Amazon Now Charging Sales Tax in the State of VirginiaTax Professionals' Resource
September 4, 2013 — 1,544 views
Amazon.com is a giant in the retail industry today. However, it is now losing tens of thousands of dollars every minute because of the change in legislation regarding sales tax. The essence of the company’s marketing strategy lay in the fact that it was completely tax- free. In order to level the playing field in the retail industry, the Senate has passed the Marketplace Fairness Act. This act ensures that sales tax must be paid even for online sales and purchases. Due to this new Act, the company is rapidly losing its preference in consumers' minds.
Consumer Mindsets and Beneficiaries of the Act
There are various competitive firms at this moment that provide the exact same services at a lower price. Amazon was built on the fact that it was tax- free and that their prices were unbeatable. This is in fact the main reason behind the organization reaching such huge levels of success over the past years of its presence in the industry. Consumers find it almost impossible to fathom the fact that Amazon.com is now supporting and in fact promoting the tax on sales. Ebay continues to avoid the sales tax legislation and has had an increase in sales due to the same reasons. Amazon has lost quite a chunk of its market share because of its quick decision to comply with the regulation and turn face on its customers.
Change in the Values of the Company?
What is surprising is the fact that the company was once noted for having the lowest possible prices on products. Their entire advertising campaign was also based on this one major factor. When a brand is built on a certain principle, consumers expect that it will live up to that image regardless of everything else. Now that Amazon has completely reversed its outlook, consumer loyalty is no longer accounted for. People are shifting easily and purchasing products from competitive sites without further delay.
Only a select few states are currently still exempt from having to pay sales tax, like the likes of Alaska, Delaware and Oregon. The Act is enforced on all other states without room for going back on the decision. The logic behind this is that if there is to be a perfectly competitive market then it is up to the legislation to prevent any such monopolies to rise due to a lower price based purely on tax. Several other retailers now stand to benefit from this particular downfall of Amazon.