Wal-Mart has clearly stated that they would no longer be selling Amazon’s Kindle. Fortunately for Amazon, a massive chunk of the sale of Kindles comes directly through their official website itself. As reported by Reuters, Wal-Mart confirmed their decision to no longer sell Amazon’s Kindle through an email. As stated, Wal-Mart has refused to put on sale any more products apart from the current inventories. This incident is a proof of the mounting tension between the physical and the online retail world. Amazon did not comment on the issue at hand.
So, what drove Wal-Mart into taking this decision? As noticed, online retailers have been overshadowing physical retails stores, which are also referred to as brick-and-mortar stores. What adds to their worry are instances wherein customers are often seen browsing retail stores, but ultimately end up opting for online retail stores when the time comes to make the final purchase. Hence, naturally, physical retail stores face threats of their sales plunging down since customers prefer shopping online. It is this very threat that has forced companies like Circuit City and Borders to shut shop. Though no clear justification was given by Wal-Mart for their decision, they stated that this decision simply is consistent with the merchandising strategy of the company. However, Wal-Mart assured its customers that they would continue selling other e-readers and tablets.
This decision is less likely to have a major impact on the overall sale of Kindle. Amazon sells Kindle products, including the Kindle Fire HD Tablet and the Kindle Touch e-reader through their web stores. This also helps Amazon earn a thin margin of profits, that is, when e-books are purchased by users who own the Kindle reader or when orders for goods are placed using the Kindle Fire, Amazon manages to make some amount of money. These profit margins most certainly do not appeal to Wal-Mart, who is looking at competing with Amazon without any alterations in the prices imposed.
By far, Wal-Mart has not been the first to cut away from Kindle. Earlier this year, Kindle was taken off Target’s stores as well. Knowing how Amazon is mainly making profits through their own online stores, one does wonder how much of an impact are these physical retail stores actually causing by their decisions.
