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Borders Closes the Books on Amazon
theodp writes "Borders said Thursday that it was severing ties with Amazon and will compete directly against the e-tailer with its own website. The loss of Borders could cost Amazon $80-$160 million in annual revenue, according to one estimate. 'Amazon could gain market share in book selling over time because it will have an advantage over Borders, which now will charge a sales tax for all books sold. Companies have to charge a sales tax for Internet sales if they have a physical presence in states that collect sales taxes, [Stifel, Nicolaus & Co analyst Scott] Devitt said. Amazon collects sales taxes only on books sold in Washington, North Dakota, Kentucky and Kansas. Borders would collect sales taxes in all 50 states, the company said."
The reason Borders partnered with Amazon in the first place was because they couldn't come up with a good enough web site on their own. What has changed since that time? I think their greed is overcoming their common sense here, as Amazon is going to be hard to compete with.
Have you read my blog lately?
For a $50 book, I'd rather pay $4 in sales tax and 25 cents in gas than pay $5 for shipping and having to wait a week... Besides, the new competition might even drive the costs down making the whole "extra cost" issue moot.
If one presumes that Borders is trying to go head-to-head with Amazon, then it looks bad. But Borders has spent billions upgrading their B&M stores in the last decade or so. ( Remember when a B&M bookstore was 2000 sq ft with no coffee and a much smaller selection? ) Borders is trying to get some of the online crowd into B&M stores. Borders will be delighted if their online sales break even, or even operate at a small loss.
I predict that we will see Border's web site saying: You can order this book and it will be delivered in x days, OR you can drive y miles and have it today!
Not really, no. Amazon has gross margins of about 21% and so does Borders. In case that doesn't mean anything to you, 21% gross margin isn't spectacular. That means Amazon and Borders are not making a lot on each sale and there isn't a lot of fat to cut out. Books on Amazon are typically already discounted pretty steeply. Borders doesn't get any economies of scale that aren't also available to Amazon and Borders has physical stores to maintain. Sure, Borders could discount down to zero profit but neither company is likely to do that unless they think they can get some advantage out of it and I can see no advantage for either side in a price war right now.
Congrats for being deliberately obtuse to show off your pedantry. The correct sales tax in your state is 0%, which Borders will collect and pocket. Now STFU.
A long time ago..? I remember going to the Borders website, found which store location had the DVD I was looking for in stock, went and bought it.
Different customers have different needs, but for me, the ability to search a store's inventory is more useful than being able to place a mail-order an item over the web. I can order something from a gazillion places, but if a store nearby physically has it, I'll swing by and pick it up.
I'm always a little surprised that not all stores w/ web presence do this. The inventory search doesn't even have to be that current -- at least narrow down the availability for me, and I can call the store and double check.
These are the US states that have a 0% state sales tax:
Alaska, Delaware, Montana, New Hampshire, and Oregon.
That said, individual cities are allowed to charge sales tax, though. While the state sales tax in New York is somewhere around 4% you will pay more than 8% in New York City. If you shop in Bethel, Alaska, you will pay 5% in sales tax even though Alaska itself has 0%.
Other states make distinctions between the products that are being sold. Groceries, for example, are very often not taxed. Clothing up to $110 per item is exempt from city sales tax in NYC but you still have to pay the 4% state sales tax (or was that the other way around?)