Supposedly, it all started off last year when the 3DS launch was less than stellar. Amazon had a lot of unsold 3DS consoles sitting around their warehouses, and they decided to start demanding a bigger wholesaler discount - equal to what Wal-Mart receives.
Anyway, this request was flatly denied. Amazon requested permission to sell the consoles at a discount. Denied again. To strengthen their case, and try to bully their way into the bigger discount, Amazon complained that they have to replace a lot of the systems because of the screen scratching problem, and starting making a big production about sending each and every one back to Nintendo, wanting a full & immediate credit, which started to overwhelm Nintendo's intake for seconds merchandise, which started to make Nintendo really mad, because Amazon was sending over units that had such slight, almost nonexistent problems, that they were not used to being bothered with such trivial things. (Supposedly.) Previously, and for other consoles, Amazon just sold returned (working) consoles at a discount on their "Warehouse Deals" page, which Nintendo doesn't like, but Amazon claimed that they were losing ALL their profit margin on 3DSes with shipping faulty systems back to NOA, as well as dealing with unhappy customers that were leaving and/or not spending as much as previously.
Nintendo smelled bull (and rightly so!) and fired back and said that there WAS no problem with the scratching, and there was no way they were going to piss off all the other big wholesalers by giving Amazon a sweeter deal (when Nintendo already considers Amazon the scourge of the business world for not having any brick & mortar stores - which is why Amazon wasn't getting the Wal-Mart discount in the first place!) Now keep in mind, this was all going down right about the time the price drop was announced, which was another thing that pissed off Amazon. Nobody was buying 3DSes after the price drop was announced, and Amazon does not like having a warehouse full of crap that's not moving. Their business model is structured around moving out cold merchandise by marking stuff down (which of course Nintendo will not allow them to do on consoles.) Then, Nintendo poured gasoline on the fire by permitting Wal-Mart (and only Wal-Mart) to sell consoles at the new, lowered price a couple of days BEFORE the official date of the price drop, without losing their margin on the old stock. Amazon has (reportedly) not bought 3DS consoles direct from NOA since that day. (Though they've occasionally picked up some 3DSes from other wholesalers.)
Neither party cares to detail whether it is Amazon refusing to buy, or Nintendo refusing to sell. Rumor has it that it's Nintendo that put Amazon on the **** list, but I've heard at least one pretty well-informed Amazon employee that says that it's their buyer that's doing it. I tend to think it's Amazon.
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This is just bad blood between these two companies, and some sort of power struggle between the buyer at Amazon and the wholesaler account rep at Nintendo. It has little-to-nothing to do with the screen scratching, and everything to do with money and corporate egos.
