Price Wars

22 October 2009

Most of you have probably caught some wind of the recent price wars going on between Amazon, Walmart, Sears, etc -- if you haven't, here's the bottom line: these super-chains are competing with one another to slash the prices of the newest big hardcover releases. Something so simple, yet so completely out of hand; prices are falling lower and lower, with Walmart now seemingly settled on $8.99, Amazon at $9.

For more details on the price wars itself, The Book Case summed it up quite well in a post on Monday, and the Wall Street Journal also gave coverage.

There are a host of problems with the price slashing, some obvious, some not so much. First, these retailers are now selling the books well below cost. Whether they worked out the world's best discount with publishers or are selling the books at a loss, I'm not sure, but I know that the average retailer - hell, even wholesaler - does not get a 74% discount (which is the discount on Steven King's latest release, priced at $35 and selling for $9 at Amazon and Walmart). How selling anything at a loss is a reasonable long-term business model is beyond me.

Furthermore, this only increases the already numerous problems for independents. They couldn't compete with the 30% discount on Amazon - how can they compete with a $9 hardcover? Actually, there is one way: they can buy the book from Amazon or Walmart (both of which are offering free shipping), then mark it up a few bucks and still sell new books at a higher discount than they could have afforded had they gone through a distributor. What a great way to rejuvenate the publishing industry - put the distributors out of business.

But even more concerning than the immediate effect on sales at indies, or the long-term success of super-chains with a negative-profit business model is the impact of this on the consumer's valuation of a book. We've struggled enough with pricing for e-books, with the consumer arguing for $10 and cheaper, and the publishers arguing that books are worth more than that, even when they aren't printed. There was concern that $10 e-books would necessarily bring down the value of a printed book, making printed matter obsolete and unprofitable, thereby leading to the decline of printed books. But this was all theoretical, what-ifs, we'll-sees.

Now, a $9 hardcover suggests that this is what a book's value is - and practical cost analysis will show that no publisher could stay afloat by pricing all books at $9 and under. It's an impossible competition, completely short-sighted, and dangerous for all involved, even the competitors themselves.

Phew, rant over. For more, check out a PW blog response here, and recent Shelf Awareness discussions: yesterday and Monday.

1 comment :

  1. Quick update: PW reported last night that the American Booksellers' Association has called for a government inquiry into the legality of this price war -- http://www.publishersweekly.com/article/CA6703525.html

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