The run on Kindles ambushed Seattle-based Amazon, which had expected to have enough supply for the rest of the year. As the retailer struggles to get more in stock, it's asking buyers to join a three-month waiting list. While the shortage risks alienating shoppers and leaving some sales on the table, the Kindle's buzz may...
Brian Bird had just received Amazon.com‘s Kindle electronic-book reader from his girlfriend as a gift. That didn’t stop him from selling it to someone else.
With the Kindle in short supply and asking prices on the Internet at twice the device’s $359 retail price or more, he got his girlfriend’s permission and found a buyer on Craigslist willing to pay $500.
“People who want to give it as a holiday gift have to pay a premium to get it in time,” said Bird, 27, a salesman for an Internet company in Redwood City, Calif. “If the existing one can be sold at a profit and I can buy the new version when it comes out in two or three months, then it’s worth the effort.”
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Stoked by an Oprah Winfrey endorsement in October, the Kindle quickly sold out. With Christmas a week away, used Kindles are listed on eBay, Craigslist and Amazon’s secondhand product site for as much as $1,500.
The run on Kindles ambushed Seattle-based Amazon, which had expected to have enough supply for the rest of the year. As the retailer struggles to get more in stock, it’s asking buyers to join a three-month waiting list. While the shortage risks alienating shoppers and leaving some sales on the table, the Kindle’s buzz may pay off in 2009.
“It’s a great position to be in, given the uncertainty of the economy,” said Bryan Eshelman, managing director at Alix Partners, a retail-consulting firm. “Could they have ended up with more inventory of this, and therefore, more sales in this time period? Sure. But in this economy, I don’t fault its strategy.”
Amazon, the world’s largest online retailer, introduced the Kindle in November 2007. The paperback-sized device allows users to download books, magazines and newspapers, displaying them on a high-resolution screen that’s designed to look more like paper. This is the second year Amazon has sold out of the product ahead of the holiday season.
This year, the company ran out of Kindles last month after Winfrey called the device her “favorite new gadget” on her television show, Amazon spokesman Drew Herdener said.
Amazon has probably sold 400,000 Kindles in total, said James McQuivey, an analyst at Forrester Research. Jeffrey Lindsay, an analyst at Sanford C. Bernstein & Co., puts that number higher, at about 450,000. Amazon will sell about 500,000 Kindles in 2009, estimates Colin Sebastian, an analyst at Lazard Capital Markets.
“That ability to grab a book electronically from wherever you are is very powerful and had generated a lot of word-of-mouth,” said McQuivey, who originally thought the Kindle wouldn’t be well received because of its high price.
Amazon, founded as an online bookseller in 1994, plans to release a new version of the Kindle in 2009. The company also is expanding the amount of material for the Kindle, offering more than 200,000 books, blogs and publications.
Amazon added more content this year by buying Audible, a provider of audio books and newspapers. In August, the company agreed to purchase Shelfari, a social-networking site that allows users to share reading lists and book recommendations.
By 2010, Amazon may get $1 billion, or 4 percent of revenue, from sales of the Kindle and digital books, Citigroup analyst Mark Mahaney, a Kindle user, predicted in August. That was an increase from his earlier estimate of $741 million.
Tapping into the Kindle shortage, David Wong is trying to sell his for $1,000. Wong, a 33-year-old pianist in Berkeley, Calif., got the Kindle as a gift six months ago. He hopes to entice a buyer from nearby Silicon Valley.
“There are a lot of rich people in Silicon Valley who don’t care about money,” said Wong, who plans to use the profit he makes on the sale to buy the new version of the Kindle next year. “If you’re stupid enough to pay me $1,000 for it, I’ll give it to you.”
Larry Schultz’s wife wanted him to return the Kindle he bought this month for $309 because she thought he paid too much.
“When I explained to her that we might be able to resell it and make a profit and in turn use that profit to buy a new model at a discount, she was very happy,” said Schultz, a 40- year-old business manager in Aurora, Illinois.
Schultz sold the device for $550.