Last weekend was a momentous one for about 12 percent of the country. The state of California started requiring online retailers to collect state and local sales tax from residents. That means prices on Amazon.com (AMZN), the world’s largest Internet store, rose anywhere from 7.25 percent to 9.75 percent.
So how will Amazon react to this unwelcome jump in prices? Here’s one response that I believe is inevitable: by sending in the grocery trucks.
For the past five years, AmazonFresh, the company’s grocery subsidiary, has quietly been experimenting in Amazon’s hometown of Seattle. Residents there can order fresh produce, dry goods, meat, and seafood and have it delivered to their home anytime—day or night. The company owns a fleet of white and green trucks in the Seattle area and uses them to deliver orders that are carefully packed into green and blue plastic palettes. Seattle residents say it’s a marvel—you can place your orders until 11 p.m. and find the products waiting for you by the time you wake up.
But AmazonFresh has been slow to expand. One big reason is the sales tax issue. If the company started selling groceries and delivering orders in states where it claimed it didn’t have any physical operations, it would have been forced to start collecting sales tax. Well, as of this weekend, that’s no longer an issue in the country’s most populous state.
To read the rest of the story, please go to: Bloomberg Businessweek
