The Unofficial AAR Blog

It’s not just Barnes and Noble who is threatened by Amazon anymore

24 Sep 2012 1:27 PM | Digital Rights Committee (Administrator)
Now the biggest retailer in the world is joining the “contain Amazon” camp.

http://www.nytimes.com/2012/09/21/business/wal-mart-stores-dropping-amazon-kindle-tablets-and-e-readers.html?_r=1

Walmart’s decision last week to stop carrying Kindles is likely a sign of a narrowing retail landscape for Kindles, but how much will it hurt Amazon and help Walmart? One might guess that Walmart’s earnings on Kindle sales aren’t that impressive, if they are willing to give up the immediate cash in order to make a statement and preclude potential long term erosion of Walmart business (though this is hard to imagine!). Whether this is a serious hit to Amazon’s bottom line is not something we’re ever going to know—as Walmart won’t say how many Kindle’s they’ve sold, and certainly Amazon won’t break a pattern of not sharing information. But for sure it is a major blow to Amazon, and other retailers like Staples and Best Buy (who currently carry Kindles) may well follow suit. The all-encompassing nature of the their business model–create a product (the Kindle) that is the gateway to your retail site and rely on other retailers to sell it; create a product (books), competing with your suppliers (publishers), that you sell on your retail site along side theirs, and expect other competing book retailers to sell your product/books– may in the end in fact come back to bite them where it counts. If the new Kindle is to have a shot at competing with the iPod and other tablets at some future time, being kept out of the biggest retailers around isn’t going to help the cause. This is only a problem, of course, if broadening the market for Kindle sales beyond the Amazon site is a major strategic goal, necessary for the growth of the Kindle. It’s hard to imagine it wouldn’t be.
 
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