Wal-Mart’s price war with Amazon will hurt everyone
Don’t celebrate Wal-Mart’s price war with Amazon, which spread yesterday as Target joined the fray. Sure, new hardcover books at $9 a pop may look good, but collateral damage is likely to include bookstores, publishers–and ultimately, readers.
Last Thursday, Wal-Mart slashed prices of upcoming marquee books, including Sarah Palin’s autobiography, Going Rogue, and Stephen King’s new novel, Under the Dome, to just $10 on its website, Walmart.com. Amazon matched the cuts, and the two internet merchants embarked on a price-cutting war.
Yesterday, Target announced discount pricing for blockbusters — $8.99 on Target.com
“There is going to be a longer-term cost to cheap books,” Michael Norris, a senior analyst with Simba Information, tells the Associated Press. “This book war drives out chain stores and independent bookstores. Bookstores are invested in the future of books, but the others are not.”
Consider some of the implications:
1. Say goodbye to independent bookstores. Lacking the massive buying power of the web discounters, independent bookstores can’t come close to matching the price cuts.
2. Chain bookstores, Barnes & Noble and Borders, are in trouble, too — big, but not big enough. Unable to compete in Wal-mart’s price war, they’re putting on a brave face.
“Our model does not rely on being the lowest-priced,” said a spokeswoman for Borders in a statement, according to the Wall Street Journal. “It relies on offering our customers a true bookstore experience, the opportunity to explore a vast array of titles within a comfortable environment where shoppers can go where their interests take them.”
3. Deeep discounting hurts publishers. “When your product is perceived as a loss leader, it lowers perceived value,” David Steinberger, head of Perseus Books, tells the Wall Street Journal. “It’s not great, certainly not for publishers.”
Publishing companies may be forced to focus even more on blockbusters than they do now. If the the discounting war permanently depresses the price of books, publishers may no longer be able to launch “the writers of tomorrow,” as David Young of Hatchett Book Group, one of the nation’s biggest publishers, tells the Wall Street Journal.
4. If that $9 price point looks suspiciously familiar, that’s because it’s just under the $9.99 that Amazon charges for e-books for its Kindle electronic reading device. If publishers can’t make money on hardcover books, and bookstores wither and die, it could hasten the rise of e-books and the demise of traditional bound volumes.
Of course, Wal-Mart did not set out to intentionally destroy literary culture in America. It’s simply seeking to beef up business in a tough economy, hoping to increase its e-retailing business, where it lags behind Amazon.
Unlike the five-and-dime on Main Street, publishers may have the clout to resist Wal-Mart — if they can find the spine.
Bestselling author James Patterson tells The New York Times he’s “glad” his new thriller, I, Alex Cross, is among Wal-Mart’s top-10 preordered blockbusters, but he can’t think of another industry that would tolerate such drastic discounts on new product.
“Imagine if somebody was selling DVDs of this week’s new movies for $5,” Patterson said. “You wouldn’t be able to make movies. I can guarantee you that the movie studios would not take this kind of thing sitting down.”