A fascinating war is shaping up in the retail book selling category. The stakes are being raised as the prices fall just as far. The bidding is bold and fast - the price for pre-ordered bestsellers is now $8.98 at Wal-Mart. Amazon matched the original $9.00 price tag, but Wal-Mart, always low-price leader, dropped it to $8.99. Target entered the fray, matching the $8.99 price. Wal-Mart countered with $8.98. It was like watching gas station wars in the 1970's, stations dueling by being a penny lower. All of this follows the fanfare of $9.99 eBooks for your Kindles and Sony Readers.
Every year in the fall as the leaves come down, Wal-Mart announces a major price discount program in advance of the holidays to get the attention of the cash conscious consumer. Last year it was Ten Popular Toys Under $10.00. This year it has been extended to 100 toys. Great news for shoppers!
This book price battle is good news for readers who can purchase hard covers by authors like Stephen King, John Grisham and Richard Patterson for under $9.00 - about the same as a paperback book bought ten to twelve months later!
It is interesting to note that Barnes and Noble and Borders, the largest chain booksellers, have chosen not to match the prices. They are holding steady on their business premise. They won't join the others in the downward spiral pricing game.
Can this last? It's questionable, as there is no margin delivery. At $9.00 or less, the price to the consumer is less than half the price that retailers are paying for the book from their wholesalers. Who, incidentally, are adamant about not playing the discount game with retailers. Will the deep discount strategy foster new readers or bring additional revenue? That remains to be seen.
As with any big box cost-cutting move, it has the doom and gloom prediction of killing the small independent book retailers. The American Booksellers Association - a trade group for independent booksellers - sent a letter to the U.S. Department of Justice asking them to investigate "predatory" behavior. This isn't the first time they've played the "woe is us" card. I remember a similar outcry when Barnes and Noble and Borders were trotting out their new mega book stores back in the late 80's and early 90's. Yes, many small booksellers closed their doors; but many adapted their business model and grew stronger and better. Book readers benefited, which is often the case when efficiency and convenience are introduced in the retail channel.
There will always be competition in whatever industry, category or service you choose to work. Independent booksellers still survive, and in some cases, thrive. Take RJ Julia, a wonderful independent book store in bucolic Madison, Connecticut. Their success is based on reader affection and allegiance to their brand. The service and book selections are worth the extra cost. Author events and community connection reinforce this. It's the same in every category. These attributes beat the big box day in and day out. It's easy to talk about offering service excellence - it's hard to deliver it.
There were over three billion books sold in 2008. There is room enough for everyone to make a buck. The battle has begun.
In the mystery world there have been several specialty book seller closings, but many continue to thrive and others have opened. One of my publishers, Permanent Press, only markets to independent booksellers and their business is up 71% over last year. They've avoided where the real pain has been lately - big box booksellers. Many are predicting the demise of Borders. The scary thing about Wal Mart is they can afford to lose huge money on major bestsellers to attract consumers which no one else in publishing can afford. The entire industry relies on a few blockbuster titles, which subsidizes thousands of other books. Kill the profit on blockbusters and you kill off thousands of books that live in "the long tail."
To build on the story for how the independent bookstores are fighting back, The Wall Street Journal reported last week that some enterprising stores, like the Boulder Book Store in Boulder, Colo., wanted to preorder as many as 70 copies of Barbara Kingsolver's latest books. At five dollars cheaper than what they get if from the publishers or wholesalers - it was a marketers dream come true. More profit and a great backdoor business move to outsmart the big boxes at there own game.
Wal-Mart saw through this and is limiting online customers to two copies. Amazon has a three book maximum and Target is the most liberal policy - five!! It is book rationing at it's finest!!