* Best Buy sees online sales lift in Calif., Texas, Penn.
* Amazon still better on price; Best Buy may still benefit
By Alistair Barr
SAN FRANCISCO, Jan 10 Best Buy Co, the
world's largest electronics retailer, said its online sales have
increased in certain markets as arch rival Amazon.com Inc
collects tax on purchases in more states.
"In California, Texas and Pennsylvania where Amazon.com
recently started collecting tax, it is very early, but Best Buy
has seen a 4 to 6 percent increase in online sales observed in
aggregate versus the rest of the chain," spokeswoman Amy von
Walter wrote in an email to Reuters.
"While some people may still prefer to shop online, the
sales tax parity has shown that people will shift their buying
Amazon, the world's biggest Internet retailer, began
collecting sales tax in California on Sept. 15, weeks before the
start of the crucial fourth-quarter holiday season. In the weeks
leading up to the move, there were reports of binge buying of
higher-priced items such flat-screen TVs by some California
Amazon started collecting state sales tax in Texas in July
and in Pennsylvania in September.
Critics of Amazon have argued it had an unfair advantage
because big retailers, including Best Buy, Wal-Mart Stores Inc
and Target Corp, have had to collect state sales
tax on online sales for years because they have stores and other
physical operations in these locations.
But many states, hungry for extra tax revenue in the wake of
the 2008 financial crisis, have introduced new laws requiring
that Internet-only retailers also collect sales tax.
Big retailers hope the requirement to collect sales tax will
reduce Amazon's price advantage and help them recoup some sales
that lost to the Internet retailer.
Best Buy also saw an increase of 6 percent to 9 percent in
online orders that are picked up in its stores in those three
states compared with the rest of its chain, von Walter said.
Best Buy, which has been among the hardest hit by
competition from Amazon, reports holiday sales results on
Best Buy shares closed 5 percent higher at $12.21 on
Thursday, while Amazon shares were down about 0.4 percent at
Despite the tax changes, Amazon's consumer electronics
prices were still at least five percent below Best Buy's during
the holiday season, according to Anne Zybowski, vice president
of digital retail research at Kantar Retail. However, Best Buy
may have benefited from even a small change in this area.
"Particularly in consumer electronics, any narrowing of
Amazon's price advantage at the margin is important because Best
Buy brings service and other shopper benefits to the category,"
Best Buy will take away people's old TVs when they buy a new
one and the company's Geek Squad service will install devices in
shoppers' homes, services Amazon does not provide, she noted.
An Amazon spokesman declined to comment when asked if the
company saw an impact on fourth-quarter sales from the
imposition of sales taxes in California, Texas and Pennsylvania.
In the past, Amazon executives have said there was little or
no impact from such changes in other regions.
Several analysts have argued that shoppers use Amazon for
its vast product selection and convenient, fast shipping and
returns, and not just its low prices.
Other retailers may not see a sales boost because, in
categories beyond consumer electronics where service is less
important, there will not be such a swing to store buying,
Zybowski said, citing health, beauty and cosmetics as examples.
"I don't think retailers should get too excited," she added.
"Best Buy results are isolated to consumer electronics. Once you
start getting over the $100 purchase price level, the tax
The main point is that new state tax laws are making Amazon
equal to every other retailer in the United States, she added.
"If this had happened to Amazon when they were just a
bookseller years ago, they may not be as big as they are now,"
But Amazon has built huge customer loyalty through programs
such as its Prime shipping service and its Kindle
gadget-and-content ecosystem and this should drive sales growth,