According to Forbes.com, Walmart has just announced that it will no longer sell Amazon’s tablets after it has sold its current inventory. This announcement by Walmart follows Target’s action several months ago that they would not sell Amazon products in the future.
One of the issues is that the Kindle offered Walmart low margins and you should not believe that for one minute because Walmart makes a living on selling products at low margins.
The problem here is one of marketshare. Walmart sells hardcover and paperback books and Amazon is trying to change the market to accept more ebooks which carry way better margins. Walmart is not yet ready for this.
But do not expect them to be sitting on the sidelines for too long. Walmart has the resources to easily develop an OEM e-reader and then Amazon will have some real competition.
Can you imagine what a Walmart house branded ereader would cost? Could you imagine what they would force authors to charge for ebooks so that Walmat can make their pennies and what it would mean, in terms of margin pressure, for Amazon?One of the cardinal rules in retail is not to upset Walmart. If you do you do so at your own peril. I’m not saying Amazon has upset Walmart’s apple cart but I do think they have showed them a new market it can exploit.
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