Think of it as a camouflaged Amazon, or a well-armed version of Walmart.com.
The Army and Air Force Exchange Service next month will open tax-free online shopping to millions of eligible veterans. It’s a move designed to boost the bottom line at exchanges, which have struggled since military downsizing hit five years ago, by allowing millions of new customers to use a shopping benefit previously limited to active troops and retirees.
“This is the first time we have been able to provide a modest benefit for those who served honorably,” said Tom Shull, CEO of the 2,700-store military retailer that offers goods on bases around the planet.
The exchange system markets everything from gasoline and burgers to kitchen appliances and furniture at bases. Its online offerings are almost as broad — the “handbags and accessories” section alone has more than 3,800 items.
But exchanges have always relied on an exclusive clientele — troops, retirees and their families. Now any veteran who served honorably for any length of time will be eligible.
“The Army and Air Force Exchange Service online shopping benefit is the first military exchange benefits expansion in nearly 30 years,” the Pentagon said in a statement this week. “Beginning on Veterans Day, America’s 18.5 million veterans will be able to shop online at the military exchange websites.”
Veterans can sign up at shopmy exchange.com.
More than 225,000 veterans already have.
Shull says the veterans were drawn to the exchange system’s deep discounts, which often set prices at 25cq percent or more below civilian competitors.
There’s another benefit that will be a draw for shoppers, especially on big-ticket items.
“It’s a tax-free benefit for the rest of their lives,” Shull said.
While most online retailers are subject to state sales taxes, the exchange is a federal entity, sheltering it from those local fees.
That means a shopper buying a $1,000 television will save $82.50 in taxes in Colorado Springs.
Shull said state’s haven’t objected to the tax-free deal.
“The impact on state sales tax is typically minimal,” he said.
The impact of shopping will be felt at local bases, though. Military exchanges funnel profits into “quality of life” programs across the military. Those include subsidizing recreation programs and child-care centers.
But those programs were put in jeopardy as the Army trimmed 70,000cq troops from its ranks.
Shull said exchange revenues plunged 9 percent after the Army cuts.
The exchange system expects that allowing veterans to shop online will bring in an additional $200 millioncq in annual revenue, with about $10 million of that going to programs for troops and families.
Shull said giving back to the troops could draw as many veteran shoppers as the deep discounts.
“We think the passion for the time they served and for those who serve today will provide them an incentive to shop on our website,” he said.
While the exchange service hopes to grow its online customer base, it’s a long way from competing with the internet’s largest retailers like Amazon, Shull said. That has never been the goal, he said.
“We are family serving family. We are very different.”
Contact Tom Roeder: 636-0240