New Study Shows Full Cost of Explosive Amazon Growth on Communities Nationwide

When Amazon recently closed its books on 2018, it made headlines with a third straight year of record-making profits. However, a new exclusive analysis from Civic Economics and the American Booksellers Association makes clear that the titanic growth of the world’s most valuable public company has resulted in as-yet-unrecognized loss and stagnation for America's cities, towns, and local communities.

The new report — Prime Numbers: Amazon and American Communities — quantifies the stark economic cost exacted nationwide as a result of Amazon's online retail sales.

Reviewing the most recent four years of Amazon's U.S. retail sales, Prime Numbers documents that in 2018 alone Amazon and its third-party vendors sold $189 billion of retail goods. The report’s analysis reveals that the nationwide results of those sales were:

• 540 million square feet of displaced retail space,
• 900,000 displaced retail jobs, and
• $5.5 billion to $7.0 billion in uncollected sales tax.

For the period of 2014–2018, the cumulative loss in uncollected sales tax is estimated to be as high as $22.5 billion.

In contrast, Prime Numbers also documents the enhanced positive impact of locally owned, independent businesses for communities, as compared to both chain competitors and Amazon and its third-party Marketplace vendors.

Looking at the most recent numbers for the independent bookstore channel nationwide, the study reports that approximately 28 percent of all revenue of indie bookstores immediately recirculates in the local economy. This translates into a massive local impact advantage of 610 percent over Amazon (which recirculates only 4 percent locally).

“We believe that this extensive study by Civic Economics provides an essential resource to both policymakers and citizens as they work to understand and respond to the ongoing and relentless growth of Amazon’s online sales,” said ABA Senior Strategy Officer Dan Cullen. “We hope that this detailed, state-by-state model of Amazon’s negative economic impact on Main Streets, overall employment, and tax revenues will help inform a necessary national dialogue, which includes the growing debate regarding massive subsidies to a multi-billion-dollar global corporation and the true cost of Amazon’s proliferation into more and more facets of our lives.” 

Amazon finally began collecting and remitting sales tax in all 45 states that collect sales tax in 2017, but, currently, it only collects taxes on third-party sales through its Marketplace in eight states. Total Marketplace sales account for almost two-thirds of Amazon retail business.

The Prime Numbers report provides a credible analysis of the rapidly growing sales on Amazon’s Marketplace, which for the most part represent lost sales taxes to cities and states nationwide. As the report notes, “Over the past five years, total retail sales with Amazon as the seller increased by a striking 94 percent. But that doubling of sales pales beside the growth of third-party sales, which more than tripled over the same period.”

The full Prime Numbers report, as well as detailed results for all U.S. states, is available at http://www.civiceconomics.com/primenumbers.html.