Walmart gives Amazon Kindle the boot

Amazon CEO Jeff Bezos unveils new Kindle reading devices at a press conference on September 6, 2012 in Santa Monica, Calif.

You won't find any more Amazon Kindles on the shelves at Walmart. The retail giant is dropping the popular tablets, just a few months after Target stores did the same.

A statement from Walmart hints that a pricing dispute may have led to the decision. It says customers trust the retailer to provide "everyday low prices, and we approach every merchandising decision through this lens." On the other hand, some analysts say it's actually a wonder that these big chains ever agreed to sell the Amazon gadgets to start with.

While stores do make a profit when they sell the Kindle for Amazon, Forrester Research analyst Sucharita Mulpuru figures there's a bigger downside. She notes that once the user takes the tablet home, it's Amazon that gets virtually all their business, from app downloads to merchandise orders from the online retailer. With every unit of a Kindle sold by Walmart, Mulpuru explains, "that once-loyal Walmart customer could slip away."

At the Codex Group, researcher Peter Hildick-Smith says the Kindle has been helping to beef up sales of Amazon merchandise across the board, thanks in part to the ease of ordering using the company's proprietary tablet. He suggests that Walmart finally realized delivering its customers to a major competitor made no sense.

As Hildick-Smith explains, "You've got an Amazon store in your hand, wherever you have your Kindle Fire," and it only takes a single click from the user for Amazon to make a sale. He notes that the company has made no secret of its strategy for making a return despite the device's low profit margins: It's designed to be a marketing vehicle for Amazon's goods and services.

Now that two leading chains have kicked Amazon out, Forrester's Mulpuru says it'll be tougher for the online retailer to take on the hugely popular iPad. Those tablets are still being sold by the same chains that will no longer sell the Kindle, as well as in Apple's own stores. Mulpuru says the Kindle needs to have a similar physical store presence if it hopes to be a competitor to Apple.

Some other retailers, including Best Buy, Radio Shack, Staples and Office Depot, are still selling the Kindle -- at least for now.

About the author

Bob Moon is Marketplace’s senior business correspondent, based in Los Angeles.

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