Walmart Takes on Kindle With Kobo E-Reader Deal

Emmett Rice
January 27, 2018

Shares of Walmart rose in pre-market trading on Friday after the company announced a deal with Japanese e-commerce site Rakuten to sell Rakuten's Kobo e-readers and content in the USA mass market.

Amazon now commands 83% of the ebook market in the US.

Wal-Mart has expanded its USA e-commerce sales in recent quarters after rolling out online grocery services and buying a string of online startups, including Jet.com Inc.in 2016, placing the site's founder Marc Lore at the head of US e-commerce operations. Starting sometime in the summer or early fall, Walmart subsidiary Seiyu, will launch a new online grocery service in Japan.

The deal "enables us to quickly and efficiently launch a full eBook and audiobook catalog on Walmart.com", Scott Hilton, chief revenue officer for Wal-Mart's USA e-commerce unit, wrote in a blog post Thursday.

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At a press event in Tokyo on Thursday, Walmart president and CEO Doug McMillon and Walmart U.S. e-commerce chief Marc Lore announced a new strategic alliance between Walmart and Rakuten, the number one e-commerce company in Japan, after meeting with Rakuten CEO Hiroshi Mikitani, according to an email from Walmart sent to Retail Dive.

Walmart will partner with Japan firm Rakuten to sell the new products, through a new category on the Walmart.com website. "We look forward to expanding our grocery footprint in Japan and launching a new offering of eBooks and audiobooks for our customers in the USA", said Wal-Mart Stores chief executive Doug McMillon. He added, "We are excited to partner with Walmart because of its commitment to creating the best solutions to serve customers with low prices". Rakuten Seiyu Netsuper will aim to increase fulfillment capacity, enrich the merchandise offering and improve convenience for the customer. Walmart's USA online sales rose 50% in its most recent full quarter. Customers will be able to use accumulated points on any of Rakuten's services. In 2016, Japan was the second-largest market outside the USA for Amazon, following Germany, with sales of $10.8 billion.

As part of the deal, Walmart will start selling Aura-branded ereaders made by Kobo, a division of Rakuten, in stores and online at Walmart.com. Rakuten, if you remember, snapped up Canadian Kindle-competitor Kobo in a $315 million deal back in 2011, before rebranding it as Rakuten Kobo a few years later. What that means is, over 4,000 Walmart stores will start offering Kobo e-readers as well as access to almost six million e-book titles and audiobooks. The joint venture will see the two companies work together to sell online groceries in Japan and e-readers, e-books and audiobooks in the U.S.

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