Amazon, discounters in book-pricing war

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By Stephen Lowman
Wednesday, October 21, 2009

The title of Dean Koontz's upcoming thriller is "Breathless." It is also an apt description of the online book-pricing war taking place among the nation's largest retailers.

Koontz is one of several big-name writers whose books are being pre-sold at eye-poppingly low prices. Some, such as Stephen King's latest, are being discounted nearly 75 percent from cover price as retailers race to match their competitors' price cuts.

The battle began last week when Wal-Mart lowered the prices on pre-orders for 10 upcoming releases to $10. Amazon.com quickly matched the prices on those books. Then, on Friday, Wal-Mart cut the prices to $8.99, which Amazon matched.

But the plot really began to thicken Monday when Target got into the game. It also began selling eight of the books offered by Wal-Mart for $8.99. Not to be outdone by its chief competitor, Wal-Mart on Tuesday beat Target's price -- by a penny.

"It's madness," said Michael Norris, an analyst at Simba Information who works with publishers. "There's really nowhere to go with this. What will happen next week if Wal-Mart drops its price another 2 cents? Is Amazon going to drop its price another 3 cents? How far are they willing to go?"

Kelly Basgen, a spokeswoman for Target, said, "That really is the question of the day."

"Wal-Mart and Amazon really started things last week, and we followed their move. Our goal is to always be competitively priced," she said.

Along with the latest from Koontz and King, other books on the list include "Ford County" by John Grisham, "The Lacuna" by Barbara Kingsolver, "Pirate Latitudes" by Michael Crichton and Sara Palin's autobiography "Going Rogue: An American Life."

On Tuesday there was another twist to this publishing story when Sears announced it would reward customers who purchase certain books through Amazon, Target, Wal-Mart and its own Web site. If customers buy a qualifying book at one of those sites, they will be rewarded with online credit at Sears.com, equal to the purchase price but not higher than $9. (Sears wants the receipt, e-mailed.)

Norris said the retailers are cutting book prices in the belief that people are likely to put items with higher profit margins, such as clothing, into their online shopping carts along with the books. He worries not only about the long-term consequences for small bookstores that cannot compete on price, but also for the publishers.

"The problem is if too many companies like Amazon, Wal-Mart and Target become the only road between the consumer and the content, then it is game over for the publisher. The publishers won't have any power, influence or relevance," he said.

And don't forget Sears.

"We are a pretty nimble organization, especially online," said Sears spokesman Tom Aiello. "The chatter that was happening last week definitely took our attention. We thought we could enter into that conversation in a bit a more sophisticated way by rewarding customers no matter where they purchase the books."

Barbara Meade, co-founder of the District's Politics and Prose, said she is not worried about the tit-for-tat taking place among the big discount retailers She said her store offers things they cannot, such as personal customer service, reliability and a "bookish atmosphere."

"It's a totally different market," she said. "If Wal-Mart started selling pork chops for $1.79 a pound, they're not going to put Whole Foods out of business. There is plenty of room for everyone."


© 2009 The Washington Post Company

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