Will faster Amazon delivery bury brick and mortars?

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by DAN SIMON

KMOV.com

Posted on November 23, 2012 at 3:26 PM

Countless people across the United States are getting an early start to their holiday shopping with Black Friday bargains, but some people will get many of their gifts without ever leaving the house.

The convenience and low costs are making internet shopping more attractive than ever. That’s posing a problem for some traditional retailers.

For years, Internet merchants like Seattle-based Amazon.com had a key advantage in states like California – no sales tax. Local bookstores, already under pressure by the rapid rise of eBooks and large bookstore chains, felt particularly squeezed.

But Amazon’s tax advantage recently disappeared in California, adding nearly 7 to 10 percent of the cost to each order. Taxing also began in other states like Pennsylvania and Texas.

Online retailers collect tax only for states where they have a physical presence. Amazon is building two giant warehouses in California and that’s a concern for local retailers there because Amazon’s goal is to get items to customers faster and to offer same-day delivery.

The logic is simple: Why would you walk into a physical store when you an order a product and have it delivered to your home in a matter of hours?

It’s a win for consumers, but tough for local retailers.

If Amazon creates distribution centers on their turfs locally that takes away the one advantage that retailers have left to compete against Amazon, so it is a big deal,” said Internet retail analyst Colin Sebastian. “Retailers need to take a lesson from Amazon.  They need to focus on the consumer experience. They need to become more sophisticated both off-line and online.

San Francisco bookstore owner Michael Tucker has come up with a model that could help the local brick and mortar stores thrive in this new climate.

“Everybody can get the books, but the staffs that we have and the readers that we have that are working with the public. That’s the difference. That's the different factor we have -- tremendous staff that are engaged with those communities,” said Tucker.

It’s a basic reminder that good customer service could be the decisive factor in winning over business.

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