It's a retailing clash of the titans: Brick-and-mortar giant Walmart (WMT) is going head-to-head with online retailer Amazon (AMZN) in a battle over prices for some of the hottest book titles this holiday season.
The shooting started Thursday when Walmart announced it would sell 10 hot new book releases -- including Under the Dome by Stephen King, Going Rogue: An American Life by Sarah Palin, I, Alex Cross by James Patterson, and Ford County: Stories by John Grisham -- for just $10 through Walmart.com.
Amazon quickly responded, matching Walmart's ten-spot price -- only to see the big-box behemoth strike back, slashing its prices to $9.
Walmart executives have been trying to position Walmart.com as a premier retail destination online, but have had a hard time surpassing Amazon's lead. "This price war comes down to who is going to be the Walmart of the web," says Broadpoint AMTech internet analyst Ben Schachter. "Is it going to be Amazon? Or is it going to be Walmart.com? This is a battle that is bubbling over now, but will continue for the next five or 10 years."
While Walmart's annual brick-and-mortar revenue of $400 billion dwarfs Amazon's $20 billion, Amazon still has a big lead in online sales. "So far, Amazon has done a phenomenal job on the Web, and Walmart has not," Schachter says. "If you've been betting against Amazon, you've been losing."
Yet a price war on books could prove detrimental to both retailers. Walmart and Amazon "are eating the margins here," Schachter says.
The Wall Street Journal sounded a note of alarm, saying Walmart's promotion "may ultimately condition consumers to expect new titles to cost $10, a price that would force the publishing industry to re-scale its entire business, including the advances paid to writers."
Dean Koontz, the bestselling novelist whose new Breathless is among the titles being discounted to $10, told The Journal that he thinks the move may be a boon to authors. "Any time people are fighting over your work, it's a good thing, especially when you've worked all those years hoping it would be fought over," he said. "I don't think this is going to be a long-term thing. Rather, it sounds like a promotional strategy designed to call attention to Walmart's decision to enter the digital marketplace more heartily than in the past."
"Our newest offering -- the Top 10 pre-selling books at just $10, with free home delivery -- is a true reflection of [our] commitment to better help our customers shop and save money online, just in time for the approaching holiday season," Walmart.com CEO Raul Vazquez said in a statement. An Amazon spokesperson was not available for comment.
Walmart seems to be waging price wars on several fronts. The retailer slashed book prices just one day after it said it would start offering nationwide wireless service at significantly lower prices than other carriers. But on both fronts, these fire-sale prices mean the consumers win. In a slow economy, a little competition is a beautiful thing.
Investing in Real Estate
Learn the basics of investing in real estate.View Course »