Having the best prices is no longer the internet retailer’s top priority.
Amazon.com (NASDAQ:AMZN) was against an online sales tax before it was for it. Now that the Supreme Court has decided that states can require online retailers to collect sales taxes even if they don’t have a physical presence in their state, smaller internet-only retailers trying to make their own mark are put at a disadvantage. Fortunately, that’s a hurdle Amazon no longer has to worry about.
When Amazon was a lowly online start-up, a big part of its competitive advantage was its ability to beat the competition on price. Not charging sales tax contributed to its price advantage. Amazon used that leverage to grow into the internet behemoth we know today.
At the same time, it began constructing distribution centers across the country to be closer to its customers and facilitate timely delivery of products. As a result, it ended up with a physical presence in most states and had to collect sales tax anyway.
Just prior to the court’s decision, Amazon was collecting sales tax from customers in 45 states and Washington, D.C., and said it favored a federal law allowing states to require sales tax collection by online sellers under a nationwide system. The Supreme Court decision effectively allows that to happen.