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Businesses The Almighty Buck The Internet

Amazon Delivering Groceries? It's Coming, Thanks To Sales-Tax Politics 214

Posted by Soulskill from the bring-me-an-eggplant-and-a-belt-sander dept.
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."
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Amazon Delivering Groceries? It's Coming, Thanks To Sales-Tax Politics More

Amazon Delivering Groceries? It's Coming, Thanks To Sales-Tax Politics

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  • More regulation = less choices (Score:5, Insightful)

    by Darkness404 ( 1287218 ) on Wednesday June 05, 2013 @05:18PM (#43918221)
    So in other words, Amazon has managed to lobby legislators into having a national internet sales tax which it can fairly easily implement (since it designed it and is a large company after all) in order to screw over both the average Joe AND make the playing field less competitive (the US tax code is far from simple...)

    Gee thanks Amazon!
    • Nope. That has no relationship to the bill at hand.

    • Re: (Score:3)

      by h4rr4r ( 612664 )

      Incorrect.
      Amazon would do this if there was no sales tax too.

      The only reason they did not is that by only enforcing sales tax on business operating in that state they had more to lose than to gain by opening this new line of business.

      • Re: (Score:2)

        by geekoid ( 135745 )

        Then why duidn't they? they are just now getting a sales tax. By your 'logic' they would have been doing this a dozen years ago.

        • Re:More regulation = less choices (Score:5, Insightful)

          by Seumas ( 6865 ) on Wednesday June 05, 2013 @07:41PM (#43919689)

          Amazon has fought against internet sales tax (or, rather, the idiocy of making people who don't live or work in one state paying taxes in it) for quite a long time. They only recently caved in and gave up bothering to fight. Remember, they even went so far as to shut down their affiliates program in response to states trying to force out of state companies into paying their sales taxes (the residents' duty to do so).

          It seemed clear that when they gave up bothering to fight against it, they had something planned. This seems like what it was. "Well, if you can't beat them - join them".

          I say, good on them. All of these idiots out there perpetuating this myth that the lack of enforcing out of state collection on state sales taxes was harming the little mom and pop stores in cities . . . little mom and pop stores that no longer exist. Not because of "the intarwebs", but because of the big national chains that already squeezed them out decades ago. They had this crazy idea that if you suddenly had to pay sales tax online, you would stop shopping at Amazon and Newegg and other outlets online and trudge across town into their stores to deal with their shitty staff and shitty stores and shitty checkouts and shitty parking lots and all the other BS that goes along with it.

          Instead, they're going to find that people who weren't going to shop at Best Buy, Walmart, Target, Lowes, Home Depot, Ralph's and so on without sales tax collection will *still* do so . . . because if you're going to pay sales taxes either way, you might as well have the pleasure of the things showing up effortlessly at your door step the next day or two. In fact, they'll probably find a lot of people who will do whatever they can to throw their business to online services just to spite them.

          • I've spent probably $500 at Amazon in the last few months and I have to pay sales tax (KY). It shows up in 2 days. (And if it ships from the distribution center in town the next day). Excellent return policies. Usually the cheapest price and I can do it from my couch without having to drive to the store.

          • Re: (Score:3)

            by h4rr4r ( 612664 )

            And because Mom and Pop stores suck. I worked for a few in my teen years. Without fail they were the ones most likely to scam customers, paid workers far less, generally treated them worse, had worse prices and terrible selections.

            I am not sure why anyone pines for them.

    • In your first sentence you say the new code is easy to implement. Then you say that is a bad thing because the US tax code is difficult to implement.

      • Re:More regulation = less choices (Score:5, Interesting)

        by ron_ivi ( 607351 ) <sdotno@cheapcomp ... s.com minus poet> on Wednesday June 05, 2013 @05:32PM (#43918379)

        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)

        • TaxCloud.net (Score:5, Insightful)

          by tepples ( 727027 ) <tepplesNO@SPAMgmail.com> on Wednesday June 05, 2013 @05:51PM (#43918631) Homepage Journal

          Easy for a large multinational with full-time tax attorneys on staff to implement.

          Painful for small businesses.

          Part of the deal in this interstate sales tax bill is that participating states will make TaxCloud.net available to online retailers without charge. Integrating TaxCloud.net into a cart is supposed to be no more painful than integrating a payment processor or a shipping rate service.

          • Re: (Score:3)

            by bongey ( 974911 )

            supposed to be no more painful a payment processor or a shipping rate

            Try telling that to anyone that works in tax with multiple states, they wouldn't stop laughing at you.

          • TaxCloud.net (Score:5, Informative)

            by fyngyrz ( 762201 ) on Wednesday June 05, 2013 @07:07PM (#43919425) Homepage Journal

            Integrating TaxCloud.net into a cart is supposed to be no more painful than integrating a payment processor or a shipping rate service.

            When someone else assures you across the board that integrating something of theirs is [some level of difficult], into something of yours, where they know exactly nothing about your situation, work load, code, or available resources, you can be absolutely certain they have no idea whatsoever what they're talking about.

            Further, for systems that implement home-grown shipping and payment, even the context is meaningless. "no more difficult" could be extremely difficult.

            There are systems out there for whom the developers aren't even available any longer.

            Whenever the government decides they're going to make every business, everywhere, do something, the load will neither be equal nor fair, and further, it may be fatal to the business for any number of reasons.

        • Re:More regulation = less choices (Score:4, Insightful)

          by Mitreya ( 579078 ) <<moc.liamg> <ta> <ayertim>> on Wednesday June 05, 2013 @05:55PM (#43918675)

          Easy for a large multinational with full-time tax attorneys on staff to implement.
          Painful for small businesses.

          Isn't it funny how that works?
          Same with tax-code -- theoretically, everyone is subject to the same tax codes. However, people with several full-time attorneys on staff seems to do a lot better in minimizing their tax bills.
          Coincidence?

      • Re:More regulation = less choices (Score:5, Informative)

        by Darkness404 ( 1287218 ) on Wednesday June 05, 2013 @05:39PM (#43918451)
        Its easy to implement for Amazon because Amazon is a large company with a team of lawyers and helped design it. In 2012 Amazon had revenue of about 60 billion or so, spending a couple hundred thousand (or more) on compliance with this proposal is a very small dent. However, the cost of compliance will be felt much more for smaller companies or individuals who sell online and may very well put them out of business. After all if you're selling something as a hobby, its not going to be much fun or profitable if you have to spend hundreds of dollars on either talking to a tax attorney or several man-hours trying to figure out the taxes on your own. Amazon can afford that, they've got the personnel and the spare cash, your "mom and pop" style internet store may not.
        • The internet sales tax law doesn't require any company selling less than a million dollars to collect tax. That's not a mom and pop internet store. They can afford a developer.

    • It'll be very easy: All you have to do is, instead of opening your own online store, you just list your items in Amazon, and they'll collect the tax for you!

      So much money to be made being a middleman.

    • So before, Amazon was unfairly competing with local brick & mortar stores because they didn't have to pay the same sales tax.

      And now you're saying that they're unfairly competing because they do have to pay the same sales tax?

      • Re: (Score:3)

        by Mitreya ( 579078 )

        So before, Amazon was unfairly competing with local brick & mortar stores because they didn't have to pay the same sales tax.
        And now you're saying that they're unfairly competing because they do have to pay the same sales tax?

        No, Amazon will unfairly compete with other online stores, because small online stores will not be able to afford a dedicated department (with several attorneys) for the sole purpose of online tax collection.

        The playing field with brick&mortar stores may even out a bit as a result, but B&M stores probably still wouldn't have enough in-stock items to remain competitive.

    • No. That is absolutely not what this is about. Random cynical statements are not insightful and shouldn't be modded as such.

    • "So in other words, Amazon has managed to lobby legislators into having a national internet sales tax which it can fairly easily implement (since it designed it and is a large company after all) in order to screw over both the average Joe AND make the playing field less competitive (the US tax code is far from simple...) "

      It's worse than that, since a "national internet sales tax" is unconstitutional, despite what the Supreme Court previously said about the possibility.

      I have laid out the reasons why several times, at length, here on Slashdot. I really don't feel like doing it again today.

      • Re: (Score:2)

        by AK Marc ( 707885 )
        What they are referencing here is not a national internet sales tax. And Congress may regulate trade between the states. Explicitly. So there is not even any question of whether this is or is not constitutional. It's a change to federal law to allow states to bill non-resident entities for taxes that would be owed if resident, but aren't owed currently. No new taxes are levied. They are just collected from a different point, and *never* by the feds. The Constitution has no problems with that.

    • Amazon wants to have distribution centers in all markets with their own delivery system. The problem is, that makes them a local seller and obligates them to collect state sales tax, just like WalMart. Instituting a law that gives states the right to collect sales tax on internet sales keeps everyone else from undercutting them on price with shipped interstate sales.

  • Live Free or Die (Score:3)

    by tedgyz ( 515156 ) on Wednesday June 05, 2013 @05:18PM (#43918225) Homepage

    No worries here in NH if they ever offer the service here. No sales tax.

    Now with regards to our no-motorcycle-helmet law, "Live Free and Die" is a more appropriate slogan.

    • Re:Live Free or Die (Score:4, Insightful)

      by h4rr4r ( 612664 ) on Wednesday June 05, 2013 @05:25PM (#43918287)

      Look on the bright side, lots of possible organ donors.

    • No worries here in NH if they ever offer the service here. No sales tax.

      I wonder what part of "national sales tax" you missed. Everyone gets to pay sales tax on internet purchases going forward.

      • Re: (Score:3, Informative)

        by EvanED ( 569694 )

        wonder what part of "national sales tax" you missed. Everyone gets to pay sales tax on internet purchases going forward.

        The part where that didn't happen.

        As I just said in another post [slashdot.org], there's no "internet sales tax", just the ability for states to require internet retailers to collect sales tax on sales to residents. If a state has no sales tax, there will continue to be no sales tax.

        (I make no statement on whether the federal bill/law is good or bad, just that the name "internet sales tax" is apparently

        • As I just said in another post [slashdot.org], there's no "internet sales tax", just the ability for states to require internet retailers to collect sales tax on sales to residents. If a state has no sales tax, there will continue to be no sales tax.

          And if a business in such a State sells something to someone living in Kenner LA, they'll have to be able to figure sales tax for LA, Jefferson Parish, Kenner, and such sales tax holidays as might be applicable on any particular item at any particular time...

          • Re: (Score:2)

            by spitzak ( 4019 )

            they'll have to be able to figure sales tax for LA, Jefferson Parish, Kenner, and such sales tax holidays as might be applicable on any particular item at any particular time...

            Wow that's complicated. They will probably need to use a computer connected to the internet to get that done! Oh wait...

      • You missed it. There's no federal sales tax; it's still just state sales tax on the state you live in. In NH, there's no state sales tax, so we don't have to pay any despite this. What does change is that our NH businesses have to collect tax on behalf of other states when you buy from us online. So when you guys buy stuff online from our businesses, they'll now have to collect sales tax for your state. That's why we fought it, not because consumers would have to pay more, but because our businesses will ha

      • Re: (Score:2)

        by AK Marc ( 707885 )
        There is no national sales tax. The push was for a centralized tax system. Alaska, NH, and others will still collect no sales tax. The problem was places like Dallas, where the city spans multiple counties, and the sub-area taxes are precinct-driven (things like DART - public transport). So neighbors with the same ZIP code could have had different tax rates. That level of granularity is not captured by anyone other than specialist tax-tracking firms who exist solely to sell databases of addresses to ta

      • I wonder what part of "national sales tax" you missed. Everyone gets to pay sales tax on internet purchases going forward.

        While that's what you'd think from the words "national sales tax", it is completely wrong. "National sales tax" is an inaccurate label (just like the more popular "internet sales tax" for the same measure was.)

        The actual measure at issue that has been dishonestly described as a "national sales tax" or "internet sales tax" is federal legislation specifying particular conditions under whic

      • Re: (Score:2)

        by AK Marc ( 707885 )
        There is no national sales tax, there is no Internet sales tax. There is just a law that requires sellers collect appropriate taxes for the location of the sale. Taxes due do not change, just a minor change to who collects them, and from whom.

    • Re: (Score:2)

      by geekoid ( 135745 )

      "Live free and let the tax payers pay for you idiocy" is more like it.

    • Same here in Texas... Helmets are optional if you have health insurance and are over 21.

      Of course, having an accident on a motorcycle and not having a helmet is pretty much an example of Darwin's natural selection process in action... Strike that... RIDING a motorcycle in an urban area in Texas is an example of natural selection processes, folks drive crazy round here....

      • Re: (Score:2)

        by AK Marc ( 707885 )
        Nah, riding a bike is safe. You are more liekly to avoid them, and the Texas drivers are so bad that they don't see you if you are in a bike or a car anyway, so you drive both as if invisible, the difference is that on a bike, you are much more maneuverable. Why yes, I did ride a bike in TX, and never had a car hit me.

    • Re: (Score:2)

      by fyngyrz ( 762201 )

      No worries for buyers. Plenty of worries for retailers. Same thing here in Montana.

  • There goes one more reason to get out of the house.

    Maybe answering the door should count...

  • "Oh, very clever, Worf. Eat any good books lately?"

  • Well, I guess they know what they're getting into:

    In June 2008, CNET named Webvan the largest dot-com flop in history, placing it above Pets.com and eight other sites on its list.[1] It is now owned and operated by Amazon.com.

    (quoting Wikipedia)

    Remember WebVan?

    How is this anything other than Amazon moving into a business that Walmart could have done at any time but evidently passed on?

    I predict Amazon will end up delivering groceries mainly places where other companies already do (i.e. where there i

    • Amazon has way more need for delivery than Walmart (well WalMart as of today). Delivery is probably one of Amazon's biggest expense lines. Why shouldn't they get into it?

  • I'm wondering, though. For package goods it's fine. For perishables like meat, dairy, refrigerated goods and so on, it's a bit more complicated. The supermarkets (Vons in my area) already have the distribution network and storage in place in every store they have. All they need to do for delivery is pick the stuff off the shelves (or out of the back room before it goes on the shelves), put it in a truck and go. It'll be interesting to see how Amazon deals with keeping perishable goods in stock close enough

    • Re: (Score:2)

      by Shados ( 741919 )

      Its the whole point. Amazon would centralize its operations to avoid taxes. Now, its customers are getting hit by sale taxes ANYWAY. So they're just putting distribution centers all over the place, since they're not gaining anything by keeping them in the middle of nowhere.

      With that, comes same day shipping as well as localized warehouses. Those two together is the only thing you need to effectively be able to do groceries.

  • Be Careful What You Wish For (Score:3, Interesting)

    by sehlat ( 180760 ) on Wednesday June 05, 2013 @05:54PM (#43918661)

    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.

    • Re: (Score:3)

      by dlgeek ( 1065796 )
      It's not just that there are 7000+ districts, but they all have their own rules. Back in 2010, Washington had an extra tax on candy. However, Kit-Kat bars were exempt and charged at a normal food tax rate. Why? Because they happened to contain flour and were considered a baked good. Imagine trying to handle thousands of different jurisdictional rules across the millions of products Amazon carries. It'd be insane!

  • It appears that Amazon already has a groceries section [amazon.com]. This appears to be them just expanding it into a less-esoteric selection.

  • It's about robots, not sales taxes. (Score:5, Interesting)

    by Animats ( 122034 ) on Wednesday June 05, 2013 @06:29PM (#43919047) Homepage

    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.

    • Re: (Score:2)

      by 0123456 ( 636235 )

      This has nothing to do with sales taxes. That's a few percent.

      Uh, you are aware that Amazon's profit margins are typically only 'a few percent'?

      The brick and mortar stores who complained that Amazon was unfairly competing with them by not charging sales tax are now going to find themselves having to compete with Amazon when they have local operations and same-day delivery. Good luck with that.

    • Re: (Score:2)

      by dkf ( 304284 )

      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.

      If that's the level of service that they're providing, the world will be a better place when they're out-competed. Sucks if you're a Safeway employee, but reduces the level of suck for many other people so it's a net gain. That's the reality of a proper free market. (And having shopped at Safeway in the US, the sooner they get replaced, the better IMO. Horrible place.)

  • peapod has been doing this for years and with groceries things have to be out of local depots

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