Amazon physical store? -- COMBINED thread

[Terrence OBrien]

"I feel dumb about this, but what's the internet retailer rule?"

A 1991 US Supreme Court case ruled a state cannot tax a company that does not have a physical nexus in that state. That means Missouri can't tax Amazon online sales to people in Missouri because Amazon has no physical presence in Missouri. However, step across the border to Kansas, and Kansas can tax Amazon online sales to people in Kansas because Amazon has a large fulfillment center in southeast Kansas. They have a physical nexus.

There is currently a case in federal court in New York where Amazon is challenging a NY law that forces it to collect tax. The tax is being collected but held in escrow. California has been in a running battle with Amazon for several years. Various states are passing laws that say an Amazon affiliate sitting in the state constitutes a physical nexus for Amazon. Amazon responds by canceling the affiliates in those states. The permutations continue.

[Bards and Sages (Julie)]

Illinois lost an estimated $18,000,000 in income tax revenues when Amazon and other major internet retailers cut ties with affiliates over the issue.  So not only did the state NOT end up collecting any sales tax, but it lost income tax revenue as well.   

The issue for many retailers is not even collecting the money per se.  It is relatively simply for a large site to code its shopping cart to automatically collect sales tax.  Much of the issue is that you have to know the reporting laws of 50 separate states (and dozens of municipalities that charge a city sales tax).  And that requires an army of employees.  In NJ, for example, even if you have no sales tax to report, you still have to file a report each month or face a fine.  Now you are talking about literarlly hundreds of opportunities for a keying error or glitch to trigger a fine or audit.

[Jon Olson]

I get the impression it has more to do with skirting the "internet retailer" rule than selling books.  If the verbiage of the CA bill specifically targets "internet only" businesses, opening a token physical store would give Amazon an out. 

This is interesting, and probably right. It's not just to have a "store." There's some financial or regulatory advantage.

[Krista D. Ball]

http://www.quillandquire.com/blog/index.php/2012/02/06/indigo-boycotts-books-published-by-amazon/

Indigo will now boycott books published by Amazon.

[NathanWrann]

with a superior model (internet store) vs. an inferior model (brick-and-mortar store),

"Internet only" is not necessarily a de facto superior model.

[Pamela]

Amazon might be planning a real store brick and Mortar in Seattle.  Appologies if you've already seen this, but it's new to me.

http://www.pcmag.com/article2/0,2817,2399891,00.asp

[EllenFisher]

There was a thread on this here:

http://www.kindleboards.com/index.php/topic,102209.0.html

but it fell back quite a few pages, so it's no surprise you didn't see it.

[Ann in Arlington]

topics merged.

[Vaguely Piratical]

Amazon can be indie friendly now because it doesn't cost them anything to do so.  They don't pay anything to "stock" Kindle books.  And even with most indie print titles they are POD so they aren't stocking physical books either.

But I wouldn't be so quick to assume they would be an indie friendly BOOKSTORE because that would require them buying books to have in stock.  That would mean then buying POD titles knowing most of them are non-returnable.  

Unless it was on some sort of a "consignment" basis where they "Invite" authors to give them books up front and then only pay if the book is sold.  

Well, that's the arrangement they already have with small presses for physical books on Amazon. We send them the books they request at our expense, making sure that their barcode is clearly visible on the label, and if they sell Amazon takes its 55% (regardless of the volume of the order ) and sends us a check for the remaining 45%.

[StephenZimmer]

We might remember Amazon sells a lot more than books.

An excellent point, and Amazon may have a great concept in mind for diverse store content.  I'm realistic in that I don't expect them to stock indies and small press titles outright, but I don't think this could be a bad thing at all.   I'm grateful that Amazon has created a climate/environment in which indies and small press titles have a fighting chance to do well, allowing for all the success stories of authors that in past times would have run into a brick wall trying to get shelf-space at B&N stores.