Target to Fire Amazon’s Kindle Line
For a lot of people, it never made a whole lot of sense that retailers such as Best Buy, RadioShack, Staples and Target would choose to sell rival Amazon’s Kindle e-reader and tablet devices. But they have had some success. Target, for example, reported during the most recent Christmas selling season that Kindle was its best-selling tablet on Black Friday.
Positive sales or not, Target apparently has decided that it’s paying too high a price contributing to the top and bottom lines of a company that it not only competes with in electronics, but every other product category it sells. A small but growing percentage of consumers, for example, are coming to its stores with mobile devices and checking Target’s prices against Amazon’s.
"Amazon has been one of the most disruptive forces," R.J. Hottovy, a Morningstar analyst, told the Star Tribune. "Store traffic and profitability have suffered at the mass merchants, particularly at big-box specialty retailers."
Mr. Hottovy said the recent deal between Target and Apple to test a store-within-the-store concept at 25 locations may be behind the decision to drop Amazon. With 1,700+ stores and growing, it seems unlikely that a small deal such as that would be, in and of itself, enough to make Target completely delist the Amazon line.
Another reason behind dropping the Kindle line could simply be declining sales. According to IDC, market share of the Kindle Fire fell about four percent in the first three months of this year after accounting for nearly 17 percent of tablet sales in the last quarter of 2011.
"The tablet market in general has been very seasonal," Bob O’Donnell, IDC’s program vice president, told Reuters. "At $199 it [Kindle] was much more of an impulse buy during the holidays. You don’t get much of an impulse buy during Q1."
Target spokesperson Molly Snyder said the decision to stop selling Kindle devices was part of the normal business process. In an email to Reuters, she wrote that the company "continually evaluates its product assortment to deliver the best quality and prices for our guests."
As a number of articles pointed out, both Apple and Barnes & Noble also compete with Target in several categories, although not nearly the number of categories as Amazon.
- Target to stop selling Kindles from rival Amazon – Star Tribune
- Target to stop selling Amazon’s Kindle devices – Reuters
- Amazon’s Kindle Fire shipments slump in Q1: IDC – Reuters
- Target will stop selling Amazon Kindle devices – The Christian Science Monitor
Discussion Questions: What do you think of Target’s decision to discontinue sales of Amazon’s Kindle devices? What will this mean for Amazon and Target?