Empirical Evidence on the Effects of Wayfair on Brick and Mortar Stores: The Case of South Dakota

Abstract

Employing very specific data for South Dakota, this study shows that the requirement of collecting a sales tax by remote sellers gave rise to a 6.99% sales increase for brick-and-mortar retail sellers from 2018 through 2022. For this period there was also an approximate 4.54% increase in employment for brick-and-mortar employers. Larger operations, and those parts of a chain, experienced even higher post sales-tax growth. There was a significant amount of net moves out of the state post-2017, but employment losses for such moves were lower for brick-and-mortar retailers.