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  1. #1
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    Impact of sales tax collection on Amazon's NY state sales
    I'm guessing this might not be public info, but it's very interesting to a lot of us to understand the impact of collecting sales tax on Amazon's sales volume.

    Question: After Amazon started collecting sales tax (in NY for example), how much (as a percentage) did the total sales drop?

    If there are any official/semi-official/third-party guesstimates that'd be useful too.

    The reasons Amazon converts so well for a lot of affiliates are:

    1) great selection, great customer experience, low prices, blah blah

    2) no tax

    3) free shipping

    Basically, in a world where #2 is gone, how much lesser will customers purchase (which directly correlates to what affiliates make)..

  2. #2
    ABW Ambassador
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    People tend to buy on the www for convenience.

  3. #3
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    Because this change occurred concurrent with a major recession, I doubt that any third-party data will be useful for such a fine-detail analysis.

    Probably the best measure would be to compare changes in shopping-cart abandonment rates for NY customers with the rates for non-NY customers (if we looked only at data for NY customers, we wouldn't know whether or how much each of several different factors may have contributed to the change).

    I don't think sales tax is a huge factor for most consumers; convenience, selection, delivery, and price are much more important. I'd be surprised to see a reduction of more than 5% attributable to sales-tax collection; if I had to make a prediction/guess, I'd say 1.5%.

  4. #4
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    Most of us would be extremely happy if adding sales tax only results in 1.5-2% reduction in total Amazon sales, but I suspect it has to be quite a bit more. There's something about free shipping, and no tax about closing sales.

    If it makes only 2% difference, do you think Amazon and others would be fighting it as hard as they are?

  5. #5
    Super Dawg Member Phil Kaufman aka AffiliateHound's Avatar
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    Quote Originally Posted by emuflies
    Most of us would be extremely happy if adding sales tax only results in 1.5-2% reduction in total Amazon sales, but I suspect it has to be quite a bit more. There's something about free shipping, and no tax about closing sales.

    If it makes only 2% difference, do you think Amazon and others would be fighting it as hard as they are?
    Yes. Tax collection and reporting process for numerous jurisdictions is a tremendous and costly burden in and of itself.
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  6. #6
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    Two percent is still a LOT of sales. Another factor is the cost to comply with the complex and sometimes contradictory tax rules for 40+ states and thousands of overlapping local jurisdictions; imagine the audit costs if 10 or 20 states decide that they might be able to squeeze more money from a huge out-of-state retailer?

    But I'll also challenge your implication that Amazon and other big retailers are fighting hard -- it sure doesn't look that way to me. Amazon really just "rolled over" for the New York law; I can't find any record of an appeal filed there.

    Quite frankly, Amazon is the best-suited company to deal with state taxes (they already compute & collect taxes for most states for their "Marketplace" merchants). Amazon might actually have a competitive advantage from these laws. And of course, such a large company is very likely to be captured under existing "nexus" rules(I'm surprised that CA hasn't already taken action.)

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