Online sales climbed 24% year over year, while Best Buy’s overall sales were flat.
Technology providers develop controls to limit minors’ access while states wrestle with the issue of lost tobacco tax revenue, Forrester says.
The web has provided a refuge for tobacco product merchants facing increasing constraints in the offline world, says Forrester Research. Though the introduction of online controls like child safety software will help restrict online tobacco sales to the underaged, tobacco e-retailers will prosper as consumers spend some $5 billion online for tobacco products by 2005, says Forrester analyst Robert Rubin.
Perhaps as many as 100 online retailers such as Mybutts.com and Supercheapcigarettes.com sell tobacco online without always verifying shoppers’ ages, he says. “Tobacco is the perfect online replenishable: cheap to ship, nonimpulsive, and a big money saver given that taxes eat up 21% of a pack’s price,” Rubin says. Forrester estimates that in 2005, 14% of US tobacco sales will be online.
In addition to the troubling issue of facilitating access to minors, tobacco sales online could cost states $1.4 billion in lost tax revenues a year due to the difficulty of collecting taxes on online sales, Forrester estimates.