Amazon.com, Inc. (NASDAQ:AMZN) backs down against The Walt Disney Company (NYSE:DIS) but this is no indication that the UK based publishing house, Hachette may face a similar outcome. CNBC‘s ‘Squawk on the Street’ news team discussed the dispute between the two powerful companies over pricing and promotion of the supplier’s products.
The Walt Disney Company (DIS) was at logger heads with Amazon.com, Inc. (AMZN) for about two months according to CNBC. The reporter explained that the online retail giant had removed the option to pre-order The Walt Disney Company (DIS)’s DVDs. However, according to the reporter’s sources, now that Disney’s upcoming releases were available on Amazon.com, Inc. (AMZN), the dispute can deemed to be resolved.
Amazon is smart enough to know when its leeway in bargaining prices is limited. The Walt Disney Company (DIS)’s position as a huge supplier cannot be challenged and it may end up hurting Amazon.com, Inc. (AMZN) more, if the supplier took its business elsewhere.
David Faber of CNBC explained how this news should not be in any way a source of celebration for Hachette whose limited size is in sharp contrast to that of The Walt Disney Company (NYSE:DIS)’s.
“[…] I think the Amazon Disney dispute was a traditional dispute between a very powerful retailer and a powerful supplier and its different than the dispute between Amazon.com, Inc. (NASDAQ:AMZN) and Hachette to a certain extent and the authors and what they want obviously to be lower price points for digital books where James Patterson says for example that it’s not toilet paper that we are talking about here, it’s the books […],” said David Faber.
The e-commerce industry is getting crowded as many companies see ample growth prospects in the sector. However, because of heightening competition these retailers are also forcing their suppliers to cut prices to an extent that the margins for suppliers start to become invisible. Amazon.com, Inc. (AMZN) will have to play this game carefully, as it is nearly impossible to get the fleeing suppliers back on board.
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