As Walmart Fires Kindle, Does Amazon’s Face Go Paperwhite?

As Walmart Fires Kindle, Does Amazon’s Face Go Paperwhite?

Walmart today confirmed today that it won’t be selling any more Kindle products going forward, as part of its future  “merchandising strategy.” Reuters first broke the story this morning. In an official statement, Walmart said —

[quote style="boxed"]Recently, Walmart Stores, Inc. made a business decision to not carry current Amazon products beyond our purchase commitments and existing inventory. 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.[/quote]

So if you want to buy a Kindle at your local Walmart store, you’d better do so now while they have the existing inventory. While Amazon stock is slightly down after the announcement, I wonder if there will be a blip in Kindle sales at Walmart for the next two weeks?

Do you think Walmart had issues with the price it paid for Kindles? I don’t buy that as I’m sure they get squeezed more by Apple for selling iPads and iPods than by Amazon.

Is their decision to drop Kindles surprising? Not if you believe that Amazon is the online version of Walmart. Target made a similar decision back in May. You see, traditional brick and mortar mega-retailers are finding it increasingly hard to compete with Amazon, while Americans are increasingly buying more products and services online.

Even the recent battle over collecting a sales tax here in California, which Amazon is fighting against, will probably not impact the many people who have become so comfortable with buying online as a matter of convenience, rather than price. Amazon’s shipping terms, methods, and costs are also very convenient for many people. The need to drive 10 miles to get it today, just isn’t as strong as it once was.

Kindle Fire HD,Amazon,smart phone,disruption,innovation,innovate,Ipsos,Vantis,InnoQuestAmazon clearly sees itself as a broad online reseller of everything! Everything that Walmart also tries to sell. The Kindle line — and the Amazon-branded smart phone if and when it emerges — is the bedrock for every product and service that Amazon sells. This includes books, music, movies, TV shows, and other content in the future. This also includes all the other categories on Amazon.com from housewares to beauty supplies and clothing. As Jeff Bezos has repeatedly said, “We want to make money when people use our devices, not when they buy our devices.”

So Walmart fires Kindle. With Amazon increasingly looking to find ways to increase customer stickiness through its existing and future hardware platforms, I would imagine that selling Kindles outside of Amazon.com would become increasingly rare. At least in the U.S.

I don’t think Amazon will be embarrassed by this. It wasn’t after the Target loss. After all, Walmart was just a big frenemy anyway.

— Randy Giusto, SVP, Innovation Research and Industry Analyst

randy.giusto@ipsos.com

@ipsosvantis    @randygiusto 

508.254.7975

 

Written by Ipsos Vantis

6 Comments

  1. Howard Greenstein · 09/20/2012

    They realized they were competing with an ecosystem not selling a device. According to stats people who take on Amazon prime move from spending $400/yr with Amazon to $900 (read that in Fast Company.)
    If true, that purchase group has to come from somewhere. I’d say it was a smart move on Walmart’s part.

    • Randy Giusto · 09/20/2012

      Yeah, I’m not surprised by the move at all, and was wondering what took Walmart so long given that Target pulled the plug back in May!

  2. Ana Volpi · 09/20/2012

    The data I saw from 2010 had Walmart as the 4th largest book retailer (behind Amazon, B&N, and the now-defunct Borders). Given that, I am not surprised they are not keen to shift people toward ebooks and away from paperbacks sold in Walmart stores, I agree with you, I am surprised it took that long! I wonder if they saw their sales of paper books fall after they started selling Kindles and if that was part of their analysis.

    • Randy Giusto · 09/20/2012

      Actually Anna, sales of books, music, and DVDs have been plummeting at the big retailers for two years now. So Walmart and Target jumped on the ebook bandwagon when Kindle took off hoping to drive traffic into their stores, but eventually realized they whad the Trojan Horse on their hands- losing more in the terms of other category sales. Can you think of anything that Walmart sells outside of groceries that can’t be had at Amazon?

      I’ve actually seen a rebound in small book stores. Here in California there is the independent bookseller network, many small independents looking to keep their niche going, in the face of Barnes & Noble, Amazon, Walmart, and the shopping clubs – don’t forget about Costco and others though they tend to have mostly the bestsellers and not that broad of an inventory.

      The question is how long will it take for Walmart to throw out Apple and the nook? Because they compete with both when it comes to selling books, movies, TV shows and other types of content whether in physical or digital form. Right now, iPhone, iPad, and iPod bring people into Walmart’s electronics department. But the content that people buy on them is not bought at Walmart- as Walmart itself tries to get into the market and become an online destination for digital goods (look at their Vudu service).

  3. Ana Volpi · 09/20/2012

    I agree with everything you said. I know book, music and DVD sales have been declining in the retail space for a while, and I am not sure why they still have the nook, if they’ve gotten rid of the Kindle Fire. Do you think it is possible for Walmart to make any inroads as a digital goods provider? Seems like they are late to the game . . .

    • Randy Giusto · 09/20/2012

      They have made inroads with Vudu though it is not as popular as Netflix, Hulu, Cinema Now, etc. Though it is probably more popular in rural and suburban markets where Walmart is has more of a force. And it’s primarily for movies. What is missing is ebooks and apps. With ebooks it’s come down to a format war between Amazon, Barnes & Noble, Apple, and what’s on Android Market. It’s hard to envision yet another player.

      The same thing can be said for apps. Though it is believed that Walmart could brand its own hardware through agreements with Chinese device manufacturing. But I’m not sure what image a Walmart labeled tablet or ereader would convey, from a quality perspective.

      I have a hard time imagining Walmart as a major global digital goods provider. Their differentiation has always been “low prices,” not so much selection.

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