Booksellers Take On Walmart, Target, Amazon Over Discounts -- But It's Just Business as Usual

Price wars can have their consequences.

But a letter written by the American Booksellers Association to the U.S. Justice Department asking for an investigation after Amazon, Walmart and most lately Target slashed prices on books isn’t likely to forestall aggressive cost cutting on bestsellers or literary lights.

The letter accused the three retailers of “illegal predatory pricing that is damaging to the book industry and harmful to consumers.” It further noted the retailers have allowed consumers to pre-order potential best selling books for a third for their list prices, adding: “We believe that Amazon.com, Wal-Mart, and Target are using these predatory pricing practices to attempt to win control of the market for hardcover bestsellers.”

Now, retailers traditionally designated some products as loss leaders, and, as the holidays loom, they can get aggressive in tempting consumers to come into stores with products sold below cost. Among the current crop, Walmart features Sarah Palin’s book Going Rogue, An American Life. List price $28.99, the retailer is offering it for $8.98 as part of a 10 Best Pre-Selling Books for Under $9 Each deal posted right on the home page of its website. The offer comes with free shipping when the book launches on Nov. 17.

Target’s deal, by the way, is almost identical to Walmart’s.

Promoting books that have best-seller potential for less than cost can draw customers who will hopefully purchase other titles at full price and a profit. And not only that, but other profitable entertainment products as well. Mass-market retailers such as Walmart and Target often positioned books adjacent to electronics, DVDs and other product lines that represent potential gifts. Losing money on a book and getting a consumer to purchase an iPod is a situation that works out for Walmart.

Amazon’s strategy is different given its Internet-only proposition. While it pre-offers Rogue Warrior at 69 percent off, or around the same price as does Walmart, the main focus of Amazon’s holiday promotional effort is literary. It is offering 34 percent off deals on what it is calling the Best Books of the Year, So Far, 32 percent off Nobel Price winning novels, 34 percent off National Book Award nominees and 45 percent off winners of the Man Booker Prize, the big British literary citation.

By going after literature consumers, Amazon is looking far beyond what Walmart or Target or booksellers carry in their stores. A customer purchasing Cheever: A Life might be enticed to peruse any number of books recommended alongside it or Amazon’s Cheever novels or maybe even classical CDs, which are being offered at up to 36 percent off in the site’s music area. Amazon may not be trying to corner the market on high-culture aficionados, but it at least wants to help as many of them as possible play St. Nicholas this holiday season, even if only for themselves.

Looking at all the discounts, it isn’t hard to see what the independent booksellers are incensed about. By taking away both potential best sellers and literary titles, the mass-market retailers are leaving the independents very little to sell this holiday season, or at least sell profitably. Unfortunately for them, the independents can’t count on loss leaders generating sufficient additional purchases to fund the kind of discounts Walmart, Target and Amazon can.

So, the independents are fighting back in one of the few ways available. While it’s unlikely that the Justice Department will ever initiate an action against the three retailers of interest – the deep discounts probably won’t last past the holidays – the publicity surrounding the letter could cause its subjects problems. Books generate strong emotions among consumers, and the idea that Amazon, Walmart and Target might be hurting bookstores and, by extension, writers who depend on sales, could constitute bad publicity for the retailers. It even could weigh against the purpose of discounts, bringing book lovers to the stores.

Still, in this economy, book lovers may just take the discounts and leave worrying about the state of American literature to better days. Certainly, Walmart, Amazon and Target have yet to back away from the book bargains they’ve been offering.