MAE ANDERSON | The Associated Press Modified September 20, 2012
NEW YORK — Walmart Stores Inc. is phasing out the sale of Amazon.com’s Kindle Fire tablet and Kindle e-readers, the second major retailer to stop offering the items in six months.
Wal-Mart, the world’s largest retailer, said Thursday the decision was made as part of its overall merchandising strategy to offer a broad assortment of products at low prices. Amazon has been selling lower-priced tablets at thin – if any – profit margins to boost sales of digital media like books and music from its online store. That makes it less attractive for major retailers to carry Kindles in their stores, particularly as online retailers like Amazon become more of a threat for traditional brick-and-mortar stores.
Retailers are trying to fight a growing practice called “showrooming.” That’s when shoppers, armed with smartphones, browse products in physical stores and then shop online for a better price.
The move echoes Target Corp.’s decision to stop offering the Kindle in May following its own merchandise review. And it comes ahead of the holiday season, which is crucial for retailers since they generate up to 40 percent of their annual revenue during the period. Tablets are expected to be a popular gift this year, much like last year.
“Amazon is clearly becoming a more attractive consumer retail destination, so it was inevitable that Target or Walmart would stop selling the Kindle product,” said Morningstar analyst R.J. Hottovy. “They perceive Amazon as a potential threat, and this is one way to neutralize that.”
Walmart Stores will continue to sell a range of tablets and e-book readers, including Apple’s iPad, Barnes & Noble’s Nook, and devices from Samsung, Sony and others.
Walmart spokeswoman Sarah Spencer said the Bentonville, Ark., company will continue to sell its existing inventory of Kindles until it is depleted.
While neither Walmart nor Amazon releases Kindle sales figures, Amazon itself is by far the biggest seller of Kindle devices, so being cut off from Walmart is unlikely to make a dent in its revenue. Amazon touts its Kindle line as its best-selling product.
“At the end of the day, Kindles are a very small percentage of sales for a lot of these mass merchants,” Hottovy said.
Source:
http://www.theolympian.com/2012/09/21/2258640/walmart-puts-brakes-on-amazons.html