Author(s): Raghu Gopal
On Wednesday, Walmart launched an e-book service, thus firing a new salvo in its competition with Amazon. The world's biggest retailer will introduce Walmart eBooks in partnership with Rakuten Kobo, the digital book division of Japan's top e-commerce company.
Walmart shoppers will get access to e-books through a cobranded app for iOS and Android devices, as well as on Kobo e-readers that are available on Walmart's site. In addition to choosing from over 6 million e-books, Walmart customers will be able to join a subscription service that will allow them to get one audiobook a month for a monthly fee of about $10. Customers will also be able to buy digital book cards from 3,500 Walmart stores. To support the launch, a Kobo Aura e-reader will be released at 1,000 Walmart stores.
In January, Walmart announced a partnership with Tokyo-based retailer Rakuten to create an online grocery delivery service in Japan, as well as the US e-book store. The deal is part of Walmart's broader effort to work with Amazon's rivals, for example, by partnering with Google for voice shopping and with Microsoft for its cloud-computing and retail technology deals. By teaming up with these companies, Walmart is trying to find a way to challenge Amazon's e-commerce business. It's a big task given Amazon's head start, but Walmart is showing progress: last week when the company disclosed its latest financial results, it reported a rise in online sales of 40 percent year-on-year, although it didn't share specific numbers.
Walmart has been diligently stepping up its efforts to compete with Amazon by adding new products, experiences and online partners. Whereas Amazon began by selling books online before taking on the wider retail sector, Walmart is already the world's largest retailer as it enters the e-commerce business.
These two rivals have generally appealed to different types of consumer. However, as Amazon has expanded and built a physical presence through Whole Foods Market and Amazon-branded storefronts, and as Walmart pushes further into online retail with a keen advertising campaign and its acquisition of Jet.com, lines have become blurred between their customers.
Walmart has slowly and steadily made strides in its competition with Amazon, but we expect it will have a difficult time breaking Amazon's hold over the e-book market given its early-mover advantage and the popularity of its Audible service. Furthermore, Amazon's Kindle controls more than 80 percent of sales of e-book readers in the US. We believe Walmart's latest move is less about entering into the e-book market than it is about offering its customers an alternative to Amazon.