MINNEAPOLIS (WCCO) — The world’s largest internet company could be building a distribution center in Minnesota.
The Minneapolis/St. Paul Business Journal says Amazon is looking to offer same-day delivery in the Land of 10,000 Lakes.READ MORE: Maple Grove Man Convicted Of Murder In Wife's Shooting Death
The Seattle-based company announced Minnesota customers will have to start paying the state’s sales tax on orders starting next month. That’s significant because state law only requires companies to charge a sales tax if they have a physical presence in Minnesota.
This change will impact customers, but it will also affect other businesses.
Target, Best Buy, and Macy’s have already been paying that sales tax, but this development could put pressure on them to compete for the speediest delivery and other services.
Still, the business community sees it as a chance at a level playing field.
Amazon will begin collecting sales taxes from Minnesota customers beginning Oct. 1, signaling the company may be opening an in state distribution center.
“Why do they want a distribution center? So they can either do next-day delivery or same-day delivery to compete with what companies like Best Buy are doing,” said David Brennan, a professor at the University of St. Thomas.READ MORE: ‘Our Business is Down Over 50%’: Deadly St. Paul Bar Shooting Impacts Surrounding Businesses
He says opening a distribution center would also give Amazon the opportunity to try out grocery delivery in the Twin Cities market. It’s a competitive move that is welcomed by Amazon’s competition.
“It’s leveling the playing field,” said Adam Prybelski of National Camera Exchange. “So instead of looking for the lowest price, [consumers would be] looking for the bet value.”
For Minnesota consumers, the added Amazon sales tax may be enough to get them offline and back in stores.
Amazon already collects taxes from consumers in 21 other states. The company operates around a dozen distribution centers around the country that offer same-day delivery.
Has Amazon said where they’ll be opening a distribution center?
No. The company hasn’t even confirmed that’s what it’s doing at all.
All Amazon has said is that its customers in Minnesota will have to start paying the state sales tax on purchases beginning Oct. 1.MORE NEWS: None Hurt After Shots Fired Inside Plymouth Movie Theater
It is state law that any online retailer with a physical presence in the state must charge that state sales tax.