Amazon's reluctance to collect sales tax in states where it doesn't have physical operations has been called out by many as giving the retailer an unfair advantage over local businesses — but those smaller competitors should be careful what they wish for. That's the thrust of a report by the Financial Times (note: paywall), which makes the case that paying sales tax could potentially open the door to further retail dominance for Amazon.
Paying sales tax will allow Amazon to aggressively pursue same-day delivery
Essentially, legally hosting operations such as distribution centers in these states will allow the company to aggressively pursue a same-day delivery strategy that could prove difficult to compete with. By bypassing traditional delivery methods and getting closer to customers, Amazon may be able to neutralize one of the main advantages still held by brick-and-mortar stores: that of instant gratification.
A recent example of how the strategy may work is New Jersey, where Amazon agreed to start paying sales tax from 2013 and will build two new distribution centers in the state, significantly expanding delivery capabilities in New York and beyond. Jason Brewer of the Retail Industry Leaders Association insisted to the FT that sales tax measures are necessary since Amazon would likely try to expand distribution even while avoiding the tax, but if the upshot is ubiquitous home delivery within a few hours, local retailers may be wondering if it's a price worth paying.