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Walmart Also Fires the Kindle

Written by Tom Ryan

Following a similar move by Target in the spring, Walmart revealed Thursday that it will stop selling Amazon's Kindle tablet line.

"We have recently made the business decision to not carry Amazon tablets and e-readers beyond our existing inventory and purchase commitments," Walmart said in a memo sent to store managers Wednesday, according to Reuters. "This includes all Amazon Kindle models current and recently announced."

A statement from Walmart's public relations stated, "Our customers trust us to provide a broad assortment of products at everyday low prices, and we approach every merchandising decision through this lens. We will continue to offer our customers a broad assortment of tablets, eReaders and accessories at a variety of great price points. This decision is consistent with our overall merchandising strategy."

Walmart's lineup will continue to include Apple's iPads, Barnes & Noble's Nook, Google's Nexus 7, Samsung's Galaxy Tab and other tablets and eReaders. Amazon declined to comment.

With no further explanation, three theories — all intertwined — emerged as to why Walmart dropped the line:

1. Skimpy margins: Amazon can sell its Kindle lineup apparently at loss-leader margins because it ultimately makes more money from people purchasing e-books with the Kindle eReader or merchandise through its Kindle Fire tablets. Walmart also competed directly on the item with Amazon.com. A pricier item such as the iPad was presumed to offer more margin room, although some observers said all technology providers drive hard bargains.

2. Kindle competition: Last month, a new line of faster and sleeker Kindle e-readers and tablets was unveiled with higher-end models offering easy access to Amazon's online store. While other 7-inch tablets also support anywhere-online buying, a line may have been crossed. Scott Tilghman, an analyst at Caris & Co., told Bloomberg, "When Wal-Mart sells a Kindle, they're effectively putting in their customers' laps a cash register for competitors."

3. Amazon competition: The sexiest theory is that Amazon's threat as a competitor finally outweighed carrying the Kindle, which included its popular eReader line. Books, CDs and videos are no longer the only categories Amazon competes in. Amazon "is a little bit of a Trojan horse" when the Kindle is sold in other stores, Sucharita Mulpuru, retail analyst at Forrester Research, told Reuters. "They should have made this decision to not carry the Kindle a long time ago."

For Amazon, the impact was said to be moderate given that most Kindles are sold at Amazon.com. But with Walmart joining Target in discontinuing the Kindle, Amazon may be more inclined to pursue its rumoured opening of its own stores to showcase Kindles.

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