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.
