The Book Depository: A New Online Place to Buy Books

There’s a “new” online bookstore that I suspect is going to become more relevant somewhat soon.  It’s The Book Depository, at www.bookdepository.com.

It’s been around for a few years but only last year started to sell to U.S. customers.  And even then, for many U.S. titles, it just sent customers to Amazon.

This past summer, it started selling all its titles directly to U.S. customers.  Its prices are attractive; for U.S. books it offers similar discounts to Amazon but the discount varies from book-to-book much more than Amazon’s discounts do.( for example, you are more likely to find discounts of 25% and 40% off retail where Amazon discounts are 30-37% off retail).  What distinguishes its pricing from Amazon’s is that it offers free shipping on every title, no matter what the price is.  So for those who just want to order one book under $25 or send a gift of a book, it will almost always be the less expensive option (except if the Amazon customer subscribes to Prime).

Right now, the more important difference between the two online bookstores is that bookdepository.com is a world bookstore, and thus has a much wider selection of books than Amazon, which only carries American books.  So for any English-language book from England or Australia or even Canada, it’s likely to be the cheapest and easiest bookseller to obtain it by far.

Anyway, this past summer Book Depository, which was started by ex-Amazonites,  was purchased by Amazon, which plans to keep it as a separately run subsidiary   There was a bit of a ruckus about competition being eliminated from customers on the net who don’t like Amazon and have been using Book Depository as an alternative, but while book depository is a fairly significant bookseller (though nowhere near Amazon) overall, it didn’t have enough market share in any one country (3% in the UK, for example) for any individual government to object to the combination.

This deal went almost completely unnoticed in the U.S; the few people who knew about it probably thought “so what.”

But I think a lot more people in the U.S. are going to become familiar with it, because as an international subsidiary – a company not based in the U.S.- Book Depository will (as far as I know) never have to collect sales tax for any state.  Amazon has long had this passive-aggressive attitude towards sales tax. It’s long fought against having to collect sales tax on a state-by-state basis, while at the same time officially supporting a Congressional bill that would allow states to require out-of-state retailers to collect sales tax under certain conditions.  Amazon surely knew that the latter would take many years to pass through Congress.  With the economy the way it is, Amazon now expects that such a bill will inevitably pass Congress sometime during the next few years.  The only part of the bill that is still being fought is the level of revenue below which small businesses will be exempt from having to collect sales taxes.  Amazon is pushing for that line to be set low, at $500,000 or at most $1,000,000.  Others, led by Ebay, want that line to be set much higher, say at $10,000,000.  Everybody involved is proclaiming that they’re fighting for what’s fair while fighting for their company’s self-interests

Regardless, my point here is that Amazon has now accepted the inevitability that they’ll be required to collect sales taxes in most states.  However, states will never have the authority to require companies that are not located in the U.S.to collect sales tax, at least not until we have a world tax organization, and that’s not going to happen in our lifetimes.   So I don’t believe that’s it’s a coincidence that Amazon now owns a foreign company that can sell books to U.S. residents without needing to charge and collect sales tax.  Now, Amazon doesn’t see having to collect sales tax as a catastrophe, but it does know that a certain subset of its customers is very price sensitive, especially to taxes, so being able to provide an alternative outlet for those customers is important.  If Amazon hadn’t created such a company, others would have, and Amazon would have to face new competition.  Right now, bookdepository.com only sells books, but there’s no reason that it couldn’t expand to offer other products later.  Given Amazon’s track record, If I were the person who owns the domain name musicdepository.com (that person, possibly coincidentally, actually lives in the state of Washington, although several hours from Seattle), I’d expect to hear from lawyers with an offer from a shell company no one’s ever heard of.