Bloomberg News

Amazon Falls After Wal-Mart Plans to Stop Sellling Kindle

September 20, 2012

Amazon.com Inc. (AMZN:US) shares declined after Wal-Mart Stores Inc. (WMT:US), the world’s largest retailer, said it will stop selling Amazon’s Kindle tablets and e-readers.

Wal-Mart decided not to carry Amazon’s products beyond its existing inventory and purchase commitments, Sarah Spencer, a spokeswoman for the Bentonville, Arkansas-based company, said today in an e-mailed statement. Amazon, the top Web retailer, dropped 0.3 percent to $260.81 at the close in New York.

As Amazon seeks to challenge Apple Inc. 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. Wal-Mart’s move follows Target Corp. (TGT:US), which said in May it would stop selling Kindles.

“When Wal-Mart sells a Kindle, they’re effectively putting in their customers’ laps a cash register for competitors,” Scott Tilghman, an analyst at Caris & Co. in Boston, said in an interview.

Amazon boosted second-quarter sales by 29 percent from a year earlier to $12.8 billion. By comparison, Wal-Mart’s second- quarter revenue increased 4.5 percent, to $114.3 billion.

New Devices

Amazon earlier this month unveiled a new line of bigger, faster and sleeker Kindle e-readers and tablets as Chief Executive Officer 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 Wal-Mart’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 Inc. (FORR:US)

“For Amazon, it’s much more profitable to sell through their direct channel, which is the majority of that business anyway,” Rotman Epps said in an interview.

Drew Herdener, a spokesman for Amazon, declined to comment. The Seattle-based company’s shares have gained 51 percent this year.

Reuters reported Wal-Mart’s decision earlier today.

To contact the reporters on this story: Chris Burritt in Greensboro at cburritt@bloomberg.net; Douglas MacMillan in San Francisco at dmacmillan3@bloomberg.net

To contact the editors responsible for this story: Tom Giles at tgiles5@bloomberg.net; Robin Ajello at rajello@bloomberg.net


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Companies Mentioned

  • AMZN
    (Amazon.com Inc)
    • $331.59 USD
    • -1.32
    • -0.4%
  • WMT
    (Wal-Mart Stores Inc)
    • $75.73 USD
    • 0.18
    • 0.24%
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