Inside Wal-Mart's war against Amazon

The country's largest retail chain is ditching Amazon's tablets, the latest sally in an ongoing battle between traditional big-box retailers and their online rivals.

By TheWeek.com Sep 21, 2012 4:29PM

Credit: Amazon.com, Inc.
Caption: Landscape view of the new Kindle Fire HD 8.9Wal-Mart (WMT) recently announced it will no longer carry Amazon's (AMZN) Kindle Fire tablet and Kindle e-readers, a move that is widely considered a pointed jab at the popular online retailer.


Wal-Mart will continue to sell tablets from other companies, including Apple (AAPL), and did not explain why it had singled out Amazon for exclusion. Wal-Mart isn't the first retail chain to ditch the Kindle. Target (TGT) did the same thing in May, suggesting the country's largest brick-and-mortar chains are starting to view Amazon as an existential threat to their business. 


Here's a guide to Wal-Mart's war against Amazon:


What's so threatening about the Kindle?
Wal-Mart and Target view the Kindle as a Trojan horse because the gadget makes it easier for customers to buy products from Amazon. And not just books and movies. "Every time you pick up your Kindle, they're trying to get you to buy patio furniture" at Amazon, Colin Gillis, an analyst, tells The New York Times. "If I were Wal-Mart, I certainly would not be encouraging my customers to go down the path of owning a Kindle and buying things from Amazon."


Will it dent Wal-Mart's profits?
Hardly. "Amazon has been selling lower-priced tablets at thin -- if any -- profit margins to boost sales of digital media" from its online store, says Mae Anderson at The Associated Press. "That makes it less attractive for major retailers to carry Kindles in their stores."


How about Amazon's Kindle sales?
Not likely. "A vast majority of Kindle sales are made through its website," says Roger Cheng at CNET. However, Amazon could find itself in trouble if other retailers follow suit, depriving the company of valuable real estate in places where people shop. "Amazon still needs a way to get the hardware into people's hands," Gillis says.


Will other retailers drop the Kindle? 
They probably should. Retailers like Best Buy (BBY), RadioShack (RSH) and Office Depot (ODP) say they will continue to carry Kindles, but they may soon realize that Amazon is not their friend. It's just a matter of time before other stores realize that "selling your competitor's major method of gaining customer loyalty" probably isn't "all that great an idea," says Tim Worstall at Forbes.


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21Comments
Sep 21, 2012 11:55PM
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Walmart is the giant that effectively slew the small family owned grocery stores. Now Amazon seems to be on the verge of doing the same to Wal-Mart, Target, et al . So, Wal-Mart......how does it feel to be the 'roasting weenie' instead of the one doing the roasting. Hmmmmm?
Sep 21, 2012 9:55PM
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I have a great idea. One week a year, or maybe just one day a  year, all the networks broadcast the classic sitcoms in prime time: I Love Lucy, Andy Griffith show, Gilligan's Island, etc. I'll bet the viewership will be high and some of the youth will be surprised at how good some of the old TV was. And then add to all that, classic B&W movies staring all the greats.

I was once  the principal of a private school and decided to do an experiment. I showed Mr. Smith goes to Washington and got groans and "Oh no it's not even in color." after about 30 minutes they were on the edge of their seats. Nothing beats a good story and good acting. And you don't even need four letter words and sex - shocking.

Sep 24, 2012 7:54AM
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I live in a small town and walmart is 50 miles away and if there is something that I can wait for i get it from Amazon because of free shipping and no sales tax and I can compare prices on line so with gas prices so high unless I need the product today I wait and SAVE
Sep 22, 2012 2:34AM
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Hello, I have been trying forever to get some help with this matter, but nobody seems to care at all. There is a very serious problem of fear of reporting unfair labor practice in Walmart. I worked there for almost 10-years with an excellent work history, up until we got a new store manager who was extremely verbally abusive to employees including a mentally handicapped female who he would bash until she was hysterically crying. You could hear her wailing across the store, and when I suggested to employees that we report it they said they were afraid they would be fired. I said we have rights and laws in this country and we do not need to be afraid to report abuse, especially of the handicapped. They said I was naive, and that everyone knows Walmart controls the government and everything with its money and lawyers and prides themselves on being able to get away with doing anything they want, I had more faith and trust in our system than that. I told myself from the begining, do the right thing, tell the truth, follow the rules, and trust God, and i began reporting the abuse to upper management. Before you know it the abusive manager started letting me know he was angry with my reporting him and fired me. That was just the begining of the mess. I went to the NLRB and they filed a charge on walmart for firing me for engaging in protected activity.
Walmart then forced me to drop the charge before they would reinstate my job, and then harshly retaliated on me in many ways including false write ups and 2 more wrongful terminations shortly after i returned. When I went back to the NLRB as they had told me to do should this occur Walmart gave perjurious testimony to the NLRB and told numerous extremely slanderous and defamatory lies in order to have the case dismissed. I have struggled very hard through 2 dismissals before obtaining my NLRB files through FOIA and managing to prove so many lies that walmart had told the NLRB, that i believe that is why The Deputy General Counsel finnally told me to re-file my case. It is now back open, but not going well.
Walmart has gone to great lengths, by doing things like what they did to me, in order to instill an atmosphere of fear of reporting in the employees. Everything is not fine at all in Walmart, in fact nobody has any idea how bad it really is because walmart has carefully ensured that the employees are so afraid to report wrongdoing that they won't even say anything when they hear a mentally handicapped female hysterically wailing across the store and hiding in the break room from the ongoing extreme verbal abuse of the store manager, and when the one guy naive enough to say something speaks up, he is promptly fired and subjected to many forms of retaliation up to and including false terminations and having his name defamed and slandered to the NLRB. I could go on and write a book about everything that I alone have been through, not to mention what others have been through with this evil tactic used by walmart to keep their employees quiet about the truth of what really goes on in those stores on a daily basis, but it seems nobody would probably even care.  Meanwhile I have lost my job, my career of nearly 10-years, and probably any chance at ever retiring in my lifetime all because I reported employee abuse including of a mentally handicapped female by a store manager in our walmart store. Robert Snodgrass, 715 Taylor rd., Downingtown, Pa 19335,   Thank You. God Bless you, and God Bless America
Sep 24, 2012 12:34PM
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I sincerely hope wal-mart goes bust and that the little Mom and Pops come back.

we brought this on ourselves by insisting on unfair pricing practices.

in order for us to save 30 cents on a jar of peanut butter, these BIG companies need to pay some 55 year old lady minimum wage, and buy all their products from a country who despises, namely China.

Being frugal and wise with our money is smart, but abusing others to get lower prices is, in my opinion, immoral and despicable.

We hate the big chains, but we support them because we are greedy. Win-Win is all about fair, completive pricing with excellent service. These stores provide lousy service and sub par products.

I refus to shop at the big stores

Sep 24, 2012 8:52AM
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ohhh poor things, evil is offended by good
Sep 25, 2012 1:18AM
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Wow It amazing how stupid people can be whoever wrote those 2 replies to my post about consequences of my actions and just bad managment.  What Walmart did to me is highly illegal first of all, firing me for reporting abuse of a handicapped female employee is illegeal by federal law. It is called wrongful terminarion for engaging in protected activity, then to make stuff up to fire me 2 more times after reinstating my job in exchange for me dropping that initial charge, is illegal retaliation, another federal law violation, and telling horendous lies to the NLRB about me to a federal agent during an investigation is nothing less than Slander, Defamation, and Perjury, which alone would put me or you in federal prison for 5-years. and as far as the consequences for my actions. Excuse me, my actions were trying to stand up for a abused handicapped girl. What are the consequences of that? you wouldn't suggest people to not report ongoing abuse of a handicapped female, would you? or suggest that thier should be consequences for people that do? 
Sep 24, 2012 5:23PM
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E-books will soon become more popular than print.  On line music has replaced records and CD's.  On line shopping has in many cases replaced the need or desire to shop big box stores including Walmart.  Price is only one of the reasons. Better product information and excellent service from Amazon is another.  Blockbuster Video and others replaced by technology.  Walmarts recent move was petty and foolish, one less reason to visit a store with at best marginal service and uniformed help.


Sep 24, 2012 12:41PM
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one less reason to shop at wal mart and target....if they don't have what I want---then I go elsewhere..
Sep 24, 2012 1:20PM
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Before you all go bashing Walmart and praising Amazon, you should think about the dangerous monopoly Amazon has created in the book industry. Now that they deem themselves 'publishers' they're pushing out all other retailers, and even publishers, trying to make themselves the sole source - and we suffer because their atrocious, unedited self-published 'books' are mixed in with the good ones, books that had an actual editor and went through a selection process at a professional publishing house.
Sep 24, 2012 8:06AM
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Walmart takes a lot of bashing for low wages, lack of benefits and squeezing suppliers yet unfortunately they are the new normal. Forty years ago what was considered good paying middle class jobs paid 3 to 4 times minimum wage to start now most jobs considered middle class start around minimum wage. Romney brags about his greatest success being Staples yet never mentions starting wages there are $8.15 an hour with few benefits similar to Walmart. No politician 40 years ago would have bragged about creating a mega company that paid so little, now in the era of union hatred you take what they give you and like it or leave.
Sep 24, 2012 12:26PM
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amazon is an amazing company

 

jeff bezo's is an amazing guy

 

i HATE WAL-MART.

 

Wal-Mart is represents everything that is bad about our country

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