Bloomberg Business Week reports that Walmart is following Target’s lead and imposing a strict limit on the number of DVDs that customers can buy at one time; the new policy puts a five-DVD cap on new releases.
The reason? According to the story, DVD kiosk operators such as Redbox andNCR get about 40 percent of their new DVDs from retailers such as Walmart, in part because the prices are so low and in part because they have been unable to reach an agreement with some movie studios that would allow them to directly buy new releases. And so they’ve been bypassing the studios and shopping retail, since they do enough volume with new releases to justify the price that they pay.
Target reportedly put a limit on new release DVD sales last December.
The reason? According to the story, DVD kiosk operators such as Redbox andNCR get about 40 percent of their new DVDs from retailers such as Walmart, in part because the prices are so low and in part because they have been unable to reach an agreement with some movie studios that would allow them to directly buy new releases. And so they’ve been bypassing the studios and shopping retail, since they do enough volume with new releases to justify the price that they pay.
Target reportedly put a limit on new release DVD sales last December.
- KC's View:
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This reminds me of what a friend of mine once told me about his kids’ camp supply business. He was having a hard time getting the bath towels he needed in a timely fashion and at an appropriate price from manufacturers...and discovered that he could actually do better by shopping at Walmart for towels and sheets that he’d resell with a markup.
In fact, it got to the point where he developed a relationship with the manager of his local Walmart, with whom he would essentially place orders for what he needed...and then, when the sheets and towels came in, he’d literally back his truck up to the store’s back door, where Walmart employees would load them into his truck. The store got the sales, the manager got the credit, and the boxes that came in the back door from the manufacturer never even got unpacked.
Just goes to show you what kind of buying power - and selling power - Walmart has.
