Wal-Mart joined its fellow big-box retailer in booting the Kindle line of products from its stores, as brick-and-mortar retailers have grown more frustrated at the consumer practice of "showrooming," which Amazon has, at times, encouraged. Wal-Mart's decision is just the latest sign of retaliation. The online giant, of course, sells its Fire tablet at rock-bottom prices, with the intention that consumers will use it as a portal into its online retail warehouse and digital media offerings.
Fighting Fire with fire
The move seems like a smart one for the world's biggest retailer, as Amazon's online dominance poses an ever-growing threat, especially as the e-tailer adds distribution centers around the country, potentially cutting delivery time down to one day, or even same-day.
But as Amazon continues to grow its position in a wide range of industries, Wal-Mart's move raises the question of how many more of these rejections await Amazon as it attempts to leverage its size into new businesses.
Best Buy (NYSE: BBY ) is an obvious candidate here. The electronics retailer has been one of Amazon's biggest victims, as its shares have fallen 50% in two years amid declining same-store sales and a host of self-admitted mistakes. Best Buy, however, seems to be moving in the opposite direction, as it is currently taking preorders for Amazon's updated line of Kindle products. Staples, the No. 2 online retailer, could also find reason to ditch the Kindle, as Amazon tries to intrude on its office-supply turf.
Wal-Mart's and Target's decision, of course, is a boon for other tablet makers like Apple and Barnes & Noble. The bookseller formed its own strategic partnership earlier this year with Microsoft, when the Windows-maker said it would invest $300 million in the Nook.
Netflix (Nasdaq: NFLX ) is yet another rival of Amazon that could fight back directly, and it's easy enough to imagine the streaming champion partnering in one way or another with one of the retail giants that have snubbed Amazon.
Investors shrugged off the news, as Amazon shares dipped just 0.5% before quickly recovering and, while this announcement should not have any material impact on the company's financials, investors should keep an eye out for similar backlashes. Going up against stiff competition from heavyweights ranging from Apple to Wal-Mart could be a precarious position for a stock priced as highly as Amazon's.
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