Will Amazon's Silence Be Golden?

Maybe there's truth to the published rumors that Amazon and Wal-Mart are engaged in some type of partnership talks, but there is no comment coming from the Great Northwest about it.

Maybe the public relations spin machine was put out of commission by the earthquake that hit Seattle, Washington last week. Or maybe everyone in Amazon's headquarters is busy ordering goodbye and good luck balloons for their laid-off co-workers.

Or maybe -- and go ahead and call me cynical if you must -- Amazon is in no hurry to squelch a rumor that sends its stock up 20-plus percent.

That reason makes the most sense. Because an Amazon-Wal-Mart deal makes a lot of sense. I have no idea, but my guess is that even if the talks weren't too far along before the news leak, they're in high gear now.

This is one trial balloon that is going up and up. Expectations are rising. So now Amazon finds itself in an awkward position. If no deal with Wal-Mart emerges, investors are going to wonder: Why not?

What's Not to Like?

Amazon and Wal-Mart have had a rocky relationship in the past, including a ban on cross-hiring at one point. But a lot has happened since then.

First, Wal-Mart has had the most on-again, off-again Web site launch in the history of e-commerce. The site seems to get redesigned every other day and attempts are constantly being made to tweak the product offerings and make other changes.

The story behind the Wal-Mart site appears to be that fulfillment issues are a giant stumbling block for the retailer. Why else would Wal-Mart have taken some low-price, low-margin items off of the site unless it was losing money delivering them?

Toy Story

For that reason, an Amazon link seems to fit. Think about the Toysrus.com example. In a single year, the e-tail side of that toy seller's business came back from the near-dead, where it lay after screwing up orders during the 1999 holidays.

A year later, the Amazon/Toysrus.com site not only ruled the online toy store roost during the year 2000 holidays, but it played a major role in sending rival eToys to the dot-com graveyard. That victory is due in large part to the fact that Toysrus.com has e-tail expert Amazon filling its orders and handling all that nasty shipping and handling business it fumbled in '99.

Wal-Mart could reap the same benefits from an Amazon alliance, gaining all the benefits that brick-and-click has to offer without getting its hands too dirty on the fulfillment side.

Wash My Back

OK, so what's in it for Amazon? How about a nice big cash infusion, for starters, or at least access to a company that is doing very well in that area, thank you. How about a presence in Wal-Mart stores and a cut of all the retailer's future Web sales? Those are some pretty enticing upsides.

Added up, the Amazon and Wal-Mart deal looks like a match made in heaven -- almost too good.

Everyone is so high on the partnership already, that if it falls through or if it turns out to be a rumor only, the disappointment will drag Amazon down even further.

Of course, not every one agrees with that prevailing wisdom. Some may believe that the pure-play Amazon would be watered down by Wal-Mart or vice-versa. And they might not be wrong. If nothing else, such a pact would put an end to the Amazon experiment as it has been conducted to date.

Mum's the Word

This is all speculation, of course. That's because, at least for now, Jeff Bezos & Co. are perfectly willing to let the rumor do its thing. No need to rush out and squelch something that is having a positive effect on stock prices. Or something that makes so much plain common sense.

But let's hope the silence indicates they're keeping a secret out there in Seattle. They want to talk, but can't. Because if there's nothing to this latest rumor, the shaking might really begin. And this time it won't be an earthquake.

What do you think? Let's talk about it.