Tuesday, November 23, 2010

Booksellers fire salvo in price war

Columbia Daily Tribune Tuesday, October 20, 2009

NEW YORK (AP) — Target Corp. has thrown itself into a heated price war on books expected to be top sellers.

The Minneapolis-based discounter said yesterday that it will offer some of this season’s most anticipated book titles at $8.99, in line with recent moves by Walmart.com and Amazon.com.

Target said the price applies to pre-orders on Target.com of such books as “Breathless” by Dean Koontz, “I, Alex Cross” by James Patterson, and “Under the Dome” by Stephen King.

The book battle started Thursday, when Wal-Mart Stores Inc. said its Web site, walmart.com, would charge just $10, with free shipping, for such upcoming hardcover releases as Sarah Palin’s “Going Rogue” and John Grisham’s “Ford County,” 60 percent or more off the regular cost.

Amazon.com, the largest online bookseller, then matched the prices. The fight became even fiercer when the two competitors lowered prices even further to $9 by Friday.

A check online yesterday revealed that Target.com, Amazon and Walmart.com have similar prices. Walmart.com and Target.com are selling “Under the Dome” and “Breathless” at $8.99, a penny less than Amazon.com.

Wal-Mart has built its strategy on using its size and massive buying power to undercut rivals. But it sells enough products in enough categories to make up for any losses on individual items it uses to pull people into the stores or onto its Web site.
All three sellers are almost certainly taking a loss on the sales of these books to bring in customers. Retailers usually pay just more than half of a book’s cover price.

But the price war, occurring as the critical holiday shopping season gets under way, is bad news for independent bookstores, as well as the large chain bookstores Borders Group Inc. and Barnes & Noble Inc. These chains have seen their sales and profits squeezed by discounting and a decline in their music business.

Analysts also note that the price wars also don’t bode well for the overall book industry, which will likely cut authors’ advances and editors’ salaries.
“I don’t see an end in sight,” said Michael Norris, a senior analyst with Simba Information. “There is going to be a longer-term cost to cheap books. This book war drives out chain stores and independent bookstores.”

Wal-Mart has said the steep discounts won’t be available in stores.

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