NEW YORK (AP) - Wal-Mart 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.com 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
Wal-Mart 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."
Wal-Mart 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.
Wal-Mart spokeswoman Sarah Spencer said the
Bentonville, Ark., company will continue to sell its existing inventory
of Kindles until it is depleted.
While neither Wal-Mart Stores nor Amazon.com
release Kindle sales figures, Amazon itself is by far the biggest seller
of Kindle devices, so being cut off from Wal-Mart 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.
"So this won't have much of an impact on them, or Amazon, either."
Amazon unveiled several new devices in its Kindle
line earlier this month, including ones with larger color screens, as it
steps up competition with rival tablet makers such as Apple Inc.
Amazon.com introduced a new $299 8.9-inch Kindle Fire and a $159 7-inch
Kindle Fire, down from the original price of $199. A 7-inch HD version
starts at $199. Meanwhile, the cheapest iPad costs $399, and the most
recent models start at $499.
Amazon doesn't say how many Fires it has sold, but
says it captured 22 percent of U.S. tablet sales over nine months. That
would make the Kindle Fire the second-most popular tablet, after the
iPad. Tom Mainelli at research firm IDC said that figure matches his
estimate of 6.7 million Fires sold, all in the U.S.
Amazon.com, based in Seattle, declined to comment. Its shares fell 87 cents to close at $260.81.
Wal-Mart shares rose 39 cents to close at $74.76
