Walmart.com, the online division of Wal-Mart Stores, cut prices on 10 yet-to-be-released hardcover books to $10 each, sparking a price war with Amazon.com. Afterwards, both online retailers cut their prices on those books to $9 each. Then Target joined the fight.
The price war then escalated again when Wal-Mart further lowered the price, discounting one more penny bringing the price down to $8.99. These discounts are nearly 60 percent or more off the cover price of such books as Sarah Palin's Going Rogue, John Grisham's Ford County, Stephen King's Under the Dome, Barbara Kingsolver's The Lacuna and James Patterson's I, Alex Cross. To make matters more interesting, shortly after the penny slashing, Target.com joined the war, reporting they cut the price of highly anticipated hardcover books to $8.99, responding to steep price cuts implemented by Amazon.com and Walmart.com. Target is also offering free shipping.
The current competition is based on a select number of high-volume books backed by powerful publishers and is not a wider pricing war. However, reactions to the price-slashing moves by Amazon and Wal-Mart have been strong throughout the book trade. The American Booksellers Association Board of Directors sent a letter to the Department of Justice requesting that it investigate practices by Amazon.com, Wal-Mart and Target, believing it constitutes illegal predatory pricing that is damaging to the book industry and harmful to consumers. In the letter, the ABA board observed: "We would find these practices questionable were they taking place in the market for widgets. That they are taking place in the market for books is catastrophic. If left unchecked, these predatory pricing policies will devastate not only the book industry, but our collective ability to maintain a society where the widest range of ideas are always made available to the public, and will allow the few remaining mega booksellers to raise prices to consumers unchecked”.
John Grisham’s agent, author of Ford Country, one of the books caught in the price war, said, "If readers come to believe that the value of a new book is $10, publishing, as we know it, is over. If you can buy Stephen King's new novel or John Grisham's Ford County for $10, why would you buy a brilliant first novel for $25? I think we underestimate the effect to which extremely discounted best sellers take the consumer's attention away from emerging writers."
Bill Petrocelli, co-owner of Book Passage, San Francisco and Corte Madera, California, explains that “what this does is accentuate the trend towards best sellers dominating the market. You have a choke point where millions of writers are trying to reach millions of readers, but if it all has to go through a narrow funnel where there are only four or five buyers deciding what's going to get published, the business is in trouble." However, Richard Hastings, a consumer strategist with Global Hunter Securities, explains that this is “about bigger volume and faster turnover, things where you have a lot of promotional support (from publishers). It's not a pervasive book war". Still, prices could fall further. Walmart.com recently announced it would continue to adjust its pricing as needed to ensure it offered the lowest prices on its top 10 pre-selling books.
Sources: Reuters, Shelf Awareness, Bookselling This Week, and ABA
