How can amazon and gamestop afford to ship games for free?

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I don't get it. I know it costs minimum $3 to ship a game. Yet both of these places don't charge for shipping.

Does Amazon holding it for a week before they ship it out somehow magically not cost them money?

And how does amazon get by without charging sales tax?

I've been buying most of my games from amazon because it saves me $4 on tax.
 
Technically, you are supposed to save all of your receipts and at tax time, calculate your sales tax off of total purchases and enter it on your state return. Not just for Amazon, but for all internet purchases that do not charge sales tax.
 
You should only be charged sales tax on online orders if the company you’re buying from operates out of your state.

Also, retailers have around $15 of margin on $60 games, which allows online retailers to drop the price more than B&M retailers.
 
[quote name='Number83']Technically, you are supposed to save all of your receipts and at tax time, calculate your sales tax off of total purchases and enter it on your state return. Not just for Amazon, but for all internet purchases that do not charge sales tax.[/QUOTE]

I kind of figured that, but when I did taxact, it never asked me anything.

The tax laws are probably behind the times. ALthough I guess it would be no different from the mailorder days.

How hard would it be for Amazon to program into their system each state's sales tax?
 
It's easy for them to program, but they don't have to do it as online stores are only required by law to charge sales tax in states where they have a physical presence (warehouse etc.).

As for how they can afford to charge free shipping.

1) there's a pretty big mark up on items--big gap between what they pay for items and what they charge customers. By doing free shipping they're just taking a bit less profit at the benefit of getting more sales.

2) Since they buy a ton of copies of stuff, they probably get a discount from distributors. Probably also get a discount on shipping from being a high volume customer.
 
Yeah like Dmaul says I suspect Amazon ship in such huge numbers that they can negotiate a hefty discount from UPS. I'd imagine with the kind of numbers Amazon ship the mail companies are failing over themselves trying to get that business.

I bet Amazon are paying like 50% of what it would cost a member of the public to ship something.
 
[quote name='dmaul1114']It's easy for them to program, but they don't have to do it as online stores are only required by law to charge sales tax in states where they have a physical presence (warehouse etc.).[/QUOTE]
I always thought this was the case, buy didn't Amazon not charge sales tax at all for the longest time, and only recently began charging in NY?
 
[quote name='Rocko']I always thought this was the case, buy didn't Amazon not charge sales tax at all for the longest time, and only recently began charging in NY?[/QUOTE]

Only because NY demand tax from online.

Also running online site + wherehouse + shipping is less than running a B&M store.
 
[quote name='Rocko']I always thought this was the case, buy didn't Amazon not charge sales tax at all for the longest time, and only recently began charging in NY?[/QUOTE]

As the other guy said, that was due to a NY state law change.

At first online stores didn't have to charge sales tax anywhere. Then the law changed to places they have physical locations. And now NY passed a law requiring them to charge sales tax there (though I don't think they have any locations in NY). So others states could follow suit.
 
A company which is selling goods over the Internet and has a presence in the state of delivery, ie has established a nexus in that state, will be required to collect sales tax on all taxable goods. NY argued that Amazon had the nexus, Amazon lost and so charges sales tax.
Without the nexus, the Supreme Court has prevented states from imposing sales tax on out-of-state sales.
However, in those cases, the individual is required to fill out the use tax form when filing taxes. This is difficult to enforce, and so largely gets unpaid.
So everyone is supposed to pay sales tax.
As for shipping costs, as said, it may be less than $3, it may be much more than $3. But large businesses don't necessarily attach shipping costs to every item sold, factoring the profit/loss in such a small manner.
Instead, shipping costs are usually aggregated, and the losses from that unit can be justified if they generate more sales, much like promotions or marketing. As long as the profit margin on the unit sale is large enough, the increased sales from free shipping is usually a good thing.
With gamestop especially, when you can explicitly see their markup (just subtract the cost of buying a used game from the the trade-in price), you can see in that healthy area they can very much afford a few dollars lost to free shipping.
 
[quote name='vherub']
With gamestop especially, when you can explicitly see their markup (just subtract the cost of buying a used game from the the trade-in price), you can see in that healthy area they can very much afford a few dollars lost to free shipping.[/QUOTE]

But I buy NEW games from them and get free shipping.

I know from a friend who worked at a small store that the markup on new games is only $5.
 
In California/LA County Sales Tax is 9.75% and since most places ship things out from here its often not worth buying on the Internet.
 
[quote name='Number83']Technically, you are supposed to save all of your receipts and at tax time, calculate your sales tax off of total purchases and enter it on your state return. Not just for Amazon, but for all internet purchases that do not charge sales tax.[/QUOTE]

Keep track of your out-of-state purchases too as those can be deducted from your state sales tax. ;)
 
[quote name='Number83']Technically, you are supposed to save all of your receipts and at tax time, calculate your sales tax off of total purchases and enter it on your state return. Not just for Amazon, but for all internet purchases that do not charge sales tax.[/QUOTE]

Say what?
 
I know exactly what you mean , with amazon prime you can order a $3 item and get FREE 2 day shipping . and 2 day shipping can cost up to 15-$20 an item
 
Cause an online retailer stocks a shitload more products per sq ft than any B&M store. That lowers costs. Have you seen an Amazon warehouse? It's like heaven for consumers!
 
I don't think Amazon actually has any warehouses in NY yet I get charged sales tax (while cheapy rakes in the dough :whistle2:#).

All the info is here
http://www.amazon.com/gp/help/customer/display.html?nodeId=468512

Kansas, Kentucky, New York, North Dakota, and Washington are all charged sales tax if the item is sold by Amazon.

I think shipwreck (who's in Ohio) mentioned that there is a huge warehouse or distribution center near him, yet no sales tax for Ohio-ers
 
They probablly just do a tax loophole where you can write shipping off as a business expense.

Not to mention they actually make more on games than you would think. So by shipping free at amazon they may lose a little money on it but make up for it in the end because more people will buy from them because of the free shipping.

Not to mention they should get good rates with shipping companies considering the huge amount of stuff they ship.
 
[quote name='Pookymeister']It's called Use Tax and most states have it. And most people know nothing about it.[/QUOTE]

On top of that, in Illinois we have to keep track of every pack of cigarettes that that purchased out of state or online, and then claim them when doing taxes. That way Illinois can add its insane $3 a pack tax that you avoided paying.

I don believe I have ever met anyone who tracked and then claimed their out of state cigarette purchases before, but the form to do so is right on our state gov page.
 
[quote name='gargus']They probablly just do a tax loophole where you can write shipping off as a business expense.
[/QUOTE]

No loophole, it's just a business expense :lol:
 
[quote name='packerfan10']In California/LA County Sales Tax is 9.75% and since most places ship things out from here its often not worth buying on the Internet.[/QUOTE]

Except for Amazon. :D

:applause::applause::applause::applause::applause:
 
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