There is simply no denying the popularity of the Amazon Kindle. The eReader from tech giant Amazon.com has quickly gained aficionados from across the globe, thanks to the system’s easy to use downloading system and the relatively inexpensive price of the device. As Amazon has no physical stores of its own, it has primarily focused on making the device available on its website and through the physical shops of retail partners like Target. Unfortunately for Amazon, Target has announced that they will no longer be stocking the eReaders, and will begin phasing out the device immediately.
Target’s announcement comes as somewhat of a surprise for those within the technology industry, as there was no indication of any friction between the two companies. Target’s main beef with the device is very likely a phenomenon many physical retailers have become all too familiar with in recent years. Potential buyers come to Target to try to the Kindle, seeing whether or not the product could be a good fit for their personal needs. Once they have made a decision, the buyer heads to the net to purchase the product. This means Target makes nothing on the sale, but is nevertheless tasked with the responsibility of maintaining the product in its stores.
Plenty of companies have experienced similar issues, with Best Buy, Circuit City, and other big box electronic companies unable to compete with the lower prices found online. Not only are online retailers able to undercut physical stores because of lower overhead, but many online retailers are not legally required to collect sales taxes on purchases online. This can add up to a significant chunk of change for more expensive items.
In regards to the specific Kindle situation, Target is likely frustrated that Amazon does not provide the device to the retail chain at an amount that allows them to remain competitive with the online retailer. This means Target makes very little from the device, as most savvy customers are quick to jump online. By refusing to stock the device, Target could potentially be opening the door for other retailers to stop partnering with Amazon in selling the Kindle.
In spite of Target’s decision to stop selling the Kindle, the device was by far the most popular tablet available in Target. Currently the retailer also sells eReaders from competitors like Barnes & Noble. Furthermore, Target recently signed a contract to begin featuring Apple iPads in stores across the nation. This will no doubt prove useful for Apple, whose stores are primarily located in urban areas in the United States. Apple already has similar contracts in place with other big box stores like Walmart and Best Buy.
Although Target has been reluctant to comment on the situation to the press, a letter sent to vendors was obtained earlier this year, and Target spokespeople have confirmed the letter was sent from the company. The letter quite clearly explains why the chain is frustrated, as executives explain, “What we aren’t willing to do is let online-only retailers use our brick-and-mortar stores as a showroom for their products and undercut our prices.” This is a phenomenon many now refer to as showrooming.
For the time being, Target’s announcement will likely have very little impact on Amazon’s overall sales and profitability. The only potential threat to the chain would be if other companies decide to follow suit and stop stocking the product. When the Kindle was first introduced to the market, Amazon pushed hard to make certain the product was available in physical retail outlets, as many customers are reluctant to purchase something they have never experienced in person. Now that Target has been carrying the device for two years, most of the general public is quite familiar with the concept and a need for a strong physical presence is less pertinent than it once was. Regardless, it will be interesting to see whether any other retailers follow suit in eliminating the product from their shelves.
Sally Thames is a freelance writer and also writes for http://www.antivirussoftwarealert.us . If you have questions or suggestions for her please contact her by twitter @SallyThames