It’s official: Target (TGT) has confirmed that it will begin selling the Amazon.com (AMZN) Kindle e-reader this weekend. The Amazon gadget will see a $259 price tag at Target stores’ brick and mortar locations. Rumors of the Amazon Kindle and Target sales partnership between AMZN and TGT stock was first reported here about a month ago, and has finally been confirmed.
The Amazon Kindle can wirelessly download books, magazines and newspapers – so it’s unclear why conventional retail space at Target is necessary for building an already successful brand. Brick and mortar TGT stores may provide an outlet for folks who don’t shop online, but isn’t that audience the least likely to forgo old print media for a digital eReader in the first place?
Even if Target does do decent sales, that doesn’t mean the Kindle would see bigger sales simply by teaming up with Target. It could just be that instead of buying through Amazon.com some shoppers are choosing to make the same purchase at Target – and that means AMZN is enabling a third-party store take a significant cut out of sales and profits it would have gotten anyway. Target is going to have to sell Kindles that never would have been sold otherwise for the partnership to work.
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Apple (AAPL) has seen big success with its iPad, which is sold through retailers like Best Buy (BBY), but Apple is not at its core a retail company despite the fact that it offers sales on its own website and through its trademark Apple Stores. On the other hand, Amazon is at its core a retail business. It makes sense for Apple to outsource the iPad distribution and sales, but the move by AMZN stock executives to partner with another retailer – one that is a competitor on many fronts – doesn’t make a whole lot of sense.
Sony (SNE) and Hewlett-Packard (HPQ) both looking to get in on the action with tablet PCs of their own, so perhaps Amazon is looking to make sure the Kindle becomes the clear front runner even if that means sacrificing some short-term profitability by sharing sales with Target.
But if the move doesn’t pay off, AMZN stock is in for a tumble. The worst case scenario would be that the Apple iPad or its competitors from Sony and HP will see increased market share at the same time Amazon margins are being pinched by a retail partnership.
