Will Amazon's Fights with Hachette and Time Warner Affect its Business?
Amazon's dispute with book publisher Hachette has led to popular titles not being available for pre-order, shipping delays on some books, and questions as to whether the company will face more pushback from its suppliers over terms. That appears to be happening as some product distributed by Time Warner , including the popular Lego Movie, are either not available on Amazon or have shipping times that are longer than the retailer's two-day standard.
"Amazon has been bulletproof. They can do whatever it is they want and their user base doesn't care," panelist Daniel Kline said on Business Take, the show that gives you the Foolish perspective on the most important business stories of the week. "The question is, what's the tipping point?"
The Time Warner dispute may get more attention than the Hachette battle because The Lego Movie is highly anticipated by families with young children. If it's not available, people might shop elsewhere. If customers register on another website to make the purchase, that could cause Amazon problems down the line since the fact that 244 million people already have credit cards on file with the online giant is one of its main competitive advantages.
"The timing is horrible for Amazon," panelist Jake Mann said. "In the current market what's to stop customers from fearing that Amazon won't have other titles in the future?"
"It's a matter of trust," Kline said. "If you start going to stores that have empty shelves you go to other stores."
To compound Amazon's problems Wal-Mart and Barnes & Noble have been selling the items Amazon has availability problems with at large discounts to lure in customers.
"Amazon has to do this," host Jason Hellmann said. "They have to take a hard line with their vendors."
Hellmann explained that Amazon operates on razor-thin margins due to its low prices. Part of the way the company maintains those prices is being strict with vendors and demanding favorable terms. In the past Amazon -- due to its size -- has been able to do that pretty much across the board. These vendor problems suggest that the company may have pushed so hard that certain vendors may be willing to forego the opportunity to reach Amazon's customer base if it means accepting unfavorable terms.
Will these disputes cause Amazon to lose customers? Should the company hold the line or give in to its vendors? Watch the video below for the whole story then share your thoughts and comments below.
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The article Will Amazon's Fights with Hachette and Time Warner Affect its Business? originally appeared on Fool.com.Daniel Kline has no position in any stocks mentioned. Jake Mann has no position in any stocks mentioned. Jason Hellmann has no position in any stocks mentioned. The Motley Fool recommends Amazon.com. The Motley Fool owns shares of Amazon.com and Barnes & Noble. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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