Is it time to short every US retailer?
According to an article in Slate today, Amazon is gearing up to stop fighting about sales tax and to begin local – even hyper-local – distribution. If this is true, and it does come to pass, we will witness the near-complete creative destruction of the centuries-old retail industry (admittedly, a middle-man business) in a matter of a score of months or so. Amazon does now, or will soon, collect sales tax in twelve (12) states. That’s over 25% of the states that have sales taxes. Based on this report, we can only assume the other 35 states won’t be too far behind.
In theory, you will soon be able to order something on Amazon, and pick it up via their locker service as early as later that same day. Hell, it’s easy to imagine an army of daylight-idle pizza delivery peeps working with Amazon to provide same-day – or even same-hour - delivery. In this case though, it most certainly won’t be an E-Dream – it’ll be viable business, and serious as a fucking heart attack.
From the article:
Physical retailers have long argued that once Amazon plays fairly on taxes, the company wouldn’t look like such a great deal to most consumers. If prices were equal, you’d always go with the “instant gratification” of shopping in the real world. The trouble with that argument is that shopping offline isn’t really “instant”—it takes time to get in the car, go to the store, find what you want, stand in line, and drive back home.
By the way, those six retailers, combined, represent almost half a trillion dollars in market cap. What should be scaring folks is that if Amazon (et. al., presumably) can pull this off, what we will see will be a creative destruction of value – a negative sum gain – not a simple shifting of value. For sake of (bad) example, Amazon will double to $200B market cap and those six retailers will lose 80% of their market caps. That’d amount to $300B in market cap “up and vanish[ing] like a fart in the wind.”
I’m a huge Amazon fan. I’ve been so for a LONG time. I was a huge Kozmo fan (RIP). The vast majority of the things I purchase do not materially benefit by me having to go to an actual Home Depot or Target location. Bring it on, Amazon!
PS: You might also want to short mall owners. Though maybe they could turn all the malls into weird apartments and condos and dog grooming centers