Friday, July 1, 2011

Amazon dumps California

For the last three years I have been an affiliate advertiser for various companies, including Amazon.com. This relationship has allowed me to offer links to books, movies, and other products of local interest. In exchange I get a small commission for every sale the links generate.

On Wednesday Amazon affiliates in California were abruptly notified that due to a change in California sales tax law, all affiliate agreements involving California residents will be terminated effective immediately.

Under previous law, the state could only require on-line retailers who had a physical presence - such as a store or warehouse - in the state to collect sales taxes on sales to California residents. This set up a major imbalance between on-line retailers like Borders, Barnes & Noble, Staples, Best Buy and the like, who have actual stores in the state, and retailers that operate strictly on-line from outside the state, like Amazon. The new law simply states that California based websites that have commission agreements with sites like Amazon, gives Amazon a physical presence in the state. It levels the playing field.

But rather than cooperate with the state, and comply with the law, Amazon threw every single California affiliate overboard with less than 12 hours notice! Evidently, Amazon felt it was easier and cheaper to break business agreements with thousands of individuals than to add the necessary lines of code to their computer system to process California sales taxes. It also appears that Amazon expected their dumped affiliates to call their legislators en masse to get the law repealed.

But that didn't happen. Judging from affiliate reactions on an Amazon message board (one only accessible to affiliates - don't go looking for it) a good many California affiliates actually supported the state and were tremendously upset with Amazon. The phrase "threw us under the bus" was used by quite a few people. I was among them. I figure if other on-line retailers - many much smaller than Amazon - could collect California sales taxes, then so could Amazon. Indeed, Amazon must surely collect sales taxes in states where they do have a physical presence, like Washington, so it's not as if they can't.

This experience shows Amazon's true colors. It was their way of saying their business relationships don't mean squat. If they don't get their way they'll just take their ball and go home to mama, regardless of how important the game is to the other players.

For me, my association with Amazon wasn't particularly profitable, but it did provide a unique ability to provide Toy Box visitors with links to specific books, movies, and other products of local interest. It took a lot more effort than with my other advertising partners, but only generated about 10% of my total commissions from all sources. Still, Wednesday's news was a sudden blow, and it has taken me a couple hours of work to remove all of my Amazon links and replace them with my other advertisers.

Amazon has promised that if the situation in California changes back to their rules, I will be welcomed back into the fold. Fat chance, Amazon. Now that I've seen how you treat your business partners, there's no way in hell I will work with you again.

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