Is Target going to war against Amazon?
The retail giant is dumping Kindle products in the latest round of an increasingly bitter battle between the online retailer and brick-and-mortar stores.
Target (TGT) announced this week it would stop selling Amazon's (AMZN) Kindle devices, which include the Kindle e-reader, the Kindle Fire tablet computer, and all the Kindle's accompanying accessories. Target is reportedly dropping the Kindle over a cryptic "conflict of interest," but the big-box retailer will continue to carry Barnes & Noble's (BKS) Nook e-reader and Apple's (AAPL) iPad. The seemingly aggressive move has fueled speculation that Target is targeting Amazon, which has emerged as an existential threat to physical retailers.
Is Target at war with Amazon?
Yes. Amazon has been stealing Target's customers: Amazon has been actively encouraging customers to comparison-shop at brick-and-mortar stores like Target, then buy the same products at a discount online, says Brad Tuttle at Time. The practice, known as showrooming, is wounding big-box retailers. Last holiday season, Amazon was even "offering special discounts to shoppers" at Target and elsewhere "who used Amazon's Price Check app for showrooming purposes." Target's message to Amazon is simple: "You undercut our prices and try to steal our customers, and we're not going to sell your products."
Apple, Target's new partner, is also at war with Amazon: "Apple and Amazon are bitter rivals," and Apple is planning on opening mini-stores in 25 Target locations this year, says Dan Mitchell at CNN. "It's quite possible that Target is getting rid of the Kindle to appease Apple," which recently accused Amazon of holding a "monopolistic grip" over the e-book market in a lawsuit over the industry's pricing practices.
Either way, Amazon's Kindle will be just fine: The controversy is probably no skin off Amazon's back, say Stephanie Clifford and Julie Bosman at The New York Times. Target's decision will likely "have little effect on Kindle sales," given that the Kindle will continue to be sold at Staples (SPLS), Best Buy (BBY), and Wal-Mart (WMT). Furthermore, it certainly "won't stop Amazon shoppers from checking out other products at Target," and its showrooming problems will continue.
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What many folks don't understand is the brick and mortar cost more because they pay the employees to help you, they pay local, state and federal taxes, they pay for the building overhead, etc. that Amazon does not have to pay. They keep our friends and neighbors employed and our communities vibrant. Go ahead and buy from Amazon but when you or your friends/neighbors lose their jobs or you don't have a place to go showroming, reflect on what caused it.
This is a mistake by Target. To be honest with you, I chose to buy my Kindle at Office Depot because I trust the manager there and I buy all of my electronics (digital camera, mp3 player, laptops) there and I like their warranty. I went to purchase the kindle at Best Buy and they couldn't answer any of my questions. As for Apple, I hate their products, I feel that they are overpriced, and quite frankly I am perfectly happy with what I have, I don't want a computer to carry with me, I don't want an iphone, ipod, etc. I am happy with the basics.
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