Wednesday, August 21, 2013

How many sites selling cigarettes are there in the USA?

Tobacco products are a major retail item in the USA. Over 47 million adults and 4 million teenagers smoke cigarettes. Annual sales of tobacco products exceed $40 billion and there are approximately 543 000 tobacco retailers in the country. Smokers have traditionally purchased their cigarettes either by the pack or the carton from local retail outlets. These local retail outlets are now facing new competition from the growing number of e-commerce sites. Internet cigarette vendors (ICVs) include those that sell online exclusively, as well as local “brick and mortar” retail outlets that advertise and sell tobacco products on the internet. More Americans are online than ever, and many of them are purchasing products on the internet. As of August 2000, over 116.5 million Americans were online and 42% of US households had a computer with internet access. Over 47% of American internet users have purchased something online, and consumers report that one of the primary attractions of online shopping is finding low prices.
Increased state taxes on cigarettes have fuelled demand among smokers who seek refuge from escalating retail prices. In the USA, state excise taxes vary considerably. Vendors on Indian reservations sell tax-free cigarettes, and excise taxes are low in tobacco producing states such as Virginia ($.025 per pack of 20 cigarettes), Kentucky ($.03), and North Carolina ($.05). High excise taxes are featured in states such as California ($.87), Alaska ($1.00), Hawaii ($1.00), and New York ($1.11). Given that each carton contains 10 packs, a smoker buying cigarettes in New York will pay over $10.00 more per carton in excise taxes than a smoker in Virginia. In the past, when a state raised its excise tax on cigarettes, smokers who did not quit would either pay the increased price, or travel to Indian reservations or neighbouring states with cheaper prices. However, the internet offers the possibility of purchasing from Indian reservations or from states with lower excise taxes without having to physically drive there. A ready source of cheap cigarettes is now a mouse click away. This may have significant public health implications because tobacco consumption is adversely affected by price. When cigarette prices increase, smokers are likely to smoke less, change to cheaper generic brands, or quit smoking altogether. For instance, in California a 50 cent increase in state excise taxes (proposition 10) was followed by a 29% decrease in cigarette sales. Although the majority of this decrease was probably caused by reduced consumption, media reports speculated that many California smokers were simply avoiding high taxes by buying directly from internet vendors.
To the best of our knowledge, no published peer reviewed studies have examined web sites that sell cigarettes. The present study attempts to fill this void in the literature by using a rigorous internet based searching and sampling methodology to estimate the number of internet cigarette vendors. In addition, a standardised coding system is used to determine their characteristics including geographic location, presence of age and health warnings, and sales and marketing practices.