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Could Sales Taxes Prevent Netflix And Amazon From Hooking Up?

from the the-taxman-cometh dept

Wed, Jun 6th 2007 2:17pm — Joseph Weisenthal

The rumor that Amazon could buy Netflix is an old one, but it's getting some fresh attention today, following a note on the subject from a Wall St. analyst. Given that Netflix shares are slumping while Amazon's are soaring, it's not surprising that people are again talking this up. But what's most interesting is one of the reasons given by a Bank of America analyst on why the deal might not be in the offing. If Amazon were to buy Netflix, it would immediately gain a physical presence in 43 states, because Netflix has so many distribution centers. Hence, Amazon would likely be forced to charge buyers in those states sales tax, which something the company definitely doesn't want to do. For any deal to go through, Amazon would have to figure out a way to sidestep this issue, possibly by drastically consolidating these distribution centers; except that if this could be done without damaging the speed of the service, it would've probably been done already.

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11 Comments

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Michael Vilain, 6 Jun 2007 @ 2:23pm

Last time I bought from Amazon...
I _was_ charged California sales tax. Guess they didn't want to piss off Arnold...
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Matt, 6 Jun 2007 @ 2:32pm

Less distribution centers = Blockbuster Total Acce
I left Blockbuster's total access program in favor of Netflix, and for one reason: Netflix has so many local distribution centers that they receive and ship movies with blinding speed. I don't know how many less Blockbuster has, but their service was definitely slower for me. If Amazon bought and consolidated the dist. centers I would cancel my Netflix membership and go back to Blockbuster, as I'm sure many others would.
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Javi0084, 6 Jun 2007 @ 3:14pm

Re: Less distribution centers = Blockbuster Total
No kidding, every time I return a movie, they get it the next day then I get email notifications that I will be receiving another movie the following day. One day shipping back and forth, rarely does it take 2 days.

I buy from Amazon A LOT and never paid for sales tax, if they were to buy Netflix and charge taxes then I might have to go back to buying from Target (household stuff) and Fry's Electronics (tech stuff) more often.
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Anonymous Coward, 6 Jun 2007 @ 4:04pm

Re: Last time I bought from Amazon...
They most likely have a fulfillment center in California, hence the sales tax.
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Eric the Grey, 6 Jun 2007 @ 4:13pm

I can't understand the comparison.
Comparing the shares between the two companies is like comparing apples and oranges. Netflix rents videos, while Amazon sells them.

Yes, there is some crossover, with Netflix selling their old ones off, but that's all.

Frankly, I'd prefer that Netflix stay on their own. I have no problem with Amazon, but any time a company gets bought out, the policies change, and that can only be bad news for us Netflix customers.

EtG
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dave, 6 Jun 2007 @ 4:56pm

Re: Less distribution centers = Blockbuster Total
Why would anyone use Netflix instead of Lackluster? W/ Lackluster's service, you get a free movie(s) while your waiting for you next movie(s) to arrive. Netflix doesn't (can't) do that.
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dave, 6 Jun 2007 @ 4:57pm

Re: Less distribution centers = Blockbuster Total
Why would anyone use Netflix instead of Lackluster? W/ Lackluster's service, you get a free movie(s) while your waiting for you next movie(s) to arrive. Netflix doesn't (can't) do that.
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Jordan, 6 Jun 2007 @ 7:37pm

Amazon Downloads
I wouldn't use Netflix, Lackluster or any other service where you have to wait for the disk to arrive. With Amazon I have the video I purchased or rented delivered right to my TiVo. With Amazon you can rent videos. The service is called Amazon Unbox. Goto Amazon type in unbox in the search & it will take you right where you gotta be. Looking now ... to rent 'Night at the Museum' is only $3.99. You can't beat it.
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Anonymous Coward, 7 Jun 2007 @ 3:58am

Re: Amazon Downloads
You sound like a walking advertisement. And yes, you can beat it. There are unlimited rentals from the other services which could easily bring the cost of each rental below $3.99. There's no comparison. So, either spend a hell of a lot more money (I can easily go through upwards of 20 rentals a month on the 3 at a time plan (at i think 17.99), so its less than a dollar a rental. Hmm... spend over 400% for Amazon... or stick with Netflix...
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Richard Hanley, 7 Jun 2007 @ 6:30am

Amazon buy of Netflix - a joke
Netflix is a mail order company with a heavy manual process. For each and every DVD that passes through Netflix, an envelop must be manually opened, each disc must be manually inspected, and each outgoing DVD must be manually stuffed in an envelop. Netflix now has about 44 distribution centers in which many low-paid workers do this work. The work is so potentially damaging to the muscles and tendons that it is mandatory for the workers to stop working every hour and a half to do mandatory exercises for half an hour. Do a Google search. Amazon would not want to inherit the potential headaches. With VOD, IPTV, DVD rental kiosks, video games and all kinds of interactive entertainment being made available, how likely is it that Netflix is worth $2,000,000,000 to Amazon or to anyone else? Amazon is not interested in Netflix for their very limited streaming service called WatchNow. Amazon has more download rights than Netflix. At the end of the 1st Quarter, 2007, Netflix reported 6.8 million subscribers and projected little to no gains for the 2nd Quarter, 2007. Subscriber Acquisition Costs are rocketing up as growth gets progressively harder to come by.
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Jordan, 7 Jun 2007 @ 7:14am

Re: Re: Amazon Downloads
It's 4 bucks, dude. Time cost of money. Do I pay one fee & wait for my movies to come to me or do I pay now & get now. Come on... don't give me that 400% bullsh!t. I am certain you spent more than 4 bucks today on nonsense (as I did, as well as everyone else did). It's paying for convenience.
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