Tuesday, October 20, 2009

Price Wars: The Empires Strike Back (At Each Other)

Normally I don't write much here about the travails of independent bookstores as we try to compete with the chains and the internet. In the first place, I figure that if you're reading this blog you already have some sympathy with, and knowledge of, the issues involved. Secondly, if it wearies me to write and talk about it, I assume it would weary readers to continually read about it.

However, I can't let the ridiculous book price war that broke out last week between Walmart.com and Amazon.com pass without comment. As you've probably heard, Wal-Mart lowered the pre-publication prices on its website of several major hardcovers to the absurdly low level of $10.00. Amazon promptly matched the price. The one-upmanship continued, and, to make a long, silly, self-destructive story short, by Monday morning the prices on both sites had gone down to $8.99. The whole business reminded me of two egotistical actors continually trying to upstage each other until both end up splayed against the back wall of the theatre.

The first thing to note: unless Amazon and Wal-Mart have made unconscionable sweetheart deals with the publishers they are actually losing a significant amount of money with every book they sell at these prices -- $8.99 is way, way below cost for most standard hardcovers. Of course, it's the classic strategy of the "loss leader": lure customers to your store (or website) with one ridiculously low price and hope they'll buy other items on which the store makes a significant profit. However, it's a strategy usually associated more with a gallon of milk than a Stephen King novel.

The impact this has on independent bookstores is pretty self-evident. It isn't so much the lost sales on the particular titles being discounted -- independent bookstores don't sell that many commercial bestsellers to begin with. Rather it threatens to reinforce the idea in some people's minds that by charging the retail price we are ripping off customers in order to pay for champagne-fueled orgies on the Accent on Books yacht. (I wish.) The reality is that we are an actual bookstore -- not a warehouse with a website -- with all the expenses that entails. In addition, we don't have the buying power of the chains, and we stock titles from smaller, independent publishers who -- like independent bookstores -- can't afford to give exorbitantly generous offers to their customers (i.e. bookstores).

What might not be so clear is the impact these discounts have on authors and publishers. At first glance it might appear to be entirely positive -- after all, authors and publishers get paid the same no matter what price retailers set for their products. But what does it say about books in general when retailing empires use them as disposable giveaways to entice folks to buy other items? ("Here's a free book to go with that overpriced pair of socks.") As David Gernert, the agent for John Grisham, was quoted as saying: "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....If readers come to believe that the value of a new book is $10, publishing as we know it is over." Publishers generally have no legal control over what a retailer charges for their products. But if they -- and authors -- were to loudly complain, it would undoubtedly have an effect. Will they? We'll see.

Our good friends at Shelf Awareness have a series of articles and links related to this issue. They can be found here.

P.S. It now appears that Target has become a third combatant in the price wars. Must be nice to have all that money to throw away.

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