Small local retailers are used to being the little guys in a market full of giants. First it was the “big box” chain stores like Wal-Mart and Target that siphoned customers and profits from “mom-andpop” shops with the allure of endless selection, abundant parking and impossibly low prices. Then came Amazon, and now even many of the big guys are seeing their bottom lines erode.
Todd Rushing of Springfi eld owns the 7,000-square-foot Rock Shop music store at 1808 W. Jefferson Ave., and despite having dozens of guitars and other instruments for sale in all price ranges, he still loses sales to Amazon.
“Best Buy complained about it last year, and I said, ‘Welcome to the party.’ It’s been happening to me for 13 years,” Rushing said. “There’s always going to be that guy that wants to sit in his chair and order drum heads or guitars at midnight. But there’s also going to be that guy who wants to come in and see all of his choices, and he’s going to want to shop locally and keep his money local.”
Robert LaBonte, owner of The Bike Doctor bike shop at 1037 N. Fifth St., doesn’t get too riled up about Amazon; in fact, he says he uses the website himself to buy books.
“I’m not totally anti-Amazon,” LaBonte said.
“But it is annoying when people come look (at products) and then they go and buy it on Amazon. It’s even more annoying when they use my expertise to fi ll in their ignorance and then go armed with my knowledge and outbid me for the same product on Amazon.”
Amazon’s dominance in the retail market means it can demand discounts from suppliers, and the company has figured out how to get around the state and local sales taxes that brick-and-mortar stores must charge, giving it a clear edge.
Illinois lawmakers attempted to even out the latter imbalance in March 2011 with a law requiring online businesses to collect sales tax on every Internet sale and send it to the state. Online purchases have long been subject to sales tax under Illinois law, but the state lacks authority to make companies with no physical presence in Illinois comply with Illinois law.
Nicknamed the “Amazon tax,” Illinois’ online sales tax law was ruled unconstitutional by the Illinois Supreme Court in October 2013. The high court reasoned that the law was discriminatory because Internet-based “performance marketers” – which make money running online ads for clients – would have to pay tax under the law while traditional performance marketers running ads in print or on the radio would not. The 6-1 decision didn’t touch on the issue of online retailers not collecting sales tax, sidestepping the issue that prompted the law in the first place.
In June 2013, the U.S. Senate passed the Marketplace Fairness Act, which would require all online retailers to collect state sales tax and send it to the appropriate state, regardless of where the retailer is located. The bill awaits a vote in the Republican-controlled House.
Todd Rushing at the Rock Shop says he thinks the bill would “level the playing fi eld” between online and physical retailers.
“I’ve fi gured it out, and I can’t see why a bunch of congressmen can’t,” he said. “I’m just a guitar shop owner.” – Patrick Yeagle
