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Where should you buy an e-reader?

The Kindle and Nook are available at big-box retailers. Should shoppers bite?

By Karen Datko Apr 28, 2010 5:13PM

This Deal of the Day comes from Kelli B. Grant at partner site SmartMoney.

 

Before last week, buying one of two popular e-readers meant ordering it directly from the manufacturer. Now, consumers have a choice: Stick with the manufacturer or buy from a retailer.

 

Shoppers in search of the Kindle reader can purchase it from manufacturer Amazon.com and, as of last Sunday, in some Target stores in Minneapolis and Florida (a nationwide rollout is planned for later this year). The Nook reader, once available only from Barnes % Noble, went on sale at Best Buy stores and on the chain’s website on April 18. (Both devices retail for $259 at each location.)

 

The expansion suggests e-readers have grown from a niche device to a mass-market product. E-book sales rose 177% last year, to $313 million, according to the Association of American Publishers.

 

“It’s a legitimate category now,” says Andrew Eisner, director of content for Retrevo.com, a gadget site offering user manuals and online reviews. “[Amazon and Barnes & Noble] are more interested in selling e-books for those e-readers.”

The April release of the iPad also put pressure on retailers to begin selling e-readers, says Kit Yarrow, a professor of psychology and marketing at Golden Gate University in San Francisco. During the first quarter, preorders of Apple’s tablet surpassed sales of the Kindle and the Nook, according to DigiTimes Research. Although the iPad isn't primarily an e-reader, the manufacturers still needed to move quickly to retain consumers’ attention, she says.

 

An end to retail exclusivity on the Nook and Kindle could be largely beneficial for consumers, although buyers may have to consider a few drawbacks, including sales tax and a hard sell on extended warranties. Buyers should not expect flat-out price breaks, either -- Target and Best Buy almost certainly agreed to keep prices in line with their respective partners', Eisner says.

 

"I don't think we're going to see prices drop anytime soon," says Michael Gartenberg, a partner at technology consulting firm Altimeter Group in San Mateo, Calif. Policies are likely to be similar to Borders', which sells the Sony reader but excludes the device from its "any one item" discount coupons and other broad sales.

 

Still, the retail expansion could offer some advantages. Consumers should consider these pros and cons when buying an e-reader from the new retail partners.

 

In-store testing. Buying from a retailer should afford consumers the opportunity to use the devices and read text on their screens. "For someone to understand the Nook or Kindle, they need to hold it and see how it works," Gartenberg says. This is consumers' first chance to play with a Kindle in-store.

 

Lenient return policies. Kindle buyers can triple the length of time they have to change their mind about the device by buying it at Target. Under Amazon's return policy, shoppers have 30 days to return merchandise but will have to pay shipping costs unless the return is a result of the site's error. Target customers have 90 days for returns, as long as they have a receipt. A Target spokeswoman says the store does not have a special policy in place for the Kindle, and will not charge a restocking fee on returned items.

 

Nook buyers double their return time when buying from Best Buy instead of Barnes & Noble. They can also avoid a fee. Barnes & Noble allows returns within 14 days of purchase and charges a 10% restocking fee (in this case, $25.90). At Best Buy, consumers have 30 days to return most items or 45 days if they are a Best Buy Silver rewards club member. Best Buy did not return calls for comment on the possibility of Nook-specific policies.

 

Sales tax. Amazon shoppers unaccustomed to paying sales tax will have to adjust their expectations at Target, Eisner says. At the Minneapolis flagship store, that's an extra 7.15%, or $18.52. Depending on where consumers buy the device in Florida, where the state sales tax is 6% before local taxes figure in, it will cost at least an extra $15.54.

 

Loyalty rewards. Consumers can earn more reward points on a credit card and store loyalty program by buying through the new retail partners. Target isn't selling the Kindle online yet, but when it does, consumers can earn more cash back, points or miles by linking to the retailer through a favorite reward portal. Amazon doesn't offer such partnerships, but Target allows 3% cash back through Ebates.com, two points per dollar via Citibank's Thank You program, and four to eight miles per dollar at Continental's ShopOnePass site.

Best Buy's Reward Zone program offers shoppers a $5 certificate for every $250 spent. For the $259 Nook, that amounts to a 2% discount, but consumers could find bigger savings by using certificates saved from previous purchases to cut the price, says Edgar Dworsky, founder of consumer advocacy site ConsumerWorld.org. "They'll treat that like cash going toward it," he says. (Nook buyers who want affiliate rewards may want to stick with Barnes & Noble, which offers much better rates than Best Buy: 4% versus 1% cash back at Ebates, for example.)

 

Gift card discounts. Buying a secondhand gift card on sites like PlasticJungle.com, GiftCardsAgain.com or eBay can cut the purchase price of a Nook or Kindle at the new retail partners. At PlasticJungle, Target gift cards run at a 4% discount. Best Buy cards are 5% lower, with a $25 card selling for $23.75.

 

Barnes & Noble and Amazon cards are less common, but still possible to find. Amazon gift cards aren't uncommon on eBay, although many sell for close to full value. Of two recently ended auctions, a $5 certificate sold for $4.75 and a $35 one for face value.

 

Warranty hard sell. Extended warranties are a cash cow for electronics stores, so consumers should expect to hear the pitch at least once before leaving the store, Dworsky says. The extra $10 to $50 for store protection is rarely worthwhile. Shoppers can get the same protection free by paying with a credit card that automatically doubles the manufacturer's warranty, he says. Among them: American Express and World MasterCard.

 

Related reading at SmartMoney:

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