Amazon Delivering Groceries? It's Coming, Thanks To Sales-Tax Politics 214
curtwoodward writes "Amazon has been delivering groceries to people in its hometown of Seattle for a half-dozen years, but the experiment has never spread any further. But this year, rumors about Amazon Fresh expanding to new cities are coming out every month — Reuters just reported that Amazon could start the service in L.A. within a week, and in San Francisco in the coming months. What gives? Why expand now? Look no further than Amazon's long-running battle with state and federal governments over sales tax policy. After more than a decade of resistance, Amazon has spent the last two years cutting deals to collect sales taxes in states all over the country. And it's pushing for a national online sales-tax system, which appears to be within reach. That's the last obstacle to Amazon getting into the grocery-delivery game — a step that should worry not only grocers, but UPS and FedEx, too."
Re:More regulation = less choices (Score:5, Interesting)
easy to implement.
Easy for a large multinational with full-time tax attorneys on staff to implement.
Painful for small businesses.
(not too unlike Health Care - which is easy if you have a HR department with nothing better to do; but is really painful if everyone in your company is trying to get work down that's relevant to your main business)
Be Careful What You Wish For (Score:3, Interesting)
The brick-and-mortar brigade has been bitching for years about the supposed "unfairness" of "they don't pay sales taxes but we do." They finally browbeat Congress into doing something.
Amazon's argument was about the burden of having to keep track of over seven thousand districts (I looked this number up.), having to update them the moment things change, and the legal penalties for any failure to keep track of changes. So they asked for, and got, a national single-tax regime, which, presumably, any business selling online can keep track of and meet, including the brick-and-mortarsaurs.
And if this is a disaster for the mortarsaurs, they will have only themselves to blame for the new K-T boundary.
It's about robots, not sales taxes. (Score:5, Interesting)
This has nothing to do with sales taxes. That's a few percent. It's all about efficient warehouse and distribution operations. Doing that wrong can double operating costs.
WebVan [webvan.com] was a popular service during the dot-com boom. They just had an operating cost problem. They had about 3% market share in 30 cities, instead of 30% market share in 3 cities. So their order processing and delivery costs were too high.
One of WebVan's former executives realized that order processing had to be much more automated for this concept to work. So he founded Kiva Robotics. [kivasystems.com] Upwards of 15% of online orders are handled by Kiva robots. If you've ordered from a major online retailer, (Acumen Brands, Drugstore.com, Gap, Toys-R-Us, Walgreens...) a Kiva robot probably handled the order.
Last year, Amazon bought Kiva Robotics. The whole company. Then they started building warehouses near major US cities and talking about same-day delivery. Those warehouses will have a lot of Kiva robots and not too many humans.
While some grocery chains like Safeway do delivery, they're not very good at it. They're picking from store shelves. So they don't know, when the order is taken, if the item is in stock. Safeway tends to deliver with some items missing. Automated warehousing operations know what they have in stock when the system takes the order.
It's going to be like Webvan again. But this time, it will be profitable. The retailers who see this coming are very afraid.