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  • nemesis_editor_2007 nemesis_editor_2007 Sep 20, 2012 7:05 PM Flag

    Short Simply Don't Get The Implications of the Walmart Move

    "While one can argue Kindle shoppers are a base of retail competition for big-box stores, the increased use of other mobile devices, from tablets to smartphones, is an inevitability."
    - Barron's

    Walmart's move is laughable at best. They're simply trying to put a finger in the dike that will do nothing to hold back the huge flood of marketshare transfer over to online sellers led by Amazon. Amazon shopping apps exist on every kind of device. Not selling Kindle's is more of an empty symbolic gesture.

    The real telling thing is how it took this long for Walmart to realize what Amazon was doing with Kindle. Shorts think that online shoppers are dumb; that they "want" to pay more money to retailers like Walmart, that they "happy" to pay higher prices to publishers for e-books. That retailers like Walmart can simply corral consumers.

    And the double talk from shorts is hilarious. When Amazon was selling Kindles at Walmart it was "bad". Amazon was supposed to (according to shorts) lose money by selling more units at negative margins and then having to share revenues with a third-party so losing even more money. And that ads on Kindles were a real turnoff to users and users all hated it.

    But now we are supposed to believe them that somehow actually Kindles enticing users to buy other things from Amazon was a huge success and that somehow Walmart's moves now in not selling any more Kindles will hurt Amazon. That Kindle users actually do want to see the ads and that they are a great success at getting customers to buy things at big margins.

    Big margins? Why of course, because why else would Walmart be worried? Techstrategy told me that Walmart did not mind going toe to toe with Amazon in a price war, after all. That they were going to bleed Amazon to death since Amazon did not have enough cash. So the Kindle ads must have been generating huge profits for Amazon, otherwise you'd think Walmart would be happy to sell customers Kindles if it really were true that the Kindle strategy was only going to hasten the "bleeding".

    And here's another point. Shorts told me that Kindles don't matter anyway. Nobody buys them. Everyone only wants an iPad or a Nexus7. Those tablets get much better reviews. If this were so then why would Walmart care about what Amazon was doing on the Kindle front? So what if Kindle customers were to buy less from Walmart? The number must be so small and the death of the Kindle to be so near why bother? How could the effect even register in any material way? (Unless shorts are completely wrong about the success of Amazon's Kindle strategy I mean).

    See how ludicrous this short double talk is? Just cracks me up!

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    • Anyway you cut it nem, this is not good for Amazon. Walmart knows a thing or two about moving product and since they are in all 50 states and 26 countries - this is not good news. Folks want to touch this thing and without Walmart and Target putting on their floors amazon market share will certainly stay in the single digits and Christmas sales will be lack luster.

      • 1 Reply to dutchboyinvestor
      • "Walmart knows a thing or two about moving product and since they are in all 50 states and 26 countries - this is not good news."

        Why not? It was good news 15 years ago when Walmart could do nothing to blunt Amazon huge success when it was a company of a fraction of the size it is today so 15 years later it should be 15 times as much the good news it was back then. Walmart will not be able to stop Amazon shorts from being steamrolled over and over.

        "Folks want to touch this thing and without Walmart and Target putting on their floors."

        No, they want to buy things conveniently without waiting hours for a parking spot and in check out lines. Only unemployed shorts have the luxury of standing all day in lines.

    • Obviously, you lack the intelligence to reconcile these wholly consistent concepts and the aggregate impact upon Amazon. Let's do so:
      1) Shoppers have always been able to order from Amazon and other etailers via PC or iPad/Android app. Now they have to collect sales tax going forward. The value proposition is diminishing, not increasing, even though you wish it were different.
      2) I know it is difficult for you to understand because you seem to only be capable of superficial thinking, but hypercompetitive business practices (e.g. price wars) can be and often are bad for all parties involved over the long term. The ST lift is offset by "commoditization" and deflationary expectations which make it harder for businesses to extract value over the long term.
      3) WalMart pulling the Kindle is strategic. As you've said, Amazon's website is available on any computer with a browser and connectivity and it has an app for every major mobile OS. As such, pulling the tablet at this time wasn't about limiting the consumers reach per se. It was about reducing Amazon's distribution and thus increasing its required marketing cost in advance of the holiday season. It is also about increasing promotion of competing platforms where AMZN's product is an App rather than a portal... You commented the other day that the right time to expand was when Amazon had cash. Well, the right time for all of the competitors to hit Amazon is now that it has already committed its cash to Kindle Fire / HD, as it begins to collect sales tax and as the economy approaches a recession via the fiscal cliff. I'm honestly surprised that Best Buy hasn't done the same yet because Best Buy is likely most impacted by showrooming...
      4) WalMart has already recommitted to everyday low prices and certainly will match Amazon prices, particularly with digital content which is incremental growth for WMT but core and necessary cash flow for AMZN. Apple can and should match on content as it has already done on some publisher's ebooks. I am actually hoping that Apple launches a subscription eBooks model that upends Amazon altogether, but I don't expect it.
      5) Your logic is so flawed so many places -- it makes you a good pumper because it takes a lot of work to correct all of your misleading statements....WalMart would not know what margins the ads were generating for Amazon. Frankly, there has been too little time to draw any definitive conclusions. What is does know is that it has no reason to help promote Amazon product and does have an incentive to have Amazon with capital tied up in excess Kindle/Fire/HD inventory... The more successful Amazon's tablet competitors, the less capital Amazon will have to fund any expansion and the more vulnerable it will be if we do enter recession (which despite the constant propaganda to the contrary is highly likely since private sector GDP has been in a recession already... Only gov't spending growth has maintained aggregate GDP growth...). Thus, WMT's incentives are aligned with Apple, Google and others to focus selling non Amazon tablets and readers.

      Amazon screwed up on launch timing. It needed to because it had to hide the impact of collecting sales tax and the best way to do it was to juice revenue growth with a new product launch. But, in doing so, it launched the Kindle too early for the holiday cycle and too late for the back to school cycle. Now, Apple iPad mini, Google Xoom and many other Android based tablet makers will get an extra product launch cycle before the holidays, with full knowledge of Amazon's price point and specs. They can steal the excitement and put Amazon into a world of hurt with a well timed blow...

      I'm not going to waste my time responding to you anymore. I will simply create new threads for people to read since it is clear your only objective is to misstate and mislead and bury real insight in a volume of crap...

      • 1 Reply to techstrategy
      • Tech ,

        Bla fvckin bla bla bla... You arguing in 5 para essays with idiots like nemisis is a goooooddddddaaaaaammmmmned waste.... Copy this and paste it into future
        Rebuttal Posts back to idiot nemesis - it will save yoiu time:

        "Nemesis iz a dieck svckin pumper who wears geegee'z jiz on his chin"

        Thats the only talk theze idiots understand.... Oh and stay away from buying optionz, it makes the stok go higher or at least not crash by way of "weekly incentives". Short the underlying and hold the short forever until the institutionz see they have 'dead money' on their books. Without revenue from scam optionz to make it worth the risk of holding this trash, theze idiot institutionz would not have run theze scam stox so high and certainly wouldnt be holding them...

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