ANALYZING INTERNET SALES AND USE TAX INFLUENCES ON AMAZON’S STRATEGIC SUPPLY CHAIN DECISIONS

Abstract

The strategic logistics decisions of a company are vulnerable to current legislation aimed at widespread collection of state sales taxes for e-commerce orders in their pursuit to provide excellent performance and create a competitive advantage for the company. Jeff Bezos, the founder of Amazon, based Amazon in Seattle partly to maximize the tax advantage (Elkind and Burke, 2013) with the focus on physical location as key to the success of an internet-based business. We examine two hypotheses to address the question that etailers (like Amazon) consider, when opening up distribution centers: whether they should operate under the assumption that they will bear the burden of sales and use tax compliance for internet sales and thus not account for this in supply chain decisions or whether they should continue to strategically modify their supply chains to minimize the tax burden where possible.