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For Wal-Mart, cons offset pros on Kindle

– Wal-Mart Stores Inc. is phasing out the sale of Amazon.com’s Kindle Fire tablet and Kindle e-readers, the second major retailer to stop offering the items in six months.

Wal-Mart, the world’s largest retailer, said last week the decision was made as part of its overall merchandising strategy to offer a broad assortment of products at low prices.

Amazon has been selling lower-priced tablets at thin – if any – profit margins to boost sales of digital media like books and music from its online store. That makes it less attractive for major retailers to carry Kindles in their stores, particularly as online retailers like Amazon.com become more of a threat to traditional brick-and-mortar stores.

Retailers are trying to fight a growing practice called “showrooming.” That’s when shoppers, armed with smartphones, browse products in physical stores and then shop online for a better price.

The move echoes Target Corp.’s decision to stop offering the Kindle in May after its own merchandise review. And it comes ahead of the holiday season, which is crucial for retailers since they generate up to 40 percent of their annual revenue during the period. Tablets are expected to be a popular gift this year, much like last year.

“Amazon is clearly becoming a more attractive consumer retail destination, so it was inevitable that Target or Wal-Mart would stop selling the Kindle product,” Morningstar analyst R.J. Hottovy said. “They perceive Amazon as a potential threat, and this is one way to neutralize that.”

While neither Wal-Mart Stores nor Amazon.com release Kindle sales figures, Amazon itself is by far the biggest seller of Kindle devices, so being cut off from Wal-Mart is unlikely to make a dent in its revenue. Amazon touts its Kindle line as its best-selling product.

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