Saturday, September 22, 2012
Sumo Wrestling: WalMart Vs Amazon
This week, Reuters broke the news that the world’s largest store, Walmart, had taken the decision to no longer carry the world’s largest etailor’s Kindle tablets and eReaders once the existing inventory and purchase commitments had been honoured. It was reported as being a merchandising strategy and a recognition that Amazon is a real competitor across all media content. Is more about who owns the customer, who is providing the service and whose brand is actually being built than dropping some devices?
In the physical world it was all about filling the shelf and if you didn’t have the product on the shelf everything else could simply fail. The likes of Amazon then created the virtual shelf with vitual inventory and online service and many failed to match the offer. Some even effectively gave their digital business, be it for physical or digital product, to these new virtual traders. Amazon built a significant marketplace which few have been able to emulate, where even when they didn’t get the sale themselves, it was done effectively in their name and they earned a commission on it. Amazon is no longer about books, or digital media, it is a retail virtual market. The Apple store then took this commission approach to a new level and established that doing business through their appstore , on their iPads, be it for purchases or subscriptions, warranted a hefty 30% commission payment. They even tried to force the whole digital market back into fixed pricing with them being the ‘most favoured nation.’
We have gone from digital device and format/DRM lock-ins and transaction charges to platform commission and portal charges and now have to ask what next and how many slices can the pie take?
It is somewhat pleasing to see the emergence of HTML5 as the potential great leveller, but equally interesting to see the browser positions adopted by Amazon Kindle with their Silk browser and Apple with own browser. Are these to become the new toll booths and open market restrictions?
If we were to ask the consumer who is their first choice gateway for music, film, games, TV, radio, news, books, will they select one umbrella service or many separate ones? Are they now looking for a simplified access and a one stop shop and is this driven by a marketplace or merely a platform. We don’t know the answer but unless we ask we will merely assume we know the answer. The important thing is that what once was the brand everyone thought they bought from may now be changing and the power shifting through technology to others who simple attract consumers and facilitate access.
Walmart may so no to selling Kindles but if all they devices they sell still access Amazon and they don’t have the comparable offer are they exposed to the same risk? By not stocking Kindles are they also just driving their consumers who want one to another store full stop?