Brick-and-Mortar Retailers Push Back Against Amazon By Snubbing Kindle
Walmart Stores, the world's largest retailer, said it will stop selling Amazon's Kindle tablets and e-readers, leading Amazon shares to drop.
Walmart decided not to carry Amazon's products beyond its existing inventory and purchase commitments, Sarah Spencer, a spokeswoman for the Bentonville, Ark.-based company, said in a statement. Amazon, the top web retailer, dropped 0.3% to $260.81 at the close in New York.
As Amazon seeks to challenge Apple with an expanding line of Kindle e-readers and tablet computers that offer easy access to its online store, it is meeting resistance from the brick-and-mortar retailers that compete with the e-commerce giant. Walmart's move follows Target , which said in May it would stop selling Kindles.
"When Walmart sells a Kindle, they're effectively putting in their customers' laps a cash register for competitors," said Scott Tilghman, an analyst at Caris & Co. in Boston.
Amazon boosted second-quarter sales 29% from a year earlier to $12.8 billion. By comparison, Walmart's second- quarter revenue increased 4.5% to $114.3 billion.
Amazon earlier this month unveiled a line of bigger, faster and sleeker Kindle e-readers and tablets as CEO Jeff Bezos seeks to draw consumers that are facing a widening array of choices for the devices. At stake is a piece of a market that may reach $66.4 billion this year, according to research firm DisplaySearch.
Removal from Walmart's store shelves isn't much of a setback for Amazon, because it's cheaper to sell Kindles online, said Sarah Rotman Epps, an analyst at Forrester Research.
"For Amazon, it's much more profitable to sell through their direct channel, which is the majority of that business anyway," Ms. Rotman Epps said.
Drew Herdener, a spokesman for Amazon, declined to comment. The Seattle-based company's shares have gained 51% this year.
Reuters reported Walmart's decision Thursday.