on Amazon, it won't change a thing about my buying habits. Edit: They also have an inventory many times larger than any brick and mortar store. Whenever I go shopping, I have to choose between the least crappy option Wal-Mart decides to stock. On Amazon, I get exactly the one I want.

dinkumthinkum 14y ago
But you're picking a fairly non-representative product for this issue. I doubt any of us are going to be buy a laptop from Walmart, looking at their stock, I don't think many other people are either. They have a couple but this is not their bread and butter (which actually is their bread and butter).
- Caerus 14y ago
  I only picked that because it was the example in the article. Looking at my recent Amazon purchases: Amazon: Oxo Coasters $9.99 for 8 Walmart: Comparable set, Silicon Coasters $30 for 6 Amazon: DVD Rack $29.99 Walmart: Comparable model from same company, $39.00 Amazon: American Crew Pomade, $21.49 for 2 Walmart: $16.98 for 1 Amazon: 13 Watt CFL, $15.98 for 8 Walmart: Same model, $16.88 for 4 Those were the first 4 items I tried to compare.
  - muhfuhkuh 14y ago
    In almost no category that I've sampled has Walmart ever been the absolute rock-bottom cheapest compared to several places (Big Lots, Dollar General, local grocery chains, Amazon... even Target, believe it or not). People, however, can't go to Amazon to get infant formula, a car battery, ammunition, and a jar of pickles at 1AM and have it in hand immediately. Walmart used to be about "made in the USA", then it was "always low prices", now it's about "live better". It's Walmart's ubiquity, convenience, and momentum that keeps them dominant (and their ability to loss-leader competitors out of business).
    - Caerus 14y ago
      True, there will always be a need for immediacy in shopping. However, on three of the four you listed (Not sure if I want to know why you need ammunition at 1 am...) Amazon carries them, and at a reasonable to very low price. Most of the time I know I'll need something a couple days before. Instead of "I'm out of coffee, better go to the store" it's "I'm running low on coffee, better order some and it will be here in two days". Personally, I find that to be more convenient most of the time.
      - wpietri 14y ago
        > Not sure if I want to know why you need ammunition at 1 am... Zombies. That's the real mistake we're making with shifting all our purchases to Amazon and their just-in-time delivery. There will be nothing to loot when the zombie outbreak happens.
        hef19898 14y ago
        Unless you know where the warehouses are... But surviving the zombie apocalypse in a wal-mart store or a huge mall has much more style then doing in a damp worehouse in the middle of nowhere. That is unless amazon is changing that bit about zombie outbreaks, too!
    - dlgeek 14y ago
      The whole point of the original article is you'll soon be able to order all of those (except the ammunition) from Amazon in the morning and have them on your doorstep when you get home from work.
suresk 14y ago
Indeed, when you look at surveys that ask people why they prefer shopping online, things like "24/7 convenience", "saves time", and "better selection" usually end up ahead of "costs less money, even after shipping" and taxes are usually a small part of that. The lack of sales tax hurts local tax entities far worse than it hurts Amazon's competitors.
- einhverfr 14y ago
  >The lack of sales tax hurts local tax entities far worse than it hurts Amazon's competitors. Except that proposals to collect online sales tax would hurt local retailers even worse if they followed the law.
  - rat87 14y ago
    Not because Amazon would be paying local sales tax, because their new business plans with 1 day shipping might(!!) bring them into more competition with local retailers. States putting pressure on Amazon to collect sales tax may have encouraged Amazon into this plan but based on their past opposition I think it has more to do with their guesses about the market.
    - einhverfr 14y ago
      The problem though is that a big company like Amazon can afford to worry about paying sales taxes properly. I worry about the electronic store that delivers though, being forced out of business due to increasingly complex sales tax reporting requirements. It seems to me it gives the online retailers way too much power over local competition when a department of revenue audit could be used to sink the B&M retailers.
- vaksel 14y ago
  not having to drive to the store is huge on Amazon you just search, compare, read reviews and click buy. with brick and mortar stores, you have to drive to the store, park, then roam the store to find what you are looking for, then hope that they have it in stock before you buy, then drive back home. Even a small purchase ends up costing you an hour of your time. and for large purchases almost always you have to wait 20-30 for the store associate to bring out what you want to buy...and you have to deal with a sales pitch for an extended warranty
pyoung 14y ago
I think the big advantage of amazon's tax-exemption isn't necessarily competition from physical retailer's, but rather from the online presence of those same physical retailer's. For example, I was checking out target's website the other day. They were offering some online only prices on things, I loaded an item into the cart, but at checkout, when the tax and shipping was added, I backed off because it was too expensive. On amazon, due to the no-tax and (usually) no shipping charges, I probably would have made that impulse buy.
InclinedPlane 14y ago
I live in the same county as Amazon's HQ, I pay full sales tax on everything there, it hasn't changed my shopping habits one bit, amazon is just such a better deal most of the time.
- sebastianavina 14y ago
  so, this means we are heading to a walmart vs amazon war? shit just got real.
  - skylervm 14y ago
    Sure seems that way :/
  - InclinedPlane 14y ago
    False dichotomy. In the big box race to the bottom of prices, perhaps, but that's not the whole market (for amazon or for retail).
    - greedo 14y ago
      How is it a false dichotomy? Look at the retail marketplace and it's a wasteland. You have Walmart at the low end, aggressively disrupting entire manufacturing industries in their quest for low priced goods. At the "high" end you have Amazon squeezing out B&M bookstores, electronic stores, etc. Amazon has demonstrated a willingness to tolerate extremely low margins (1-2% if not negative) to achieve marketshare. How can a small business compete? The only outlier I see in retail is Apple, generating huge amounts of revenue from their physical stores.
      - InclinedPlane 14y ago
        This deserves a much longer response than I have time for at the moment. Ultimately the core answer is this: the long tail. That's why we shouldn't fear amazon overly much as if it were just an online walmart. The book and music selection at amazon is better than at any physical store and that's true for almost all variety of goods there as well. However, there's more. Retail isn't solely defined by low margin businesses like buying canned food and imported low-grade durable consumer goods (e.g. the walmart/target scenario). In many parts of the country there is a trend toward high-end "boutique" shops of various sorts. In my town, Seattle, there has been an explosion of neighborhood butchers offering organic, grass-fed beef et al. But the same sort of principles apply to lots of different businesses. If your core business is about getting interchangeable mass produced goods into people's hands you are going to lose out to the big boxes and to the amazons. If your core business involves a lot of customer interaction or requires special skillsets or can be decommoditized in some way then perhaps you'll do ok, both online and off. Trying to compete on amazon's playing field is a non-starter, so the trick is playing on a different field.
mathattack 14y ago
In retail, 7% is usually higher than gross margins.
pkulak 14y ago
Exactly. I live in Oregon where there's no sales tax no matter where I buy something. I still get most non-grocery items on Amazon. More selection, cheaper, and I love the reviews. I don't think I've ever been disappointed by a highly reviewed Amazon item.

by Caerus 14y ago

dinkumthinkum 14y ago

But you're picking a fairly non-representative product for this issue. I doubt any of us are going to be buy a laptop from Walmart, looking at their stock, I don't think many other people are either. They have a couple but this is not their bread and butter (which actually is their bread and butter).

Caerus 14y ago
I only picked that because it was the example in the article. Looking at my recent Amazon purchases: Amazon: Oxo Coasters $9.99 for 8 Walmart: Comparable set, Silicon Coasters $30 for 6 Amazon: DVD Rack $29.99 Walmart: Comparable model from same company, $39.00 Amazon: American Crew Pomade, $21.49 for 2 Walmart: $16.98 for 1 Amazon: 13 Watt CFL, $15.98 for 8 Walmart: Same model, $16.88 for 4 Those were the first 4 items I tried to compare.
- muhfuhkuh 14y ago
  In almost no category that I've sampled has Walmart ever been the absolute rock-bottom cheapest compared to several places (Big Lots, Dollar General, local grocery chains, Amazon... even Target, believe it or not). People, however, can't go to Amazon to get infant formula, a car battery, ammunition, and a jar of pickles at 1AM and have it in hand immediately. Walmart used to be about "made in the USA", then it was "always low prices", now it's about "live better". It's Walmart's ubiquity, convenience, and momentum that keeps them dominant (and their ability to loss-leader competitors out of business).
  - Caerus 14y ago
    True, there will always be a need for immediacy in shopping. However, on three of the four you listed (Not sure if I want to know why you need ammunition at 1 am...) Amazon carries them, and at a reasonable to very low price. Most of the time I know I'll need something a couple days before. Instead of "I'm out of coffee, better go to the store" it's "I'm running low on coffee, better order some and it will be here in two days". Personally, I find that to be more convenient most of the time.
    - wpietri 14y ago
      > Not sure if I want to know why you need ammunition at 1 am... Zombies. That's the real mistake we're making with shifting all our purchases to Amazon and their just-in-time delivery. There will be nothing to loot when the zombie outbreak happens.
      - hef19898 14y ago
        Unless you know where the warehouses are... But surviving the zombie apocalypse in a wal-mart store or a huge mall has much more style then doing in a damp worehouse in the middle of nowhere. That is unless amazon is changing that bit about zombie outbreaks, too!
  - dlgeek 14y ago
    The whole point of the original article is you'll soon be able to order all of those (except the ammunition) from Amazon in the morning and have them on your doorstep when you get home from work.

suresk 14y ago

Indeed, when you look at surveys that ask people why they prefer shopping online, things like "24/7 convenience", "saves time", and "better selection" usually end up ahead of "costs less money, even after shipping" and taxes are usually a small part of that. The lack of sales tax hurts local tax entities far worse than it hurts Amazon's competitors.

einhverfr 14y ago
>The lack of sales tax hurts local tax entities far worse than it hurts Amazon's competitors. Except that proposals to collect online sales tax would hurt local retailers even worse if they followed the law.
- rat87 14y ago
  Not because Amazon would be paying local sales tax, because their new business plans with 1 day shipping might(!!) bring them into more competition with local retailers. States putting pressure on Amazon to collect sales tax may have encouraged Amazon into this plan but based on their past opposition I think it has more to do with their guesses about the market.
  - einhverfr 14y ago
    The problem though is that a big company like Amazon can afford to worry about paying sales taxes properly. I worry about the electronic store that delivers though, being forced out of business due to increasingly complex sales tax reporting requirements. It seems to me it gives the online retailers way too much power over local competition when a department of revenue audit could be used to sink the B&M retailers.
vaksel 14y ago
not having to drive to the store is huge on Amazon you just search, compare, read reviews and click buy. with brick and mortar stores, you have to drive to the store, park, then roam the store to find what you are looking for, then hope that they have it in stock before you buy, then drive back home. Even a small purchase ends up costing you an hour of your time. and for large purchases almost always you have to wait 20-30 for the store associate to bring out what you want to buy...and you have to deal with a sales pitch for an extended warranty

pyoung 14y ago

I think the big advantage of amazon's tax-exemption isn't necessarily competition from physical retailer's, but rather from the online presence of those same physical retailer's. For example, I was checking out target's website the other day. They were offering some online only prices on things, I loaded an item into the cart, but at checkout, when the tax and shipping was added, I backed off because it was too expensive. On amazon, due to the no-tax and (usually) no shipping charges, I probably would have made that impulse buy.

InclinedPlane 14y ago

I live in the same county as Amazon's HQ, I pay full sales tax on everything there, it hasn't changed my shopping habits one bit, amazon is just such a better deal most of the time.

sebastianavina 14y ago
so, this means we are heading to a walmart vs amazon war? shit just got real.
- skylervm 14y ago
  Sure seems that way :/
- InclinedPlane 14y ago
  False dichotomy. In the big box race to the bottom of prices, perhaps, but that's not the whole market (for amazon or for retail).
  - greedo 14y ago
    How is it a false dichotomy? Look at the retail marketplace and it's a wasteland. You have Walmart at the low end, aggressively disrupting entire manufacturing industries in their quest for low priced goods. At the "high" end you have Amazon squeezing out B&M bookstores, electronic stores, etc. Amazon has demonstrated a willingness to tolerate extremely low margins (1-2% if not negative) to achieve marketshare. How can a small business compete? The only outlier I see in retail is Apple, generating huge amounts of revenue from their physical stores.
    - InclinedPlane 14y ago
      This deserves a much longer response than I have time for at the moment. Ultimately the core answer is this: the long tail. That's why we shouldn't fear amazon overly much as if it were just an online walmart. The book and music selection at amazon is better than at any physical store and that's true for almost all variety of goods there as well. However, there's more. Retail isn't solely defined by low margin businesses like buying canned food and imported low-grade durable consumer goods (e.g. the walmart/target scenario). In many parts of the country there is a trend toward high-end "boutique" shops of various sorts. In my town, Seattle, there has been an explosion of neighborhood butchers offering organic, grass-fed beef et al. But the same sort of principles apply to lots of different businesses. If your core business is about getting interchangeable mass produced goods into people's hands you are going to lose out to the big boxes and to the amazons. If your core business involves a lot of customer interaction or requires special skillsets or can be decommoditized in some way then perhaps you'll do ok, both online and off. Trying to compete on amazon's playing field is a non-starter, so the trick is playing on a different field.

mathattack 14y ago

In retail, 7% is usually higher than gross margins.

pkulak 14y ago

Exactly. I live in Oregon where there's no sales tax no matter where I buy something. I still get most non-grocery items on Amazon. More selection, cheaper, and I love the reviews. I don't think I've ever been disappointed by a highly reviewed Amazon item.