I’m mildly obsessed with the Amazon sales tax law I wrote about earlier in the week, which targets affiliate marketing relationships in a misguided effort to rain down money on state government. I hope you like reading about that issue. Because if not, hoo boy, are you in for a rough ride.
I want to emphasize that while Amazon.com is the biggest target, because they’re the major player in online sales and affiliate marketing, the impact stretches much, much further. While Amazon and Overstock.com generated news coverage for terminating their affiliate contracts in Arkansas, there’s a longer list of retailers that are pulling up stakes from the state.
I talked with Judi Moore, a Conway-based affiliate marketer who runs LunchBreakShopping.com along with a stable of other niche sites, who has seen her marketing relationships with dozens of merchants summarily ended as retailers beat a hasty retreat from Arkansas. Her efforts to inform legislators about the effects of the Amazon tax bill were “discouraging,” she said.
“Truthfully, if I thought education of the legislators would help, I’d be racing in that direction,” Moore said. “Affiliate marketing is kind of invisible, and none of them are making the connection that we are viable small businesses in their state, that they just stepped on. Hard.
“The way affiliate marketing works, Amazon doesn’t need me to make sales in Arkansas,” Moore explained. “They can direct market to Arkansas. They can get clicks from a website in Florida that happen to come from somebody in Arkansas. That’s just the business.”
Moore provided a list of some of the merchants she has worked with on her sites, all of whom are ending their affiliate contracts in Arkansas in response to the Amazon sales tax law signed by Gov. Mike Beebe in April:
- CSN Stores (a network of 200+ retailers)
- Hayneedle.com (an Overstock.com-style retail network)
- Scrubs and Beyond
- Newegg and all related companies
- Northern tool
- Shoe Buy
- Swanson Vitamins
- Extreme Halloween
- Dick Blick
- Betty’s Attic
- The Lighter Side
Rebecca Madigan, executive director of the Performance Marketing Association (PMA), an industry group headquartered in California, sent along a list of retailers who have pulled their online marketing and advertising out of other states following the passage of nexus sales tax laws. She says it should be expected that these companies are “likely to terminate” in Arkansas, as well, based on their previous history.
“They don’t publicize their actions or even their intentions, so we get lists from affiliates,” she says. “There’s every reason to believe they will terminate in Arkansas, as with every state where this passes…The same companies have terminated in every state.” (So far, New York, Connecticut, Rhode Island, North Carolina and Illinois have passed similar nexus laws. PMA has filed suit against Illinois, arguing the law is unconstitutional).
Here’s PMA’s list (a few of these names overlap with Moore’s list above). Again, not all of these are confirmed as having left Arkansas, but if the pattern holds as it’s developed in other states, they’re likely to pull out:
- CSN Stores
- Lamps Plus
- Accessory Geeks
- Air n Water
- Annie’s Costumes
- Apex CCTV
- Compact Appliance
- Costume Kingdom
- Gardeners Supply Company
- Golf Balls
- Just Blinds
- Lamps Plus
- Living Direct
- Luggage Online
- Mrs Motorcycle Superstore
- Wine Cooler Direct
Now let’s stipulate that Arkansas will survive the loss of affiliate marketing from SimplyDehumidifiers and Wine Cooler Direct. But is the Arkansas economy really such a powerhouse that our state’s leaders are willing to tell scores of companies to go pound sand and take their dirty money with them?
Keep in mind that as each of these companies end their affiliate relationships in Arkansas, they won’t be paying any sales taxes in the state, which was the whole point of this exercise to begin with. Moore is pointed in her assessment: “There’s not going to be any money coming in because of this incompetent law,” she predicts, since all the targeted companies are simply ending their relationships in the state.
But it’s OK! It was all for “fairness,” so I’m sure it will work out just fine.
UPDATE: Glen Johnson with Full Figure Plus sends a note that he received an email from Redcats USA, which holds a variety of online retailing outlets (Woman Within, Roaman’s, KingSize Direct, OneStopPlus, Brylane Home, Bargain Catalog Outlet and Jessica London) is terminating affiliate contracts in Arkansas as of June 24. The hits keep on comin’.