By Ben Conwell, Senior Managing Director and Practice Leader
Sales Tax Collection and the Walmart – Jet.com Transaction
ONLINE SALES TAX COLLECTION, MARKETPLACE FAIRNESS AND eCOMMERCE SITE SELECTION
Close on the heels of our Cushman & Wakefield eCommerce Reader on sales tax collection implications to eCommerce, distributed last week, the Wall Street Journal is just out with an article about the potential sales tax collection impacts of Walmart’s acquisition of Jet.com.
As we noted in our Reader, with a physical presence in every state, retailers such as Walmart have been obligated to collect sales tax on online orders per the US Supreme Court Quill decision. Jet, on the other hand, has had to collect sales tax on customer purchases from only seven states – states where it has a qualifying physical presence. In head to head price comparisons between Jet.com and Amazon, the fact that Amazon collects in four times as many states has enabled Jet to often offer lower all-in prices. That advantage, however, appears to be short-lived.
Of course there are many significant strategic drivers behind the acquisition of Jet’s platform. Coming impacts of having to collect sales tax on all Jet sales in the US are just some of the many complexities of such a transaction. It will, however, mean one of Jet’s benefits to having a physical presence in only limited states will go away post-closing of the Walmart deal. Some would say the field got just a bit more level.
Fascinating times indeed.
Ben is Senior Managing Director and Practice Leader for Cushman & Wakefield’s eCommerce and Electronic Fulfillment Specialty Practice Group for the Americas. His responsibilities include counsel on strategy, site selection, design and execution for leading retail and logistics occupiers and investors, intellectual property presentation and business development. As leader of the Special Practice Group, Ben provides Cushman & Wakefield clients the most up to date market-leading counsel to effectively plan and execute their supply chain and fulfillment and real estate strategies.