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Cyber setback?

CHARLESTON, W.Va. -- In 2012, American consumers spent a record $1.5 billion shopping online on the Monday after Thanksgiving. That number is expected to rise this year, even though several states -- including West Virginia -- have recently passed laws applying sales tax to online purchases.

The Monday after Thanksgiving, the so-called "Cyber Monday," has been the biggest e-commerce shopping day of the year every year since 2010, according to research from comScore, Inc., an industry analyst. Sales have nearly tripled since 2005, rising every year.

In the spring, West Virginia passed a law that requires any online retailer with a physical presence in the state -- a store, a warehouse or an office -- to collect the state's 6 percent sales tax.

The law, which was pushed by Gov. Earl Ray Tomblin, passed the state Senate unanimously. It passed the House of Delegates by a vote of 77-19 with exclusively Republican opposition.

That law does not go into effect until Jan. 1, 2014, but Amazon.com, the world's largest online retailer, has already begun collecting the tax. Amazon has a 70,000-square-foot service center in Huntington, which is why it falls under the auspices of the new law.

West Virginia is one of 16 states in which Amazon currently collects sales tax. It will begin collecting tax in three more states in 2014.

Despite the added cost to consumers, Amazon is predicting its busiest Cyber Monday ever.

"We expect this holiday season to be our best ever," said Ty Rogers, an Amazon spokesman. "On our peak day last year, Nov. 26 (Cyber Monday), Amazon customers ordered more than 26.5 million items worldwide across al product categories, which is a record-breaking 306 items per second."

Amazon has long supported federal legislation regarding online sales tax, preferring it for logistical reasons to the state-by-state approach.

Steve Roberts, president of the West Virginia Chamber of Commerce, said they supported the sales tax legislation in the spring and he doesn't think it will have much of an impact on either e-retailers or traditional businesses in the state.

"Our point of view at the time was that Main Street businesses are having to pay sales tax, and what good reasons are there to exempt others?" Roberts said. He added that since several large e-retailers were not particularly opposed to the tax, he didn't think it would be a problem.

"We think that up to a certain point people don't pay much attention to them," Roberts said of sales taxes. "Obviously if they reached a point of paint that people really noticed and paid attention to them, they obviously could have an impact."

If people are unlikely to turn their backs on e-retailers because of the tax, that means that, conversely, brick and mortar businesses are not likely to see big influxes of new customers because of the new law, Roberts said.

Roberts said the big winner might be the state.

"The fact that we may be getting more revenue without actually raising tax rates is certainly something we can use," he said.

The fiscal note attached to the legislation estimated that it would raise state revenues by $7 to $10 million per year.

Nationally, comScore is predicting more rapid growth in Internet sales on Cyber Monday and throughout the holiday season.

For the entire holiday season, defined as Nov. 1 through Dec. 31, they're predicting about $49 billion in sales, an increase of 15 percent over last year.

They're predicting a record $1.8 billion in sales on Cyber Monday, a 20 percent increase from 2012.

As big as that number sounds it pales in comparison to another big shopping day.

On Nov. 11, Alibaba, the largest online shopping company in China -- still just a single company -- sold $5.75 billion worth of e-commerce goods. Reach David Gutman at david.gutman@wvgazette.com or 304-348-5119.


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