"Wal-Mart Stores Inc. launched a brash price war against Amazon.com Inc. on Thursday, saying it would sell 10 new books for just $10 apiece through its online site, Walmart.com. That was just the beginning. Hours later, Amazon matched the $10 price. Wal-Mart soon fired back with a promise to drop its prices to $9. "If there is going to be a 'Wal-Mart of the Web', it is going to be Walmart.com, said Walmart.com CEO Raul Vazquez."
--Wall Street Journal, October 16, 2009
After an escalating price war between Amazon.com and Walmart.com brought hardcover book prices to unprecedented lows, Wal-Mart changed its position today to state that "if there's going to be a Wal-Mart of the web, it's okay for it to be Amazon."
Last week, when Walmart.com cut their preorder prices for new hardcovers, first to $10, then to $9, Amazon followed suit. The retail giant then cut its prices by a penny, to $8.99. Amazon matched the new pricing and also offered free same day delivery in 27 cities; Wal-Mart matched the delivery offer as it lowered its pricing for new hardcovers to $6.99.
Immediately Amazon matched its competitor's deal and threw in an additional hardcover selection for free, thus effectively cutting the price for each book to $3.50. Jeff Bezos, the founder and President of Amazon, issued a statement that read, "It may not seem like good business sense, but we're keeping sight of the forest, not obsessing over a few trees. If there is to be a Wal-Mart of the web, we believe it should be Amazon, because we were there first."
Wal-Mart fired off a press release accusing "the Bozos at Amazon" of being "juvenile in their strategic positioning" and wondered "what kind of name is 'Bezos', anyway'." Wal-Mart not only matched Amazon's 2-for-1, same-day delivery offer, but also added a free music CD of the customer's choice. Customers were delighted, although executives in both the book and music industries began expressing their growing concern more openly.
"This level of discounting will mean that everyone in the supply chain -- authors, publishers, distributors, and retailers -- will lose money with each transaction," said one major Publishing CEO, speaking anonymously for fear of damaging his company's relationship with either retailer. "And in this economy it is more difficult to sustain further financial loss above the normal financial losses we routinely expect."
Yesterday saw several new skirmishes in the book pricing wars. First, representatives from the Ann Arbor-based chain Borders chimed in, stating, "Just because one bookseller decides to jump off the Brooklyn Bridge doesn't mean we have to follow them. Sure, our maturity in this imbroglio belies our already slippery financial standing, but be assured that it has nothing whatsoever to do with either financial interests or our distance from lower Manhattan."
Then later in the day, Steve Riggio of the New York-based retail chain Barnes & Noble, balancing precariously on the railings of the Brooklyn Bridge, issued a statement to curious onlookers that the chain was contemplating actually paying customers to take home new books from their stores' shelves, and that a decision would be announced by someone in their offices shortly. Police were eventually able to talk Mr. Riggio down, but as of press time he had not returned calls.
Last night Amazon, seemingly undaunted by Wal-Mart's recent move, issued its own press statement, consisting entirely of two words: "Oh yeah?" It then offered customers two hardcovers for $5.99, a free music CD, and a free iPod Nano, all delivered the same day of the order by "tuxedoed gentlemen on roller skates." The first 500,000 customers to take advantage of the new package were also offered a $10 gift certificate valid for any future purchases from any of their site's stores, regardless of the purchase's retail value. Customer traffic and orders surged at Amazon in response.
The move prompted this statement from Wal-Mart: "Okay, Amazon, you win this round, in a way. But we'll be back." Wal-Mart then announced that all customers purchasing a shirt from their internet site would be entitled to a free 24-quart jar of pickles and the toll-free customer service phone number at Amazon, long considered one of the most closely-held secrets in America.
Blogger's Note: It's all fun and games until someone loses an industry.
Where will this pricing war end? Is it in anyone's interests besides the consumers? At what price should inexpensive hardcovers reasonably come -- at the expense of the author's income? The Publisher's ability to stay afloat? The retailer's ability to earn a profit on the transaction? We at the Huffington Post invite -- indeed urge -- you to chime in on this pressing issue.