[ossiblue]

One other thing that may stifle mall-to-warehouse conversion for on-line operators is taxes. Some states, California in particular, require that on-line merchants charge sales tax if the company has a physical presence in the state. If not, the California buyer who purchases something sales tax free, is supposed to declare the purchase/tax liability on their state tax return (yeah, right.) Having a warehouse within the state would obligate the seller to charge sales tax, thus reducing the price incentive.

Don't know how many states have similar laws, but in California it plays a role in whether or not an on-line company has any physical facilities here.