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The Best (And Worst) States to Live for Online Shoppers

In: 调研类

16 Mar 2011

Two of our most valued commodities in the world today are time and money. That notion is actually why we started Extrabux.com in the first place, to save online shoppers as much time and money as possible. We obsess over it. So naturally when determining the best places for online shoppers to live, we considered four factors; shipping time and costs, sales tax rates and the chance of having to pay sales tax at all–all of which contribute to how much you pay for your online order and how much time you spend waiting for it.

So after analyzing each state’s online sales tax incongruities along with the varying shipping times and costs, we’ve determined the top 5 best and worst places for online shoppers to live–and that we are moving to Delaware.

Five Best States to Live for Online Shoppers

1. Delaware

It’s no coincidence that “It’s good being first” is Delaware’s state slogan as its 2.74 days average shipping time (6th shortest in U.S.), $4.07 average shipping costs (tied 3rd lowest) and 0% sales tax (tied 1st lowest) clearly make it our number one place for online shoppers to live.

Shipping Transit Times to Delaware with Distribution Center Locations

Not only do Delawareans avoid paying sales tax on every online order, they have some of the lowest shipping costs and fastest shipping times. The map above shows how many days it takes for a UPS shipment to arrive in Delaware from a retailer distribution center, with the majority of distribution centers in a region with a delivery time of only 1-2 days (in yellow or brown.)

2. Mississippi

The fact that only 5% of online retailers charge sales tax to Mississippi residents combined with its relative proximity to east coast distribution centers make Mississippi our top southern state and #2 on our list.

3. New Hampshire

Although New Hampshire residents may wait a bit longer for their packages (3.52 days on average) they never pay sales tax. We suggest New Hampshirites use the extra money saved on sales tax for expedited shipping.

4. West Virginia

West Virginia residents enjoy some of the quickest shipping times in the country with an average shipping time of only 2.72 days. The #4 state on our list sits right between distribution center hubs in Pennsylvania, Ohio and Kentucky but has a small retailer presence itself—meaning very few online retailers charge sales tax to West Virginia residents.

5. Oregon

Oregon residents always pay 0% sales tax on their online orders; however delivery times are less consistent than other states. While an order from a west coast distribution center only takes a day or two to arrive, shipments from an east coast distribution center take almost a week. On average, shipments to Oregon take 3.8 days.

Check how your state compares to the top 5!

Five Worst States to Live for Online Shoppers

50. Hawaii

Although Hawaii residents don’t pay too much for sales tax (only 4.25% on average), they have to pay the equivalent of overnight shipping for the slowest shipping times in the country. On average, an order shipped to Hawaii costs $19.17 and spends 4.57 days in transit.

49. Alaska

Alaska residents also pay very little in online sales tax (1.7% on average), but the shipping rates and shipping times are just about as bad as Hawaii’s.

48. California

About 50% of online retailers charge sales tax to California residents, which is more than in any other state. Combine that with an average sales tax of 8.96% (2nd highest) and you’re looking at an additional 4.5% in sales tax costs, on average. In addition, Californians wait 4-5 days for shipments coming from an east coast distribution center.

47. New York

New York residents pay, on average, 8.16% in sales tax with about 46% of retailers charging sales tax to the state’s online shoppers. Although shipping times are pretty quick, the additional costs of tax make New York a costly state to live in for online shoppers.

46. Washington

Because pretty much every non-Seattle shipping distribution center is thousands of miles away, Washington has the slowest average shipping time of all states in the continental U.S. Those long shipping distances also make the cost of shipping more expensive. To make matters worse, Washington has the 5th highest average sales tax rate at 8.45%.

The scatter plot below gives a visual summary of each state’s average tax and shipping costs and average shipping times.

Best Online Shopping States Scatter Plot

Before we dive into an analysis of how we standardized tax rates and calculated shipping costs to determine the best online shopping states, a quick lesson in online sales tax: Only when the online retailer you’re buying from has a physical presence (a warehouse, a store, headquarters, etc.) in your state, do you pay sales tax on that order. And every state has a different base sales tax rate, unless you live in one of a handful of states, like #1 on our list, where online shoppers never pay sales tax.

Moving on to shipping… There are only a few factors that online retailers consider when calculating shipping times and costs: your order subtotal, shipping package dimensions/weight, and your distance from their shipping distribution center. Since the first two are the same in every state, your proximity to an online retailer’s distribution center can be what sets you apart from #50 on our list.

Shipping Transit Time

To determine the best and worst states for online shopping, we first considered the location of online retailers’ shipping distribution centers. The closer you are to a retailer’s distribution center, the sooner you’ll get your item.

Map of Average Shipping Times by State

The majority of distribution centers are located on the east coast, meaning that residents in that region usually receive their online purchases the fastest.

Shipping Cost

For some stores the shipping cost is based on the order total. For many other stores the shipping cost is based on your distance from the shipping distribution center and the weight of the item. To determine the average shipping cost per state, we took a large sample set of popular products on Extrabux.com, each with 2-45 different sellers, and found the average shipping cost per product for 50 different zip codes (one in each state). We then averaged all these products’ average shipping costs for each of the 50 states.

Map of Average Shipping Costs by State

Unless you live in Alaska or Hawaii, shipping costs vary only slightly based on where in the country you’re located.

Sales Tax

Because the sales tax for online purchases can be as high as 11.725% for some cities (in Fredonia, Arizona to be exact), it is an important factor in determining the best states for online shoppers to live. The following map shows the average sales tax rate in each state, which we determined by averaging the total sales tax of every city in each state:

Map of Average Sales Tax Rate by State

But the above graph only tells half the story. For our purposes, it doesn’t matter how high the sales tax rate in your state is if only a small fraction of online retailers ever charge sales tax there (as with those lucky Mississippians). The following map shows which percentage of Extrabux’s 1,500 retailers charge sales tax in each state, or in other words, in which states these retailers have a physical presence (headquarters, brick and mortar store, distribution center, etc.)

U.S. Map of Online Retailer Physical Presences or Nexus

When we multiply a state’s average sales tax rate by the percentage of retailers that charge sales tax in that state, we find the average sales tax you can expect to pay on any given order (officially termed “standardized sales tax rate” by… me).

Map of Standardized Sales Tax Rate by State

Voila! So unless you live in Oregon, Montana, New Hampshire or Delaware, you should budget in about 1-5% of your online spending toward sales tax… and another 99% or so toward purchases on Extrabux.com.

33 Responses to The Best (And Worst) States to Live for Online Shoppers

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The Best and Worst States for Online Shopping | Tricia Duryee | eMoney | AllThingsD

March 16th, 2011 at 1:14 pm

[...] full breakdown of the reasons these states were chosen can be found on the Extrabux Blog. View Comments Tagged: EMoney, Tricia Duryee, Amazon, best, e-commerce, Extrabux, location, [...]

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For Online Shoppers, Best and Worst States to Live In

March 17th, 2011 at 7:00 am

[...] good to be first”), and its bravado can only increase after an analysis by Extrabux declared it to be the best state to live in for online [...]

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How Does Your State Stack up for Online Shopping? « E-commerce News

March 17th, 2011 at 1:32 pm

[...] You can read more about the Extrabux report, including a thorough explanation of their criteria, on the company’s blog. [...]

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Will

March 21st, 2011 at 1:16 pm

Does the Amazon fulfillment center in Fernley NV not count? It’s definitely a reason for my continued use of Amazon: no sales tax and speedy delivery times to the Bay Area.

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Jeff Nobbs

March 21st, 2011 at 2:41 pm

Good question. We did count the Amazon fulfillment centers in Nevada when calculating average shipping times. But on the maps above we only display Amazon fulfillment centers that have at least 25 other retailer fulfillment centers in the area. Our goal was to highlight areas of the country that are hubs for online order fulfillment.

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JoeInAtlanta

March 21st, 2011 at 4:21 pm

Why do we fetishize not paying taxes?

Frankly, I like knowing that the fire department is going to come if my house starts to burn, that both the prisoners and the guards are not going hungry, that the lights will stay on in the state universities, and that someone is working to make sure the planes don’t bump into each other.

If you’d prefer a descent into chaos, I just don’t think I’ll ever agree. And if you think you’re smarter or better than me for avoiding your tax obligation, then I’ve got some words for you that would probably be censored out of this blog.

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MikiStewart

March 21st, 2011 at 5:25 pm

JoeInAtlanta,

I surmise you are in one of two tax brackets — either the bottom, which pays a negligible contribution in taxes, because their taxes are subsidized, OR the top, which indicates that you are so wealthy that you don’t need to watch every dollar in order to have a moderate standard of living.

As a resident of the fixed-income middle, being slipped into the lower class by inflation, I am grateful for every opportunity to save 5 – 11% on my few purchases. Sometimes that tax is the difference between affording a new coat, or having too buy someone elses 20 year old cast-offs at a charity.

The people who avoid SALES taxes are not the ones funding fire departments, prisons, universities or airports with their sales taxes; we’re the people trying to care for our own home and family under severely pressed financial circumstances.

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Xndienx

March 21st, 2011 at 6:04 pm

It really doesnt matter for MI residents anyways, as we are supposed to claim online purchases that we dont pay tax on when we do our income tax returns.

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JoeinArkansas

March 21st, 2011 at 6:19 pm

Arkansas is the 8th most socialist state figured by monetary value of the state production compared to the amount of money spent on entitlements. As one of the people working to pay for the free loaders I don’t care if the firetrucks/police cars come. My neighborhood doesn’t have drugs or gangs because we are to busy working. I’ll get out of every tax possible and when I retire I’ll barter.

Of course if I was a firefighter or policeman I’d already be retired. Screw taxes.

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How Your Location Affects the Cost of Online Shopping (and What to Do About It)

March 21st, 2011 at 6:43 pm

[...] The Best (And Worst) States to Live for Online Shoppers | Extrabux Blog You can follow Adam Dachis, the author of this post, on Twitter and Facebook. If you’d like to contact him, Twitter is the most effective means of doing so. [...]

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Chris

March 21st, 2011 at 7:47 pm

Great article, I was wondering where you found your data, because I’m actually doing an economic paper on this very topic for my econ class, and it would really help me. Thanks

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Joe Thomas

March 21st, 2011 at 8:44 pm

I don’t use Amazon much, they are headquarted in Washington which is where I live so I get charged a sales tax. And when I use free shipping (I get charged a sales tax so free shipping or no sale), the closet warehouse is in Arizona but usually get mine sent from New Jersey. I am lucky if I get it in the next week but only if I ordered on Monday or Tuesday. Great site for you guys it but screws it’s home state times two.

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Roofus

March 21st, 2011 at 8:51 pm

Honestly, I’d rather have roads to drive on. But thanks for pointing out that it’s not the taxes that are the problem, but who ends up paying them.

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Roofus

March 21st, 2011 at 8:53 pm

One guess as to what news channel you watch.

FOX

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misskitty_79

March 21st, 2011 at 11:07 pm

Though this article wasn’t especially relevant to my own situation, it was still an interesting read. You wouldn’t happen to have any intentions of creating similar data collection for Canada, would you? ;)

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misskitty_79

March 21st, 2011 at 11:18 pm

sales tax ≠ income tax

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Jeff Nobbs

March 21st, 2011 at 11:44 pm

We had some help from UPS to determine average shipping times. Besides that, the same data and software we used to create this report are used to calculate tax and shipping costs for price comparison on Extrabux.com.

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Jeff Nobbs

March 22nd, 2011 at 12:02 am

Unfortunately no :( the data we have and the software built to analyze that data are based on U.S. zip codes.

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AdaminMissouri

March 22nd, 2011 at 7:15 am

Fair and balanced and HIDE THE CHILDREN!!!! BURY AMMO!!!! BUY GOLD!!!! RUN FOR THE HILLLLLLSSSSSSSSSSS!!!!!!!!!!!!!!!!!!!!!!!!

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gggirlgeek

March 22nd, 2011 at 9:32 am

I live in Washington too, 2 miles from the Amazon main warehouse. So it sucks to wait for shipping from NJ and pay the sales tax for Washington, but I have to say I’ve never waited more than 3 business days, normally 1 or 2, for my orders. I even got one on ebay from China in 2 weeks — no tax. :D

However, I’ve lived in many states and, in my experience, these things always work out. For example, in Chicago I usually managed to save myself the 8.75% tax because most retailers were not in Illinois, however, I had to pay 4% on my food. I thought this was normal until I moved to California, then Washington, where we pay no tax on food. We also pay crazy rates for our water, but, my “free” water in Chicago tasted like fish, I bought water.

If you are in need, Washington’s State assistance programs are the best I’ve ever seen, and they include working folks. To get a steep discount on their power bill, an individual income must be less than $1800/month — $1000 more than most other places. On top of this, in hard economic times Washington’s economy is one of the healthiest in the country. It’s not great here right now but when I visit other places I feel very blessed — after all, I’m still shopping online aren’t I?

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Joe Thomas

March 22nd, 2011 at 10:23 am

I don’t mean to sound like I’m in rough shape, not rich but don’t need that assistance. Thanks though. I just usually will go with the best item at the lowest cost and cheapest shipping. And usually I find a better combo of those things on other sites. Newegg for tech stuff for example.

The only time I really use Amazon is when I turn my jar of coins at Coinstar. If you pick the giftcard option there is no counting fee and I always pick Amazon. But any other time I usually go somewhere else. I don’t mean to sound like I’m being ripped off by any means just I usually have better alternatives.

On the shipping Girlgeek,, you get it in 3 days? With the super saving shipping? Cause that’s what I do. I think I had it in 6 days once.

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gggirlgeek

March 22nd, 2011 at 11:18 am

These statistics are very informative and it’s a great eye-opener to gather information like this. But I hope people are taking it for what it is, which is a tiny peak at the whole picture. It is not an accurate way to judge the general standard of living in a State. For that you would have to measure the total percentage of income spent on necessities, factor in the average amount a family needs, to compensate for spending habits, and then see what the residents have left in disposable income.

Even if they are spending more of their disposable income on shipping and taxes, they may come out ahead due to less hardship in that State. For example, if you live in Hawaii you’re probably spending a lot less on doctor’s bills caused by stress or lack of nutrition. In Washington I don’t need to fly, or even drive anywhere to go hiking, see a new country, hear the best music in the world, or escape sub zero winters. I can spare $5 for taxes.

I have to add that I haven’t experienced this online shopping nightmare you describe in Washington. But after thinking about it I’ve realized I’ve instinctively nullified this problem by doing all the steps mentioned in the article without knowing it. I have always assumed I don’t know the “real” price of an item until I check the shipping cost and location of the company. So normally, I put a dummy item in my cart and check the shipping page before even browsing the rest of the site.

This is a great way to sniff out scams too. My Spidy sense starts poking me when I see a 6.95 shipping charge on a .99 cent cell phone case. Then I do a Google search for something like “2good2Btrue.com reviews” or “complaints” and find out the real story. It takes me a lot longer, actually, to shop online — sometimes even weeks — but the effort is well worth it because I find great retailers who have just what I want.

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gggirlgeek

March 22nd, 2011 at 11:27 pm

Joe: So sorry! I wasn’t addressing my comment about the state assistance you. Didn’t mean to make you feel poor. That was a general comment to the community (universal “you.”) I was hoping to give a tip to future people who read this thread because all the utilities in Seattle have assistance for moderate-income families, not just low-income. Reading back I see how it came across though. Sorry. :(

About the Amazon Super Saver shipping: yes, that is what I use. They have only been slow on me once and it was because they delayed the shipment, not because of transit time. I let them know I was not pleased. I also made it known in the reviews that I bought a hard drive at Newegg precisely because I didn’t trust them to ship it undamaged, as stated by other reviewers. (They tried to reject my post because I mentioned Newegg so I put new egg. Hmph!)

I love Amazon’s user reviews. I won’t shop without reading them, or other reviews, anymore. I’ve been steered wrong only once but have probably made close to a hundred top-notch purchases online because of user feedback. The Internet is such a miracle.

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gggirlgeek

March 23rd, 2011 at 12:01 am

As others have said, I don’t mind paying my taxes because I live in an amazing city, and I really enjoy the fact that it’s so low in crime compared to Chicago. Seattle’s cops are a bit over-the-top but they can have my taxes because the “bad” neighborhoods here are like walking down Sesame Street — and yes, the thugs actually do say hi to you. :)

Starting to sound like a commercial! Let me stop. :)

However, I don’t mind finding a bargain either. So I am not supporting the fact that I have to pay a tax on purchases that are actually being shipped from New Jersey. And I am certainly not supporting others who think that people who need assistance are free-loaders. Guess what? Those people pay sales tax too — and without taking a job away from anyone. Essentially the government not only helps keep crime down by supporting under privileged people, but they create jobs this way too. Think about all the employees needed to process the paperwork, and the health care staff employed to help take care of the disabled. It’s a win-win for everyone. I’ll pay tax to that!

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Don’t have to shop around — Delaware’s best | Delaware Inc.

March 23rd, 2011 at 9:17 am

[...] site Extrabux.com recently undertook a nationwide analysis of such shopping-friendly factors as delivery time, shipping costs and sales taxes, concluding [...]

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Joe Thomas

March 23rd, 2011 at 11:35 am

Won’t let me comment below you so hope you read this.

Nothing to be sorry for. It’s a great tip and I hope it does help someone out. I wonder how I got away with saying new………… egg the first time :)

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Jenna

March 23rd, 2011 at 2:02 pm

I live in New Jersey, and I think we should lower the prices of shipping to at least $4.50-$6.00. Jersey and other states shouldn’t be taxed with shipping; it’s ridiculous. People are already paying X-amount of money for schools, gas, groceries, and other essentials. As a little reward, let us pay shipping for a cheaper price and NOT have to worry about tax, by not charging us with it. This is why people are starting to have 0 tolerance with America; too much taxing. It’s very irksome most of the population in the U.S. If we don’t fix this whole solution, not only will the websites shut down, the stores will start losing business, people will start losing jobs, and where will we go from there? Honestly, this what I like to call…. The American Greed.

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The 5 Best and 5 Worst Places to Live for Online Shopping | Money Talks News

March 24th, 2011 at 3:05 am

[...] everyone is equal online. But the state you live in can exert its influence in devious ways. As Extrabux says, where you live influences “shipping time and costs, sales tax rates and the chance of having [...]

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apaul-wall-et

March 24th, 2011 at 5:08 pm

Very interesting article Jeff.

One way to get around sales tax is to have items sent to a friend of relative in one of the lucky states with no sales tax. This works for items with a high value to weight/size ratio (i.e. jewelry), since sales tax will be much more than the additional shipping cost.

IATM

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BillyOceansEleven

April 4th, 2011 at 1:24 pm

Very true! I did just that with my wife’s engagement ring. Picked the ring out in person with the jeweler in Louisiana, paid by credit card, and had them ship it to a trusted friend in Florida to avoid 8.5% sales tax.

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The REAL Numbers Behind the Internet Sales Tax Debate

April 13th, 2011 at 12:02 am

[...] month’s post about the best and worst states for online shopping sparked a spirited discussion about online sales tax. It also sparked a question: What would be the [...]

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The Equalizer

April 16th, 2011 at 8:48 am

And we know you watch MSDNC if any….Doofus. Bet you fall into that 49% of Americans who feed at the trough and pay ZERO federal income taxes! I agree with, JoeinArkansas…I’M SICK OF SUBSIDIZING YOU FRICKING EGGHEADED FREELOADERS!

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Lori

August 24th, 2011 at 7:29 am

Great post. I shared some of these details on my blog as well. Trying to put together a list of all states with links to their ecommerce tax law information and how it relates to shipping taxes as well.

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