A reader writes:
These arguments regarding sales taxes as the lynchpin of Border's demise seem preposterous to me. A 3000-square-foot store in a high traffic location can command significant rents. It also has to be well lit, filled with attractive furniture and displays, staffed at all times, airconditioned in the summer, heated in the winter, etc. These are very expensive stores to operate and represent expenses at a scale that Amazon simply does not have. It is completely true that the tax burden is a factor, but it pales in comparison to the cost of running a pick-and-pack warehouse operation versus a chain of expensive, brick-and-mortar retail storefronts. This to me is simply a prime example of the promise and peril of the e-commerce juggernaut.
Another also doesn't buy the tax argument:
Shipping costs offset not having to pay sales tax. In most cases, especially with books, shipping probably costs more than sales tax. The response here will probably be "Free Super Saver Shipping" or "Amazon Prime" … but there are serious drawbacks to both.
Amazon's Super shipping takes over a week and requires you to spend at least $25. Their Prime program requires you to pay $80 up front and you still don't get your stuff for two days. That would pay for the sales tax on around $1000 in purchases at a physical store and you would get the stuff immediately.
Avoiding sales tax isn't really a big motivation
for online sales. That's just a line promoted by Chambers of Commerce so they can saddle their ethereal competitors with shipping expenses and sales tax. Given our propensity for instant gratification, being able to walk out of the store with your prize would seem to trump a non-existent tax savings.
Is seems more plausible to me that Borders is the book equivalent to Circuit City – poor locations, poor prices, poor management, poor economy. And technological change they didn't adapt to. It seems to me that Amazon's big advantage is that it has everything at a reasonable price. If you go to the book store looking for something that isn't a brand new bestseller, your odds of finding it are fairly bad. But Amazon has it, guaranteed. Even if it's been out of print for 50 years, Amazon has an associate who has it. It's the worlds biggest, best, cheapest, and most comprehensive store. That's why it's doing well. Not sales tax.
Another:
My local Borders closed down about a year ago. I went to their liquidation sale when prices were touted at 30% off everything. The store was mobbed and there were people carrying around carts of books. I picked up a few that were on my Amazon wishlist, looked at the prices and then chuckled. I was on the phone with my wife and said, “I came here planning on buying a bunch of books, but the prices are still higher than Amazon, which I guess explains why they are going out of business!”
I put the books back on the shelves and went home to my computer.
(Photos via Todd Van Luling)
