Internet superstore Amazon has something huge in the works, Slate reports. After a long history of resisting collecting sales tax, the company seems to have a new strategy to stay on top: same-day delivery.
For years, Amazon never collected state sales taxes. This gave it a serious advantage over brick-and-mortar retailers, especially on big-ticket items like electronics. Why pay an extra $100 in sales tax when Amazon is happy to sell the same product for cheaper?
Sales tax has always been a contentious issue with Amazon. Several states have passed laws designed to rope Amazon into paying taxes. By claiming that the company's distribution centers count as a "physical presence," states like Texas, California and New York are now beginning to collect their taxes, even after Amazon spent millions of dollars campaigning against the California law.
Now Amazon seems to be eyeing a new strategy as every year more and more states are claiming their sales taxes. Retreating from a losing battle, Amazon needs something else to stay on top, something so convenient for consumers that they'll never consider driving to a Best Buy ever again.
And what is that holy grail? Same-day delivery.
It makes sense. For years, Amazon has perfected two-day shipping with their Amazon Prime program. For a yearly fee, customers can receive two-day shipping on any item for no additional cost. It's a highly efficient program, so much so that many customers report receiving their packages the next morning, even those who live far away from Amazon's huge delivery centers. They seem to be testing the limits of their system's efficiency.
The company has already rolled out a new "Amazon Lockers" program in areas like Seattle, New York, and parts of the UK. It allows customers to collect their packages from a series of lockers in convenience stores.
Of course, same-day delivery isn't easy. Companies have attempted it in the past and perished in the process. But Amazon might just have the resources -- and the cash flow -- to make it viable.
Slate reports that Amazon is planning on spending billions to make this a reality. The company already has spent millions on new delivery centers in New Jersey, Virginia, Texas, San Francisco and more. Amazon has also acquired Kiva Systems, a robot manufacturing company that plans to make their existing shipping centers more reliable. If anyone is able to make same-day shipping a reality, it's Amazon.
How will a move like this affect local retailers? Plenty of businesses have already been driven to bankruptcy by online shopping. Even big-box chains like Best Buy and Barnes and Noble are hurting. If Amazon has to pay sales tax nationwide, that may destroy the price advantage over local stores, but same-day shipping could completely destroy the inconvenience of driving to a retailer at all.
Will this be a game-changer in the field of online retail or just another failed experiment? Only time will tell, but if anyone can pull the feat off, it's Amazon.
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