I was not surprise this week when I read that Wal-Mart was doing a new assault to gain more market share by reducing its prices at a lower price than their actual cost and well below competitors. Since its beginning, Wal-Mart attack ferociously new markets with price cutting to always offer the lowest price in the market. The company remains committed to providing customers with the lowest prices available without thinking about how they will affect the smaller retailers and independent sellers to dominate all markets.
Their strategy had forced many small and specialize retailers to either lower their prices or simply close since their customers were going to Wal-Mart.
Last Thursday, Wal-Mart launched a brash price war against Amazon.com. The company announced 10 anticipated new best-seller books for just 10 dollars to enter the digital marketplace and to compete with Amazon.com, the world’s largest online retailer. This tactic forced Amazon to match their price since they also seek to offer the best online prices for their customers.
Now, the books are on sale at 8.99 dollars at Wal-Mart and 9 dollars at Amazon which is definitely below the hardcover normal price of 22-35 dollars. Both companies are offering more than 70% of rebate when the normal big retailer’s prices are 30% to 50% off the market price.
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I definitely think that this war could damage the book industry because writing a book takes time and there is no authors, publishers or booksellers that will be able to write or publish new works at a price as low as 9 dollars. Maybe Wal-Mart and Amazon can do it because they have a certain power, but their war will be more detrimental to the industry and I think that at the end they will lose if there are no more writers.
I read different articles that covered this price war between these two big discount retailers. I particularly enjoyed the New York Times because it related the story in favor of the book industry. The author introduced is article with a good headline Price War over books worries industry and relate the entire story with some bias because the author introduced some quote from Wal-Mart showing that they were attacking the market versus quotes from an owner of an independent company saying that you have a choke point where millions of writers are trying to reach millions of readers but if it all has to go through a narrow funnel where there are only four or five buyers deciding what’s going to get published, the business is in trouble . (New York Times)
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As for the Financial Times, I didn’t really appreciate their article because in comparison with the other articles that I have read, they were basically summarizing what the other articles were stating. The only positive comment I could say is that they used an analyst comment saying that the online price war underlined the long-term threat new technology posed, but I think the author should have say more.
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Bloomberg’s author focused more on the benefits and stock market of Wal-Mart versus Amazon which was quite interesting as well. It demonstrates more research in the subject than just relating the facts. Moreover, the author was quite objective and went even further in the information by giving the reader the strategies of both companies. Finally, the author also state that he contacted Amazon.com’s press office and didn’t received any immediate response which shows that the PR people from Amazon probably decided to wait to see what was going on before related information to the press. I really liked this sentence because without stating anything, Bloomberg demonstrate that Amazon doesn’t really know what to do.
Overall, I think that with all the different articles I read, I’ve been able to follow the price war and discover all the information from different point of views. The majority of the articles related more or less the same story but I was happy that some authors gave quotes from the industry showing that it was in danger even though I would have gave more facts about how the small retailers, writers and publishers could be affected in the long term.
SOURCES:
Financial Times: http://www.ft.com/cms/s/0664a9f10-bab4-11de-9dd7-00144feab49a.html
New York Times: http://www.nytimes.com/2009/10/17/books/17price.html?hpw= &page wanted=print
Bloomberg: http://www.bloomberg.com/apps/news?pid=20601110&sid=aNudtIRVsXWM
Wall Street Journal: http://online.wsj.com/article/SB125565024634288895.html
Reuters: http://www.reuters.com/article/newsOne/idUSTRE59F5GX20091017
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