Wal-Mart Stores Inc, the largest retailer in the US, said on Thursday it was dropping Amazon’s Kindle tablets and e-readers, a sign of how seriously it views Amazon as a competitor in the consumer goods market.
Target said in May that it would stop selling Kindles, although other stores, including Best Buy, Staples and Office Depot, said on Thursday that they would continue to carry the devices.
Wal-Mart did not specify why it was discontinuing its Kindle sales, but analysts said it was not hard to decipher, given that the retailer will still sell similar devices from companies like Apple, Google, Barnes & Noble and Samsung.
Physical retailers have been worried about customers who browse in stores and then buy from online competitors instead. Displaying the new Kindles encourages that behavior, analysts said.
While earlier black-and-white Kindles were only good for reading books, the newer Kindle Fire, introduced last year, can be used for e-books, movies, games and potentially anything Amazon sells, thanks to a built-in Web browser.
“The Kindle Fire is the Trojan horse,” said Andrew Rhomberg, the chief executive of Jellybooks, an e-book recommendation site. “It’s a shopping platform that covers so many more categories than e-books. It affects Wal-Mart in a different way than the early Kindles and e-readers did.”
Colin Gillis, a technology analyst for BGC Financial, said that by selling Kindles, Wal-Mart was “encouraging its customers to step into that ecosystem.”
“Every time you pick up your Kindle, they’re trying to get you to buy patio furniture” at Amazon, Gillis said. “If I were Wal-Mart, I certainly would not be encouraging my customers to go down the path of owning a Kindle and buying things from Amazon.”
Moreover, the Kindle line and most tablets are only marginally profitable for retailers, Forrester Research analyst Sarah Rotman Epps said.
“A lot of them have had it with tablets other than the iPad,” she said. “They’re not high-margin products, and other than Apple ones, no one is selling these devices in great volumes anyway. For Wal-Mart to drop Amazon is more of a symbolic blow rather than a substantive one.”
However, if more retailers back away from selling the Kindle, Amazon will lose valuable physical display space that it cannot match with a Web site, exposure that becomes especially important during the holiday shopping season.
“Amazon still needs a way to get the hardware into people’s hands,” Gillis said.
Amazon declined to comment on Wal-Mart’s decision.