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Cyber Monday 2012: Amazon sales tax collection for California, Texas and Pennsylvania shoppers

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A new survey has found that more customers are opting to shop from the comfort of their homes this Thanksgiving weekend, forgoing the chaos of Black Friday for the ease of Cyber Monday deals.

But web shoppers beware: For the first time, residents in California, Texas and Pennsylvania will be automatically charged state sales tax at the checkout on Amazon and other online stores.

And next year, they will be joined by shoppers in Virginia and New Jersey, and by January 2014, those in Nevada, Indiana and Tennessee.

What comes as bad news for shoppers comes as good news for Amazon’s competitors, who have expressed their relief at finally “leveling the playing field” with the e-commerce giant, which earned a staggering $17.45 billion in the holiday quarter last year.

Other stores have claimed that Amazon’s success is partly due to the fact it can undercut them by avoiding sales tax, which is as high as 9% in some states.

The changes are coming into play after individual states have passed legislation on online sales tax after Congress has failed to pass a national law. Chains including Wal-Mart and Target have been lobbying the bills, Politico reported.

“Now for a sizeable chunk of the U.S. population, Amazon is playing by the same rules as the rest of the retailers,” Jason Brewer, a spokesman for the Retail Industry Leaders Association, told the site.

“There are going to be fewer people who shop online solely for the sales tax benefit.”

But Amazon maintains that it expects this holiday season to be its most successful yet.

“As analysts have noted, we offer customers the best prices with or without sales tax,” said Scott Stanzel, an Amazon spokesman.

“We collect sales tax or its equivalent in more than half of the areas where we do business and we are pleased to say we are thriving in those geographies because Amazon offers low prices, vast selection and fast delivery.”

Residents in California, Texas and Pennsylvania will be automatically charged state sales tax at the checkout on Amazon and other online stores

Residents in California, Texas and Pennsylvania will be automatically charged state sales tax at the checkout on Amazon and other online stores

Yet some retailers said they are already noticing a difference in states were Amazon is collecting sales tax.

Best Buy has seen a four to six per cent increase in sales in California, Texas and Pennsylvania compared to the rest of the chain, Amy Von Walter, a spokesperson at Best Buy, told Politico.

“These are encouraging data points,” she said.

“It lends itself to the idea that a level playing field is good for business.”

Online sales during Cyber Monday last year reached $1.25 billion, up 22% from the previous year, according to ComScore. This year, the data firm expects $1.5 billion in sales that day.

Despite changes to sales tax, research has shown that more people are shunning the mania of Black Friday to shop from their homes on Cyber Monday.

A survey by shopping comparison site PriceGrabber.com revealed that almost half of all Thanksgiving weekend shoppers will shop online on Monday – and more than half of these said they would shop more online than at shops on Black Friday.

Of the 5,000 people surveyed, 41% of people said they would shop on Cyber Monday – up from the 37% in 2011, and 33% in 2010, Fox News reported.

Eighty-four per cent of Cyber Monday shoppers said they wanted to take advantage of one-day deals, discounts and free-shipping offers.

A third of shoppers said they would be shopping on Monday after scouting for deals over the weekend.

But although the interest in online shopping is growing, the total sales will still not come close to those in shops on Black Friday. Stores are expected to take as much as $11.4 billion.

Cyber Monday, the Monday after Thanksgiving, was created in 2005 as an online alternative to Black Friday.

This year, as Black Friday begins earlier than ever – with retail giants nudging their opening times into Thanksgiving – e-commerce departments are doing the same.

Walmart emailed customers this week to reveal that its Cyber Monday sale will start this Saturday and last until Sunday, December 2, 2012 for deals on toys, electronics and video games.

Target, Best Buy and Amazon also announced they would have tech deals starting on Black Friday.


Amazon is also offering special Sunday deals – so that bargain hunters don’t have to click from their work computers come Monday – on golf equipment, clothing, lamps, books, clothes and cameras.

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