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Target to stop selling Amazon Kindles in its stores

Even if it loses offline Kindle sales elsewhere, impact on Amazon is minimal, analysts say

May 4, 2012 12:35 PM ET

Computerworld - Target plans to stop selling Kindle e-readers in its brick-and-mortar stores after seeing buyers test the devices in its showrooms only to later buy them online from Amazon.

Target's decision was reported this week in The New York Times, after analysts reported in January that the company wasn't willing to let online-only retailers use its 1,800 stores to showcase their products while undercutting Target's prices.

Target's decision could influence other retailers that sell Kindles, including Wal-Mart, Staples and Best Buy, analysts said. Amazon and the other physical retailers didn't respond to a request for comment.

"Target's problem is a common problem for brick-and-mortar companies," said Rob Enderle, an analyst at Enderle Group. "Customers will find what they want at the store, then leave and shop for the best price online."

Smartphone apps now available allow customers to scan a barcode on a product in a store and instantly look for better prices at other stores in the area and online, Enderle noted.

What has made matters worse at Target is that Amazon's Kindle Fire tablet also serves as Amazon's online storefront to everything Amazon sells, Enderle added. "So that's like Target is promoting all of Amazon, and Target's not a fan of doing that," Enderle said.

Enderle said if other brick-and-mortar retailers stopped selling Kindles, Amazon's physical shelf space could dry up and Amazon would have to find shelf space by opening stores in malls or kiosks. Barnes & Noble has one advantage in selling Nook e-readers and tablets because it can offer a place for users to test out the devices before buying them, analysts said.

Jack Gold, an analyst at J. Gold Associates, said he would not be surprised to see Best Buy or Staples, among others, "push back on selling Amazon Kindles as a result of this frustration with Amazon."

However, even if large retailers stop selling Kindles in their stores, Gold sees a "minimal effect on Amazon and Kindle sales" simply because most of their devices are sold directly.

Also, offline retailers wouldn't see much material impact if they stopped selling the devices, since there was probably only a small mark-up for them, Gold added.

Amazon has sold its Kindles at a loss, primarily to encourage purchases of books and other merchandise with the device where it can make a profit, Gold noted. "It's not a real penalty to Amazon to only have direct sales of the device," he said.

covers mobile and wireless, smartphones and other handhelds, and wireless networking for Computerworld. Follow Matt on Twitter at Twitter @matthamblen or subscribe to Hamblen RSSMatt's RSS feed. His email address is mhamblen@computerworld.com.

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