Best Buy Reaping Benefit of Amazon's Sales Tax

For years, brick-and-mortar retailers have been crowing about the unfair advantage Amazon has in the retail space in territories where it doesn't have to collect sales tax, and now that the playing field is starting to level, their sales are going up. Best Buy, for example, noted that holiday online sales increased in three states where Amazon started collecting sales tax ahead of the holiday shopping season. Coincidence?

Probably not. In many cases, Amazon's prices are lower than what shoppers find in brick-and-mortar stores to begin with, but the icing on the cake, where applicable, is the lack of sales tax, creating an even bigger pricing disparity. Especially in this tough economy, shoppers have shown a willingness to pay less and wait for shipping rather than pay extra and receive instant gratification.

Best Buy

Amazon isn't just competing with brick-and-mortar locations. Best Buy sells products online, but it charges sales tax in locations where Amazon doesn't.

Over the past year or so, and especially in recent months, states have more aggressively targeted Amazon with new tax laws. In California, Amazon began collecting sales tax of 7.25 percent to 9.75 percent starting in September, and as a result, third-party sellers moving their wares on saw their sales drop for the quarter, Reuters reports.

Interestingly, Best Buy saw its online sales in California, Texas, and Pennsylvania spike 4-6 percent during the holiday shopping season compared to other territories, as well as an increase of 6-9 percent in online orders that are picked up in-store.