After Tax Increase will California Shoppers Continue to Spend with Amazon?

Online shopping

Let’s face it. Amazon.com is synonymous with online shopping. Once known as a literary retailer that catered to the bibliophiles among us, now its online marketplace sells a staggering variety of consumer goods; everything from toiletries to athletic wear to snacks.

In addition to their breadth of products available for sale, Amazon is perhaps best known for its competitive pricing, its simple “one-click” checkout for logged in customers, 2-day shipping (free to Prime users), and–perhaps most attractively–no sales tax.

It’s tough for anyone to compete with Amazon, and it’s no wonder that other retailers have expressed specific concerns around Amazon’s tax advantage.

Well, as of September 15, 2012, online shoppers in California received a rude awakening as Amazon began charging sales tax to residents after losing a long battle with the California State legislature.

With the passing of this legislation, it appears that  Amazon has lost one of its largest competitive advantages as an online retailer. As a company with an office in California–where Amazon shipments arrive daily–we here at SurveyMonkey, wanted to know how other Californians reacted to this change and what, if any, effect it would have on Amazon customers both new and old. Will people look for alternatives? Will shopping habits change? Will consumers actually return to brick and mortar stores instead? Or is this change simply not that big of a deal? And what will this mean for the company’s revenue during the upcoming holiday season?

With these questions in mind, we decided to open up the discussion and ask the people whom the new tax would affect the most. Using SurveyMonkey Audience, we were able to ask these questions to current Amazon shoppers who live in California, and collect their feedback on the new tax.

Survey Results

Before running the survey, we proposed a few hypotheses about how the results would pan out. First, we predicted that less than half of consumers would be aware of the new legislation. Similarly, we guessed that a little less than half would actively make changes in their shopping habits as a result of the new tax. With these predictions in place, we ran the survey during the week immediately following the implementation of the tax (September 24 – 29).

So what was the verdict?

  • 67% of consumers reported being aware of the recent tax legislation and Amazon’s move to add sales tax for online purchases in California
  • As a result of the changes, 36% of people expect to shop on Amazon.com less,61% expect to maintain their current habits, and a small but interesting bunch of consumers, 2% of those surveyed, expect to spend more on Amazon.com (either they love Amazon.com, or love the California government)

So, for those who expect to stop spending their dollars with Amazon, where are they headed? We expected that most people would say they would spend more at traditional brick and mortar retailers or just trim their spending in general now that cheap deals online are becoming less so. However, 63% of respondents claimed they would still seek out tax-free online options.

And for those who decided to stay true to their Amazon accounts, we used our text analysis feature to surface the most common reasons for doing so.

In conclusion, it seems likely that consumers still plan on using Amazon and will most likely stay for reasons other than just the price. Nonetheless, some are going to do a bit more shopping around now the the retail playing field is a bit more level. What may be most interesting is what comes next. Who will emerge as the next online retail giant with no sales tax?  According to our survey, people are on the hunt for one.  And we’ll be sure to keep you posted on the online retail trends as they evolve.  Until then, happy shopping.

Interested in running your own survey on online shopping trends? Get start with SurveyMonkey Audience today! 

*Image courtesy of BigStock Photo.

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  • http://www.eckersf.com Dan Priven

    I boycotted Amazon while they were shirking California taxes and playing by unfair rules. My wife, son, and I all have Nooks instead of Kindles – primarily because we were boycotting Amazon at the time.

    I doubt there are many people like me, but there is one Californian, at least, who is shopping there again.

  • http://www.southbeachboutique.com/servlet/StoreFront Steve

    Wow, great list. Thanks for sharing. Wall Mounted Hair Dryer</a.

  • http://www.stock4less.com/ Pradeep

    Amazon is one in million if we go for online shop.it does not matter any to California shopper.

    Thanks