Why Amazon.com gave up the sales tax fight: A new face for the ‘online’ retailer?

Amazon Fresh truck in Seattle. Part of a larger strategy?

An interesting thing started happening last year. Amazon.com, which for months had battled states over the collection of sales tax, began changing its tune on the issue.

It started agreeing to collect sales taxes on purchases in some states where it didn’t operate physical locations, while simultaneously inking deals to bring massive warehouses (and jobs) to population centers such as California, New Jersey and Texas.

As part of an ongoing special report on Amazon.com, The Financial Times’ Barney Jopson explains what was really going on. He writes:

“Amid the tax furore, Amazon is seizing the opportunity to expand its network of US warehouses – it had 34 at the end of last year – so it can place its merchandise nearer to big markets and offer same-day delivery to more consumers. That will erode one of the last advantages of the physical store: instant gratification.”

Classic Amazon.com. Turning lemons into lemonade, quickly pivoting on an issue and making it into what could be a significant business advantage.

Photo Courtesy Dave Zatz

In Seattle, we’ve been on the front lines of this radical shift, in part because the company has always had to collect sales taxes on purchases in its home state.

That’s meant Amazon could experiment with new ideas when it comes to the instant gratification of home delivery or in-store pickup, namely Amazon Fresh and Amazon Lockers.

For the past five years, Amazon.com’s lime green delivery trucks have ferried groceries and other products to the doorsteps of Seattleites. The company has continued to claim that Amazon Fresh is a “test,” and it has yet to expand to another U.S. city.

But, if Jopson’s thesis is to believed (and I think it is), we could see an entirely new Amazon.com in the coming years where the company’s delivery trucks and locker systems create a new physical component of the online retailer.

For years, Amazon, despite its rankings for top-notch customer service, has been a relatively faceless corporation. Hard to find customer support phone numbers. No physical retail stores. Basically, few human interactions. (Editor’s note: This post has been updated. See comment below)

The new physical components, lockers and delivery trucks, could put a face (sort of) on Amazon.com. (Has anyone else noticed how quiet Amazon Fresh trucks during their early-morning drop offs?)

Slate’s Farhad Manjoo suggests that this new push into same-day delivery will shake up the retail business. Majoo writes:

Same-day delivery has long been the holy grail of Internet retailers, something that dozens of startups have tried and failed to accomplish. (Remember Kozmo.com?) But Amazon is investing billions to make next-day delivery standard, and same-day delivery an option for lots of customers. If it can pull that off, the company will permanently alter how we shop. To put it more bluntly: Physical retailers will be hosed.

There’s a reason why Amazon.com co-founder Jeff Bezos is a backer of Uber, the private driving service, and Rethink Robotics, a maker of robotic technologies. (The company also lost money on Kozmo.com, one of its failed dot-com investments).

Jeff Bezos

But, if nothing else, Bezos is a long-term thinking entrepreneur. And same-day, or home delivery, are things that the retailer could start to take to other cities beyond Seattle.

And the concept could go much further.

Corum Group’s Elon Gasper and Jon Scott earlier this year suggested that the online retailer should buy Coinstar, the Bellevue maker of automated retail kiosks.

“Together, Coinstar and Redbox already have thousands of automated kiosk-style vending machines in high traffic areas that consumers can order DVDs or video games from remotely and pick up when they grab dinner—all without human contact,” said Gasper. (See full remarks here).

They envisioned a brick-and-mortar retail scenario without sales clerks where Kiva (or for that matter Rethink) robots could work on the back-end to pick products, servicing the retail customer who interacted with the kiosk at the front of the store.

All of those very large warehouses that Amazon.com is building across the country, establishing a physical presence in states where it previously avoided the collection of sales taxes, could be the feeder systems to the smaller retail footprints.

Sounds a bit sci-fi. And that’s exactly why I think Amazon.com will do it, or at least a version of it. After all, Bezos likes to say that Amazon is “willing to be misunderstood for long periods of time.”

  • Brant Williams

    Ordered my an Apple TV on the Amazon.com iOS app heading into work yesterday, while at a stop light…i swear. Got it before my afternoon coffee that afternoon. That’s some bad donkey.

  • Reu

    If my business got the tax breaks they get, I’d love collecting sales tax also. Too bad I have to anyway. It’s great to be in the US if your a super massive business.

  • http://twitter.com/chrisamccoy Chris McCoy

    I have a man crush on Jeff Bezos. The man is so underrated, but I imagine not for long. He’s a true trailblazer. A real pioneer. America needs more people like him (that are good at it).

  • Bill Laswell

    Amazon can now count on the states making it tough for smaller competitors who do not collect their “fair share” of sales tax.

  • jess k.

    “For years, Amazon, despite its rankings for top-notch customer service, has been a faceless corporation. No customer support phone numbers to call.”

    What? This isn’t true.

    • johnhcook

      Really? What’s the number? And where is it on the site?

      John Cook
      Co-founder, GeekWire

      • jess k.

        They’re on the “Contact Us” section of the help pages.

        For regular customer service:
        “Click the Call Me button or you can reach us at 1-866-216-1072 to use our automated customer service system.
        International customers can reach us at 1-206-266-2992. Charges may apply.”

        For Kindle:
        “Click the Call Me button or you can reach us at 1-866-321-8851 to use our automated customer service system.
        International customers can reach us at 1-206-266-2992. Charges may apply.”

        • johnhcook

          Thanks Jess. I’ve never seen the Amazon customer service #s before, and numerous folks I’ve talked to have raised this as an issue. You learn something new everyday.

          Thanks again. I’ve updated the post.

          • Belmi

            John, the next time you are looking for information, I would recommend Google. I googled “Amazon customer service phone number” and found the page Jess cited in only 0.59 seconds.

        • Atto

          I think John was asking for the videophone number since he wants to talk to an Amazon rep face-to-face. Did you find a videophone number on the help pages?