States respond to cash crunch

AuthorAuthor

Rohit Bhadange & Maya Rector
October 15, 2023

Hello fellow nerds.

Who is going to Grow LA or Foundermade this week? Excited to catch up with many of you!

I know you’re all here to cure your Sunday Scaries, so let’s see what’s in today’s trash:

  • Struggling Blue Apron finally acquired

  • States respond to cash crunch

  • States taxing deodorant like luxury, not necessity

  • Meme of the week

  • “Didn’t Internet Tax Freedom Act ban taxes on Internet sales?”

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STRUGGLING BLUE APRON FINALLY EXITS 

Blue Apron was acquired for $103 million, a 95% decline vs IPO.

At IPO, it was worth $2 billion (2017). Here's what happened:

🍽️ Blue Apron’s Buzzy Start:

  • Founded in 2012

  • First meal-kit to go public

  • Pioneer in packaging fresh ingredients for easy-to-make meals sold online

📉 Financial Struggle Post-IPO:

  • 2017: $881 million - 746k customers

  • 2018: $668 million - 557k customers

  • 2019: $455 million - 351k customers

  • 2020: $461 million - 353k customers

  • 2021: $470 million - 336k customers

  • 2022: $458 million - 298k customers

🚧 Growing Challenges:

  • Supply-chain and unstable ingredient costs

  • Increasingly saturated meal-kit market

  • Rivals include grocer Kroger to Amazon

  • Laid off 10% workforce in 2022

 💼 Recent Cash Infusion:

  • Closed $50 million deal with FreshRealm this June

  • Transferred fulfillment centers, equipment and staff for cash

  • Includes 16.5% ownership in Blue Apron

✨ Acquiror Wonder’s Story:

  • Founded in 2018

  • Vertically-integrated delivery-first restaurants

  • Elevated dining experience called “Fast Fine”

  • Feature chefs like Bobby Flay, Jose Andres, Nancy Silverton and more

  • Raised $350 million at $3.5 billion valuation in 2022

Blue Apron certainly isn't the first and won't be the last company that went public in the past decade selling for pennies on the dollar.

We are seeing more and more distressed assets. Who will be next?

STATES RESPOND TO CASH CRUNCH  

1️⃣ Missouri denied Walmart an $8 million use tax exemption on tech products to resold to out-of-state affiliates.

Walmart is calling it “absurd” but will likely be upheld in favor of Missouri.

2️⃣ Alabama business was dinged for failure to maintain adequate books & record. State determine the tax liability by applying a 35% purchase markup.

The business owner tried to protest to no avail.

3️⃣ New Mexico has proposed digital ad tax rules with new sourcing method.

One other item to note…

4️⃣ Arizona deadline is approaching for those who filed a 2022 filing extension.

SMELLING GOOD IS NOT A NECESSITY

States can sometimes be annoying with imposing taxes.

They try to avoid taxing necessities like groceries

Yet, many key items get left behind

In Texas, deodorant and antiperspirant are not exempt from sales tax… unless they have an FDA “Drug Facts” panel.

In Washington, deodorant is exempt sales tax if prescribed by a physician.

Guess sales tax is just the extra price we pay to smell fresh

MEME OF THE WEEK

Send us a meme - best one will be featured next week

PARTNER SPOTLIGHT 🌟

SeaMonster Studios is a full-service digital agency offering data-driven strategy, design, and development for brands.

Interested in chatting? Just reply to this email and I can make a direct intro.

P.S. Is your business sales tax and WCAG compliant? Register for Zamp’s interactive Spooky Boring Zoom Roundtable with SeaMonster Studios on 10/24 to find out!

YOUR QUESTIONS, ANSWERED!

Q (Elena): Didn’t the Internet Tax Freedom Act ban taxes on Internet sales?

A: No.

The Internet Tax Freedom Act prohibited new taxes on Internet access fees and discrimination of electronic commerce. Most states do not tax Internet access fees.

The Act did not prohibit states from imposing taxes on transactions conducted over the Internet. If a purchase is made on-line, it is generally taxed the same as if it was purchased off-line.

The real question is whether a retailer is required to collect the tax, which is known as nexus.

Thank you for reading along. I’ll be back next Sunday with more sales tax shenanigans.

If you enjoyed this one, please share it with your network. 🤝

If you caught a laugh, reply back and let me know. I live for the people.

If you have any feedback, suggestions or questions, please let me know by responding to this email or DM me on Twitter or LinkedIn.

Until next week’s 🗑 …

Rohit