The ShipRush Product Management Blog

When AuctionBytes discussed "shipping arbitrage" recently, I had to laugh. What will crafty merchants think of next?

On the one hand, the profiled merchant is being creative.

On the other, how many orders is Amazon really going to ship for free before they smell a rat? 50? 100? 500?

Further, while there are automated ways to process shipments, there are not automated ways to place orders on Amazon. That seller is hand placing each of those orders on the Amazon web site.

(Not to mention the actual buyers, who could probably purchase those items on Amazon directly and pay about the same price they are paying on eBay once shipping is included.)


Ina Steiner, the author of the piece, identifies that the merchant appears to be violating the rules of Amazon Prime, by using Amazon Prime benefits for commercial purposes, but the real hot water may be related to sales tax collection. For example:

• The eBay web site generally avoids collecting sales tax from buyers (sellers can opt for their sales to collect sales tax, but it is done for a small percentage of merchants).
• If the eBay seller is in a state where Amazon does not collect tax, the seller does not pay sales tax to Amazon.

But, if both the eBay seller and the ultimate buyer are in the same state (and it is not Oregon or one or two other sales-tax-free states), then the seller may be over the line in terms of sales tax collection obligations. Based on my business experience in California and the state of Washington, both of these states would require sales tax collection if the buyer and seller were both "in state" even if the merchandise is being fulfilled by a third party from out of state.

Regarding the state tax man... as my father always says, it isn't if you will be audited, it is when.

Or, as the saw goes, what can't go on, won't.