Walmart, Rakuten announce partnership

Walmart Inc is making a circuitous and belated push into the digital book market, teaming up with a Japanese company to sell e-books and audiobooks.

The deal with Rakuten Inc, an e-commerce giant based in Japan, will allow Walmart to start selling digital books on its website for the first time later this year.

The move, which was announced late Thursday, comes years after Walmart’s arch-rival, Amazon.com Inc, began to dominate the market for digital readers.

Walmart customers will be able to read the books through Rakuten Kobo e-reading devices — which have not taken hold with Americans the way Amazon’s Kindle and Barnes & Noble’s Nook have.

The partnership is part of Walmart’s effort to ensure that its online offerings include every conceivable product line, giving shoppers no reason to click over to Amazon.

But by many measures, Walmart is arriving late to the digital book party. Amazon, which built its business around book sales in its early days, has a huge head start. Beyond that, the e-book market has shown signs of fizzling, as screen-weary readers turn back to print copies.

“This ship sailed years ago,” said Peter Hildick-Smith, president of Codex-Group, a book audience research firm.

E-book revenue among 1,200 publishers reporting data fell to $743.5 million from January to August last year, 5.3% below the same period in 2016, according to the Association of American Publishers.

Hildick-Smith said the decline was driven in part by “digital fatigue” among readers, who spend hours looking at computers and smartphones and are looking for an escape by picking up a paper book.

Kobo, a Canadian company that Rakuten bought in 2011, is a small player in the US market.

Rakuten Kobo’s chief executive, Michael Tamblyn, said in an interview that the deal gave Kobo a vast new audience for its digital books through Walmart’s website and eventually its stores, which sell print books.

Walmart, the largest retailer in the United States, “brings incredible scale to Kobo’s book platform,’’ he said.

The company’s e-books — which include six million titles, from best-sellers to children’s books — can be read on Kobo devices or on a new co-branded Walmart-Kobo app.

According to Hildick-Smith’s analysis, Kobo accounted for fewer than 1% of e-book purchases last autumn, while purchases from Amazon totaled about 75%.

Tamblyn declined to comment on Kobo’s share of the e-book market, but said sales had been “steady.”

As part of the deal, Walmart said, it would also join forces with Rakuten to expand its online grocery business in Japan.

Walmart already delivers groceries in Japan through its Seiyu supermarket chain, which it acquired more than a decade ago.

The deal — which Walmart’s chief executive, Doug McMillon, flew to Tokyo to announce — will allow Walmart’s online grocery business in Japan to expand exponentially.

Rakuten’s online marketplace has 93 million registered members, capturing a huge volume of e-commerce in Japan.

Online grocery is a major initiative for Walmart, which is going head-to-head with Amazon in that area.

In the United States, Walmart has been focusing on encouraging customers to order their food online and then pick it up at stores. In Japan, the partnership with Rakuten will focus on delivering groceries to homes.