Amazon to Offer Same-Day Delivery, Could Pummel Brick-and-Mortar Retailers
July 12, 2012 12:33 PM
comment(s) - last by
Amazon is now collecting sales tax in some states in exchange for more distribution centers for same-day shipping options
Amazon is already a major threat to brick-and-mortar competitors with its low prices and easy online shopping method, but now, physical stores have another reason to fear the monster e-tailer: same-day shipping.
Amazon is currently working on same-day shipping methods for customers, which would send a package out only a few hours after the order is placed according to
. How is Amazon doing this? By opening more distribution centers, and putting a lot of money into these new centers to make them efficient. This is likely an expansion of
Amazon's existing Local Express Shipping option
which provides same-day delivery to a handful of large U.S. cities.
Amazon's old way of conducting business was to set up distribution centers in low-cost states and ship the orders to wherever they needed to go. This worked because Amazon didn't have to collect taxes in states that it didn't have a physical presence in, and low-cost states didn't put too much financial strain on the e-tailer.
However, Amazon has been fighting that tax-related battle for awhile now.
The online retailer cut ties with
states like Texas
, where Texas State Comptroller Susan Combs charged Amazon $269 million in unpaid sales taxes, and Illinois, where Sen. Dick Durbin (D-Ill.) introduced a bill called the Main Street Fairness Act, which would force Amazon to collect sales tax.
In California, Governor Jerry Brown signed a bill that would require websites that forward shoppers to Amazon to collect sales tax in the state. The law is expected to generate $200 million in revenue, and prompted Amazon to threaten to
leave California-based affiliates
It ended up filing lawsuits in many states like California, Rhode Island, North Carolina and Colorado.
But more recently, Amazon has been backing off on the tax front. It has agreed to collect sales tax in many states, including Texas,
, Nevada, Tennessee, Indiana and Virginia. Before that, the e-tailer only collected taxes in Kansas, Kentucky, North Dakota, New York and Washington.
Amazon has decided to bend on the tax issue because this would allow the company to open more distribution centers within those states. Having more distribution centers means even faster shipping, which is where the same-day shipping idea came from.
To make sure the same-day shipping method is a success, Amazon has poured a lot of money into making these new distribution centers. For instance, the e-tailer invested $130 million into new facilities in New Jersey, $135 million for two new centers in Virginia, $200 million for Texas distribution centers, $150 million in Indiana and another $150 million in Tennessee. But it's not finished yet -- Amazon plans to build as many as 10 distribution centers in California, totaling $500 million in expenses.
Amazon has also made these centers super efficient by purchasing picking robots, which accurately improve shipping times. It is also placing "lockers" at nearby drug stores and convenience stores, where those who live or work nearby can pick up their Amazon purchases from the locker if they wish.
Same-day shipping could really give brick-and-mortar stores (and even other online stores) a run for their money. Not only is Amazon convenient and cheap, but now it's also fast. The e-tailer keeps giving customers more reasons to shop from Amazon instead of competitors like Walmart and Best Buy. It's funny that brick-and-mortar stores complained that Amazon's lack of sales tax collection was unfair, and now that the online shop is collecting taxes, these other stores could still have the disadvantage -- and we'll likely be hearing about it.
In addition to being a major e-tailer, Amazon is becoming more of a tech giant as well with the release of its hit Kindle Fire tablet last November, and the upcoming release of
its first smartphone
next generation Kindle Fire
This article is over a month old, voting and posting comments is disabled
RE: Kozmo v2?
7/12/2012 3:23:30 PM
Unless this is super cheap, it won't change my buying habits much at all. If I can wait 4 - 8 hours for something, I can almost always wait 2-3 days. If it's something that can be bought online, I'm probably already doing so. I do get that instant gratification is important for some people, though.
Where I do see potential, though, (if the same day stuff is fairly cheap) is putting Amazon into a position where they could seriously get into the grocery business. Local distribution centers + same day shipping = they could probably sell produce and meat.
I'll see, I guess, since it sounds like I probably live close to one of the new distribution centers... Very cool. At this point, anyone with a brick an mortar store should be a little worried.
RE: Kozmo v2?
7/12/2012 5:01:16 PM
I think it will make Prime a more profitable calculation for Amazon. I got a free month of Prime and got an item by mail, my guess is from Arizona to CA.
All these retailers who cried about the sales tax (funny they never mention the lack of shipping costs), we be bit in the backside at least in CA.
Suddenly Amazon is not just cheap, but fast and easy (sounds like an old girlfriend!).
"It's okay. The scenarios aren't that clear. But it's good looking. [Steve Jobs] does good design, and [the iPad] is absolutely a good example of that." -- Bill Gates on the Apple iPad
Amazon's New Kindle Fire Display Specs Leak
July 9, 2012, 11:40 AM
Bloomberg: Amazon to Release Its Own Smartphone in November
July 6, 2012, 9:09 AM
Amazon to Collect Sales Tax in New Jersey Beginning July 1, 2013
May 31, 2012, 3:31 PM
Amazon to Collect Online Sales Taxes in Texas Starting July 1, 2012
April 30, 2012, 10:34 AM
New Online Sales Tax Bill Prompts Amazon to Cut Ties with California Sales Affiliates
June 30, 2011, 10:47 AM
150M Android Apps Still Susceptible to Heartbleed
April 24, 2014, 12:48 PM
Amazon Prime Pantry Will Deliver 45 lbs of Groceries to Your Door for $5.99 S&H Fee
April 24, 2014, 10:10 AM
NSA Spying Won't Impact Huawei's Growth
April 23, 2014, 8:24 PM
Amazon, HBO Team up to Bring HBO Content to Prime Members
April 23, 2014, 11:36 AM
U.S. Wants to Reduce Tension Over Internet Net Neutrality
April 22, 2014, 2:07 PM
AT&T Announces Plans to Expand Ultra-Fast Fiber Internet Network to 100 Cities
April 22, 2014, 9:36 AM
Most Popular Articles
A Bug's Life: Female Cave Bugs Have Penises, Penetrate Males for Three Days
April 17, 2014, 7:20 PM
HTC Hires Former Samsung Marketing Chief Who Developed "Galaxy" Brand
April 18, 2014, 6:00 PM
NASA Finds "Habitable Zone" Planet Sized Similar to Earth
April 18, 2014, 3:13 PM
Mounties Arrest 19-Year-Old Who Delayed Canada's Tax Filing w/ Heartbleed
April 17, 2014, 3:24 PM
Thanks to Government Crackdown, Chinese "Porn Cop" Has Watched 600K Adult Videos
April 21, 2014, 12:00 PM
Latest Blog Posts
Space Terrorism is a Looming Threat For the United States
Apr 23, 2014, 7:47 PM
Facebook Aims to Provide Internet to "Every Person in the World" with Drones, Satellites
Apr 1, 2014, 10:20 AM
Retail Mobile Sites Experience Outages in Light of Simplexity's Bankruptcy
Mar 14, 2014, 8:48 AM
Tesla vs. BMW: Who Has the Safer EV?
Feb 1, 2014, 2:56 PM
Justice Leaks Details of Next HTC One Two Flagship Phone
Dec 5, 2013, 4:04 PM
More Blog Posts
Copyright 2014 DailyTech LLC. -
Terms, Conditions & Privacy Information