Wednesday, 3 October 2012

Is It Time for Amazon to Follow Apple?

There are a lot of places that sell iPad WiFi/3G 16GB and other mobile gadgets like tablet PCs and mobile phones. You can go and visit the nearest shop in your neighborhood or you can just go online to buy one. The great thing about this is that the consumer is given the freedom to choose the way he shops even for grocery items. Those who are intimidated when setting foot in tech shops, or those who live far from the big cities that have swanky stores can get their gadgets from large retail stores that sell anything. Yes, Target, Kmart, and Wal-Mart sell tablet PCs, too! 

image credit to
The latest news that rocked both the tech and business worlds was the announcement of Wal-Mart discontinuing distribution of the Amazon Kindle in its stores and online site. There is no denying that Amazon is one place where you can buy almost everything from small appliances to tech gadgets and even toiletries. It is much like a grocery store in every sense only that it has no physical store, as it is an online retail shop. You can say that it is already directly competing with the online shop of both Wal-Mart and Target because of the same items that they offer. But then, you can say the same thing about Wal-Mart and Target. These stores sell anything you can think of, which sort of makes them Amazon, only with actual stores. 

image credit to
Now that Amazon has offered the Kindle at a rock bottom price, the giant retailers do not have enough room to make a profit for every Kindle that they sell in their stores. Amazon itself is already cannibalizing its own sales with this move. So, it does not make business sense for Wal-Mart and Target to continue selling the Kindle if this continues, as they only get very minimal profits or none at all. Those retailers who sell iPad WiFi/3G 32GB and other tablet PCs might just end up doing the same thing because what’s the use of selling the Kindle if they do not make any profit out of it.

With this, Amazon is left with a greatly reduced number of channels where customers can purchase their product. If this move happens again with the other retailers that still sell Kindle, then it leaves Amazon with a very limited market. It might just end up with the Kindle being available only through online purchase through their website unless Amazon puts up a store in every major city in the country.

Come to think of it, this has worked for Apple. Through the years, Steve Jobs’ company has operated its own stores and kept authorized retailers at a minimum. This has given the company an aura of exclusivity that sits well with its loyal customers, and at the same time also allowed them to maximize profits. If Amazon wises up, they could follow this brave business model and operate stores themselves, and maybe even expand their product line to accessories and whatnot, building a better and stronger brand for themselves.


Post a Comment