Best Buy Online Sales Rise Due to Amazon Tax

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 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. 

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  • The Egg baby, free shipping and NO taxes.
  • abbadon_34
    Amazon should have left CA than submit to the extortion and set a bad precedence for everyone else
  • SteelCity1981
    typical best buy crying cause amazon wasn't adding in sales tax to their products whats next best buy going to cry because they aren't paying stocking fee either? It's best buys fault that they are on the the brink of going bankrupt with over their top prices on many products, i was in there last week and they were still trying to sell an nvidia GT 440 for 100 bucks. lol and they wonder why people flock to online retail stores.
  • capt_taco
    Doesn't it say in the constitution that only Congress can regulate interstate commerce? So where does California get off thinking they're allowed to do that now? Gimme gimme gimme, that's all that's on their mind.
  • ipwn3r456
    Stupid Amazon tax... Why do you have to exist...
  • gilgamex101
    Best Buy is a robbery, a blatant robbery, I saw a stick of PNY 512mb DDR2! DDR2!! for $25 not too long ago! Amazon in general is one of the most comprehensive places to shop, it is even more organized than ebay with seperate affiliate online stores. Whatever self-proclaimed gains Best Buy is having, I don't buy it (semi-pun?)
  • cmcghee358
    soldier2013The Egg baby, free shipping and NO taxes.
    No taxes for you? Yes

    No taxes for residents of California? Not so much. Newegg charges sales tax for customers in California(and possibly NJ/TN, not 100% on these 2)
  • So that explains why California had it first revenue surplus in 14 years. (sarcastic)
  • hitman400
    Guys, (I'm pretty sure) but they HAVE to charge tax for people who buy their products in the same state that they are located in as well as their warehouse. I forget what kind of tax this is, but..ya
  • alidan
    "If this had happened to Amazon when they were just a bookseller years ago, they may not be as big as they are now."

    book at retail, 30-50$
    book on amazon, 8-20$ cheaper, and thats new prices, you willing to go used and its up to 95% cheaper.

    thats amazons strong suit, being so cheap that even when sales tax is applied they are the cheapest.

    at the same time, i think the way sales tax is applied is wrong.

    the items cost should have sales tax included, not being slapped in the face later on at checkout with what, 1-11.5% more cost added onto whatever it is.

    i dont even believe we should have a sales tax considering that some states dont.