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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 Slate. 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, New Jersey, 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 and the next generation Kindle Fire.

Source: Slate



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By bill4 on 7/13/2012 11:12:50 AM , Rating: 3
@Mint: This is baloney. Stop and think about this, in India I guess there was a time recently where there was a major backlash against backhoes. Why? Because it took jobs away from people with shovels.

That seems pretty backwards and stupid, but it's the argument against all automation extended to it's logical conclusion.

If there is an easier way to do something, it's better. Extend it to your personal life as well, would you rather mow your lawn, or have a hypothetical robot do it for you if it was possible for free? Of course the latter. Now understand that same logic applies on a large scale as well.

The sentiment is that somehow, there wont be jobs left for people to do. That's silly. Look around you, is there work to be done? As long as every single person isn't driving a rolls royce, eating filet mignon, and living in a mansion, plus being on vacation 10 months of the year, then there's plenty of work to do to get to that point.

There's less factory jobs sure, but it's funny how quick people are to blame automation and outsourcing and never mention extremely strict and ever worsening environmental and other regulations, which are the REAL reason there are no factories left in America. Any kind of factory building things with metal is virtually illegal, I mean, the big buzzword is things like ozone, climate change, and all that right? Factories are painted as nothing but polluting smokestacks, so it's no wonder they're driven from America. And then people wonder where the jobs are while every other word on our TV is "climate change".


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