Amazon And New York Sales Tax

In yesterday’s NYT, Saul Hansell asks whether Amazon will lose business in New York, because customers in that state will now have to pay sales tax on their Amazon purchases. Taking a cue from an economist, he suggests that: “convenience…may be more valued by online shoppers than a not insignificant discount,” but ultimately concludes:

“Still I’m sure some bargain hunters…will start exploring smaller online stores that still are not required to collect the sales tax.”

Well…not really. True-blue “bargain hunters” value a low price over both brand familiarity and convenience. And those people were already not married to buying from Amazon. Witness Book Burro, a Greasemonkey extension that allows Firefox users to look at a book page on Amazon while simultaneously viewing prices for the same book from other sellers…as well as availability at their local library. For New York users of Book Burro, Amazon paying state sales tax is just one of many factors that allow them to decide what to buy on a book-by-book basis.

Speaking of a book-by-book basis. The fact that Amazon has to pay state sales tax does not mean that now all their books are going to be more expensive than the same books carried by their competitors (and, of course, we’re not just talking about books, but everything that Amazon sells). The strength of Amazon’s unparalleled distribution network, as well as their ability (and historical willingness) to take a loss on some items just to provide an unblemished image of superior convenience and service, means that, very often, we will probably be seeing items that are most inexpensive when bought on Amazon, no matter what state you live in, tax or no tax.

Most importantly, though, the vast majority of people do not decide what to buy, or where to buy it, based completely on price. They choose based on brand. And I have no problem admitting that, as far as Amazon is concerned, I’m one of those people. I live in New York…so am I going to cancel my Amazon Prime membership, which gives me “free” priority shipping for $70 per year? Am I going to forsake the recommendation algorithm that repeatedly has proven itself to be accurate in terms of predicting my taste for one item or another? Learn my way around a website that doesn’t dynamically generate each page based on my own purchase history and preferences? Stop using “Amazon Marketplace,” the used-item network where I have successfully sold my own stuff? Well…I could. But I won’t. And neither will most other regular Amazon users in New York.

I’m not saying that Amazon doesn’t have its problems. But I am saying that, even as someone who works in online advertising myself, and as a more-savvy-than-average ecommerce customer, and as someone who has a better-than-average sense of what’s going on in the online business world, this Amazon New York tax nonsense is barely a blip on my radar.

How big of a blip is it on yours?

photo by scragz