Wal-Mart to Stop Selling Amazon Kindles

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Customers visiting the Amazon website will certainly see that the online retailer has new Kindle ereaders and tablets out this fall, but those perusing the electronics section of Wal-Mart might never know.

According to a memo sent to store managers this week, Wal-Mart will no longer sell Amazon Kindle ereaders and tablets. The memo was obtained by Reuters, which reports the memo said, "We have recently made the business decision to not carry Amazon tablets and eReaders beyond our existing inventory and purchase commitments."

The memo also stated that the move is consistent with Wal-Mart's overall merchandising strategy. The decision only affects Amazon's devices, and other ereaders and tablets will still be sold in Wal-Mart stores.

When Wal-Mart states the decision is in keeping with its merchandising strategy, it implies that Amazon couldn't give them a good enough price on their Kindle devices to make them worth selling. The Reuters report points out that Amazon's margins on Kindle devices are believed to be thin.

The reason those margins are thin is that Amazon is stil not really a hardware company. A quick look at any of their devices shows that they are all designed for customers to consume content. Specifically, to consume Amazon content. The Kindle Fire, for example, runs on a version of Google's Android operating system that is modified to use Amazon's app store and display content prominently. It functions wonderfully for selling movies, ebooks, and games that are bought through Amazon. Wal-Mart sells many of these same products in the form of DVDs and physical books. It's possible that part of Wal-Mart's decision has to do with not selling devices that are geared toward selling its competitor's products.

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