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Wal-Mart’s price war with Amazon will hurt everyone

October 20, 2009

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.”

14 Comments leave one →
  1. Tommy permalink
    October 20, 2009 2:09 pm

    “Unlike the five-and-dime on Main Street, publishers may have the clout to resist Wal-Mart — if they can find the spine.” Very true, consumers will also have a hand in the outcome of this price skirmish. Will I buy the $9 title online foregoing the more expensive in-store version knowing that I may be playing a part in the small bookstore funeral procession? Will you?
    Seems to me it’s capitalism at its best (and worst).

    Capitalism attacks and destroys all the finer sentiments of the human heart; it ruthlessly sweeps away old traditions and ideas opposed to its progress, and it exploits and corrupts those things once held sacred.
    Daniel De Leon

  2. October 20, 2009 2:21 pm

    From the Small Consolation Department: Readers like me wouldn’t be buying Brown or Patterson or Palin anyway, no matter how little somebody charged for their books…

  3. rachel permalink
    October 20, 2009 3:06 pm

    I agree with Jon.

    Aside from that: “Of course, Wal-Mart did not set out to intentionally destroy literary culture in America.” Are you sure? Seems like the kind of thing they would take joy in.

    If all that is available is ebooks I will not be reading any new books, sorry modern authors. I will only be reading old books. I will reread the books I have. I will buy used books. I will go to libraries. I will start a secret society with other book owners and we will let each other borrow the sacred objects.

  4. Chauncey Mabe permalink*
    October 20, 2009 5:40 pm

    Tommy, I do believe you are proposing socialism. Don’t you know the free market is self-correcting and never makes a mistake? Didn’t you pay attention when Bush was president?

    Jon, I agree entirely, with your literary criticism, and with your characterization of it as “small consolation.” Small indeed.

    Rachel, Wal-Mart doesn’t give a fig about books or publishing or culture, one way or the other. All it cares about is increasing market share, by any means necessary. But if worse comes to worst, sign me up for your secret society. I have a few books around the place, if you want to borrow them. I charge overdue fines, though….

  5. October 20, 2009 7:36 pm

    Ok,

    You folks have got me. I turned down Wal-mart for my new book. Said no way. The way they operate and the volume I could lose a dollar a book. They control your market and then turn to you and say this is the new price. You see Wal-mart does not make a profit much on items they sell. They make about 90% of their money on the money roll and interest on the cash in, and then pay you in 120 days payments. They make the money on the interest on the roll. Nothing wrong with that. Not my cup of tea. They took out main street stores. Buttttt. It is us who
    wanted that 62 cent saving on items that took out main street. They sold we bought. Buy from the small business. Keep you and your neighbor , your neighbor. It is up to us . I never buy from them at all. I am a local boy. Always will be. I can only eat so much food, drive so many cars and have so many houses.
    Do business with your neighbors first. That is what America is really about. ( I have talked with my attorney’s and this is only a drill, not to be misunderstood to be South Park or any thing. I plead the 5th. always )

  6. Lizz permalink
    October 21, 2009 9:42 am

    Who goes to Wal-Mart to buy books?! That’s what’s wrong with America to begin with! We are used to these super stores–One-Stop Wonders.

    Michael, that is very interesting about Wal-Mart. Is that how all these super stores function? I think you bring up a very important point; We are the ones in power when it comes to price and nothing will change unless we stop buying.

    I am shocked that when big bookstores like Barnes and Noble first put our little local bookstores out of business we did not put up a better fight. However, now’s as good a time as any.

  7. Chauncey Mabe permalink*
    October 21, 2009 10:10 am

    Lizz, I found it grimly amusing when Barnes & Noble’s spokesperson bravely described what her company is actually selling: “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.”

    That, of course, describes the traditional independent bookstore, which Barnes & Nobles and Borders spent the ’80s and ’90s busily using their clout to put out of business — alas, with great success. Able to buy much greater numbers of books from publishers and distributors, the chains negotiated prices lower than any independent could get, and then undersold the mom-and-pop bookstores out of existence.

    Shoe’s on the other foot now, eh? But I can’t take any gloating pleasure. That’s because Barnes & Noble succeeded so well, in many towns they are as close to a real bookstore as most people will ever see. And, really, they do a good job of staging that bookstore experience, making for a reading-browsing-coffee-drinking envioronment that’s comfortable and nicely literary.

    So we have to pull for them, their despicable business history notwithstanding. Still, I don’t understand why any reader would patronize, say, Barnes & Noble, when there’s one of the best remaining independent bookstores still around only two blocks away, which is the case in Coral Gables, where Books & Books continues the independent tradition.

  8. Tommy permalink
    October 21, 2009 1:23 pm

    Chauncey, I do not believe socialism is a workable solution to our nation’s woes. Individuals taking more responsibility and comprehending just how powerful they are as consumers is less naive then rallying for socialism. Of course, that solution still depends on people making difficult and sometimes more expensive decisions.

    “And, really, they do a good job of staging that bookstore experience” I was also struck by Barnes and Nobles claiming to rely on offering their customers a true bookstore experience. Really? Staging is the perfect word to describe Barnes and Nobles “book store” experience. Ersatz would work too. Mega-book stores offer all the warmth of a polar bear’s toe-nail, I have also been in Greyhound bus stations that were more hospitable.

  9. Tommy permalink
    October 21, 2009 1:34 pm

    Secret sacred book society? Why wait till the Amazon-Target-Walmart axis of evil ruin literature, Sign me up! today. Also, here’s five bucks in advance late fines.

    Yes, I did listen when Bush was president and all I got was this lousy unemployment check.

  10. Candice Simmons permalink
    October 21, 2009 2:42 pm

    If I have to go to Wal-mart to make a purchase, I’ll do without. I do not go to Wal-Mart to buy anything.

  11. October 21, 2009 2:59 pm

    Yes Liz,

    I am afraid that how the big boys work. Night time money rolls around the world. That is another reason Wal-mart went to China. I just buy local myself. From bookstores to restaurants. As the owner of a small publishing company I print local. Costs more but that is ok. I print in Florida. We need the jobs. The big books stores are, well to big for me. I have to wait along time for money from them. They also force large distributors in the industry on our company. Usually the big book stores have coffee though. Not that there is anything wrong with that.

  12. Lizz permalink
    October 21, 2009 3:05 pm

    Chauncey, I agree that we have to save whatever’s left of the bookstores of today–even if it means the big chains that once ate the small ones. I remember when I was little I would go to B&N and sit for hours reading books but never purchasing anything; I felt like a rebel. For my purchases, I would go down to “The Town Bookstore” (yes, it was actually called this, though then it turned into BaskingRobbin’s and finally Coach), talk to the owner, squeeze between the overstocked shelves and find something special that I needed to own. I felt that I was beating the system, but I never imagined that as an adult, I would be need to support what I once fought against.

  13. Tommy permalink
    October 24, 2009 9:09 pm

    After re-reading one of my comments I seem to have erroneously attributed a quote from Borders booksellers has having come from Barnes and Nobles. Such mistakes are unforgivable not matter how understandable mistaking one for the other may be. My punishment shall consist of having to read “Sarah Palin: Poised to Become America’s First Female President” while maintaining a straight face. If at any point in the book I fail to maintain the serious facial expression the title deserves I must begin again at the Table of Contents. ( You guys may not see or hear from me for a while.)

    Chauncey, these slashed prices all seem to include only pre-orders of the three titles you mention in the column. I wonder if when the books hit the shelves will the price return to normal? There is an internal struggle over whether I will purchase King’s new novel for $9 online or wait to pay $25 to $35 at a small bookseller. I think I may hold off on purchasing either opting instead to own the collector set of Under the Dome which includes character illustrations from New Yorker cartoonist Matthew Diffee among other goodies. That decision will be tough too $75 from Books and Books versus $40.50 from Amazon.

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