Best Buy Online Sales Rise Due to Amazon Tax
Best Buy and other retailers may profit at the expense of Amazon.
Online shoppers across California and Pennsylvania all despaired at the news that Amazon was to be levying a sales tax down on their purchases in September 2012. No doubt many of them immediately sought out cheaper, tax-free alternatives to the popular online shopping service.
In fact, Best Buy may be one of the retailers enjoying the luxury of increased business at the expense of Amazon. "In California, Texas and Pennsylvania where Amazon.com recently started collecting tax, it is very early, but Best Buy has seen a 4 to 6 percent increase in online sales observed in aggregate versus the rest of the chain," stated Best Buy spokeswoman Amy von Walter to Reuters, "While some people may still prefer to shop online, the sales tax parity has shown that people will shift their buying habits."
Previously, Amazon had been accused of having an unfair advantage over physical retailers, because it didn't require customers to pay sales tax. That's slowly been changing across the United States, as state legislatures have passed laws requiring the online retailer to levy sales taxes in hopes of helping the ailing economy.
Best Buy's better fortunes have caused its shares to rise, which closed 5 percent higher on Thursday. However, according to Kantar Retail Vice President of Digital Retail Research Anne Zybowski, this trend is something that will only be confined to more expensive areas of purchase, such as consumer electronics. "Particularly in consumer electronics, any narrowing of Amazon's price advantage at the margin is important because Best Buy brings service and other shopper benefits to the category," she said.
"I don't think retailers should get too excited.
"Best Buy results are isolated to consumer electronics. Once you start getting over the $100 purchase price level, the tax matters.
"If this had happened to Amazon when they were just a bookseller years ago, they may not be as big as they are now."
Still, the increases that other companies are going to experience are probably going to be marginal, as Amazon's garnered plenty of loyal customers over the years with its good customer service, low prices, and fast shipping. Its Amazon Prime deal for $79 a year with video streaming and free two day shipping doesn't hurt either.