Tuesday, May 06, 2008

Three Stories About Amazon

Washington State AG Refuses Amazon Case
Publishers Lunch directed readers to the Writers' Weekly website yesterday where Angela Hoy posted the statement from the Washington State Attorney General. The AG indicated that, as a result of the numerous complaints they'd received regarding Amazon's demand that clients use BookSurge, Amazon's proprietary POD company, they'd contacted the company.

Read the entire statement here.

Amazon in a Price War
The London Times Online had a story about Amazon crying foul:
Amazon is angry that Penguin, Bloomsbury and others are discounting titles on their websites, encouraging customers to buy direct instead of using the online retailer.

Read the entire story here.

New York State About to Collect Sales Tax From Internet Retailers
I will admit to a perverse pleasure in the fact that Amazon is threatening to sue the State of New York for charging it sales tax on online sales.

Jane over at Dear Author wrote last Thursday supporting Amazon's position. You can read her post here.

I disagree with Jane. Bookstores located in New York are paying the sales tax. Amazon is not, giving Amazon an unfair competitive advantage. If the bookstores are forced to close due to lagging sales, staff will be laid off, money will be lost to the local economy. The law says if Amazon uses local websites for click-throughs, they need to pay the tax. I think it's right.

Congress let Internet retailers off the hook on sales tax while they were growing. Now those businesses are mature, and Internet sales are well-established. If they're using local representatives in a state to help their business via click-throughs, the retailers should pay the state tax.

Read the story here.

Gotta say: this feels like a case of what goes around, comes around. New York is offering Amazon the same choice Amazon offered the small publishers: "If you don't like it, go elsewhere."


Katie said...

re: story #3

I understand what you're saying, Maya... but what about Jane's point of how it would affect much smaller businesses? I've owned an online business for nine years, and believe me, the complications in filing 200-600 tax returns every year (depending on how many states file sales tax 1/month or 1/quarter) would be phenomenal. Not to mention that most states have additional county sales tax surcharges, and for each sale in that state, you have to find out what county it's in, look-up it's extra surcharge, and then add that to the sale. Amazon could manage this, because it could find or use some look-up service that (hopefully) automatically supply the county for every city/town/township in the nation... and then they'd have to create a database that stayed updated every year with the surcharge that every one of those counties charged... then a program that applied that to the sale... and then figure the means to keep the totals for the county sales tax surcharges for each of the thousands of counties in the country separate, on top of keeping the sales tax for every state separate, etc....

Grated, IF Washington State has county sales tax surcharges, then they've already got something similar to this in place, but most of us who have small online business just manage it manually in our own state. PLEASE don't ask us to do it for every state!

Finally, I've always seen the fact that I, as a consumer, have to pay shipping instead of sales tax to be the trade-off between buying locally and over the Internet. Of course, Amazon offers free shipping for bigger orders, but we all know that we're still paying for that shipping somehow. It's not like UPS is offering their services for free.

Maya Reynolds said...

Katie: This law is NOT going to impact the vast majority of online retailers. It WILL impact those who have representatives based in New York who solicit business for them. Amazon has an "affiliates" program where people advertise Amazon on their Internet sites and then earn sales commissions on each purchase visitors to their sites make at Amazon.

Do you have a similar program? If not, this law will not impact you at all.

Jane obviously has a vested interest in this since her website (Dear Author) is an affiliate site of Amazon's. She's been very upfront in acknowledging that for which I respect her.

But that doesn't change the fact that Amazon and other giant online retailers do have representatives based in New York. And these giant retailers are benefiting from those connections, but are not contributing to the local economy and are, in fact, getting an unfair advantage over local retailers by not playing on a level field.

Katie said...

Hmmm... thank you for clarifying that. Apparently I missed the detail about it only applying to those who had affiliates or representatives in the state. I had (mis)understood it to apply to anyone who had customers in the state. That's what comes of not having the time to study the issue in-depth, I suppose.

I thank you for clarifying, as this does set my mind at ease if the law does go through.