Amazon's Growing Problem

The holiday season really was a taxing time for Amazon.

The company reported fourth-quarter sales of $21.27 billion; the slowest pace of growth since the second quarter of 2009. An increase in the number of states charging sales tax for online transactions might have something to do with it. Texas in July and California and Pennsylvania in September started collecting online sales taxes. Together, the three states account for a quarter of the U.S. population, so a fair-sized chunk of American shoppers had one less reason to buy online. There are other reasons to shop on Amazon, of course, like convenience and low prices. But to continue to gain market share on the basis of those factors may entail substantial investment that could continue to weigh on the company's margins.