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Here’s why Amazon shouldn’t sweat Trump’s attacks—but maybe eBay should

Here’s why Amazon shouldn’t sweat Trump’s attacks—but maybe eBay should
[Photo: Flickr user OnInnovation]

For all of President Trump’s bluster about Amazon in recent weeks, there’s not much he can really do to hurt the retail behemoth. Two of the most likely ways that the federal government can punish the company–by requiring that all Marketplace transactions be taxed (including those by third-party sellers) and by hiking the postal rates charged by the U.S. Postal Service for Amazon deliveries–won’t really do that much damage, according to a new Morgan Stanley research report.

Moreover, it could actually end up inflicting more pain on some of Amazon’s competitors, like eBay.

If two bills in Congress that mandate more uniform sales tax enforcement are passed, the financial consequences for Amazon would be mitigated due to four factors, according to the report:

  1. Retailers essentially would be on the same tax-playing field
  2. Platform loyalty and product elasticity would be key
  3. This isn’t new for AMZN
  4. If anything, this is a bigger risk to EBAY and third party sellers

As to the USPS, it’s not irrational for the service to raise its rates since Amazon currently pays an estimated 50%-60% lower than average postal rates. Even if it boosts the rate by 50%, causing shipping costs to increase $3.5 billion, that would only increase Amazon’s total $250 billion retail operating expenses by 1% (or 2% “if just looking at N. America”).

According to the report, “even this bump in shipping costs feels manageable and able to be offset.”

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