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Can Amazon.com overcome its instant gratification problem?

Jul 12, 2012

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The Amazon Swansea fulfilment centre in Swansea, Wales. Credit: Matt Cardy/Getty Images

Shopping on-line versus in a retail store has always been an either-or proposition; either you pay a little more and have it now or you pay less and wait for it to show up. On-line retailer Amazon.com however, may have the solution.

For the last several years, on-line retailers had the price advantage over the brick and mortar guys because of the state sales tax. If you owned a shop you had to impose the tax, but if you didn’t have a storefront in that state, the onus of paying the tax was on the consumer in the form of a use tax.

Amazon has fought off mounting pressure by state and local governments to impose state sales taxes until recently. A sudden shift in practices has Amazon collecting sales tax in six states with another five to be added soon. So why would they give up their decided advantage? The answer is storefronts—or—more to the point, distribution hubs.

With a massive infrastructure of distributors, Amazon would now be poised to get your products on your doorstop hours after you’ve ordered them. Talk about instant gratification. So, what does this mean for local businesses? Would you shop on-line more often if you could get your product on the same day? Is this any different than a big-box store moving into town?

Guest:

Barney Jopson, US retail correspondent for the Financial Times.

 Can Amazon.com overcome its instant gratification problem?  photo

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