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Wal-Mart To Stop Selling Amazon Kindles

First it was Target, and now Walmart Stores, Inc., has announced that they will no longer be selling Amazon.com Inc's Kindle eReaders and tables. The reason is obvious. Amazon has continued to outpace Walmart in the online marketplace, while still capitalizing on sales of their Kindle products in Walmart's physical stores. It could be concluded that Walmart and Target were cannibalizing their own retail sales by selling a competitor's product, the Kindle Tablets.

Though mainly in the online retail world, Amazon has previously tested physical stores for other goods. And now that two large mass retail chains are no longer selling Kindle, analysts and industry experts are speculating that the dominant online retailer could open its stores where shoppers could try out and buy Kindles.

Amazon "is a little bit of a Trojan horse" when the Kindle is sold in other stores, said Sucharita Mulpuru, retail analyst at Forrester Research. "They should have made this decision to not carry the Kindle a long time ago."

The timing of this decision to no longer carry the Kindle eReader and tablet products will definitely have an impact on Walmart's bottom line, especially this close to the holiday season.

"We have recently made the business decision to not carry Amazon tablets and eReaders beyond our existing inventory and purchase commitments," Wal-Mart said in a memo sent to store managers on Wednesday. "This includes all Amazon Kindle models current and recently announced."

Several other "big box" retailers have stated that they will continue to carry the products in their stores. These companies include Best Buy Co Inc and RadioShack Corp.

Walmart is famous for driving lower prices, which almost always involves a reduction of supplier margins, Amazon might not have had that much room to negotiate. If Amazon has a thin enough margin on their readers and tablets, they may not have much in the way of profits to share with retailers.

"I think part of it could be margin, though the bigger point is that Wal-Mart and Target view Amazon as a competitor," Tilghman said.

Wal-Mart continues to sell Apple iPads, Barnes & Noble Inc's Nook, Google Inc's Nexus 7, Samsung's Galaxy Tab and other tablets and eReaders.

A search for "Kindle" on Walmart.com recently brought up peripheral items such as tablet and reader carrying cases as well as screen protectors. Walmart will continue to sell these third-party products that can be used with the Kindle eReader and tablets.

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