Brand Wars: Wal-Mart v. Amazon

Amazon Kindle 4

In a move to protect its own merchandise sales, Wal-Mart announced Thursday that it intends to disassociate itself with Amazon’s Kindle e-reader. This is not a shocking move; in fact, the surprise is that Wal-Mart agreed to carry the Kindle in its stores in the first place.

Brands must protect themselves if they want to survive. This is why McDonald’s does not sell Burger King’s Whopper.

Wal-Mart and Amazon compete for the same customers. Both offer consumers low-priced, accessible goods, and both try to make their “stores” as easy and accessible as possible. While the Wal-Mart and Amazon shoppers likely overlap, one makes a determined effort to drive to a store while another accesses his online.

Wal-Mart has giant box stores, stocked to the nines with popular items promised at the lowest possible price. Amazon prides itself on slashing suggested retail prices and selling much the same stuff as Wally World. Amazon even guarantees free, two-day shipping for users who sign up for Amazon Prime.

Given their competition for the same consumer, my question is why Wal-Mart decided to stock its rival’s brandname e-reader in the first place. Target, too, removed the Kindle from its stores in May, wanting to reduce “showrooming” to customers who turned around and bought the Kindle for cheaper from Amazon.

Even more, the box store model is in jeopardy, and it’s online retailers like Amazon that control the guillotine. Case in point: Best Buy announced it would close 50 stores in April and is refocusing instead on small-format stores.

Wal-Mart continues to carry Barnes & Noble’s Nook e-reader and Apple’s iPad. I’m sure Wal-Mart still generates sales on both of these items, particularly the iPad, because a Wal-Mart store is often more accessible or less crowded than the Apple store.

But throwing Amazon’s Kindle into stores likely did not generate too many sales for Wal-Mart. In fact, encouraging the Kindle likely sent consumers to Amazon’s website, where they found other items they could order from Amazon, too. The brand was smart to remove a rival name-brand e-reader and focus instead on channeling customers toward electronic purchases such as the iPad that will definitively increase sales.

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