In Price War, Amazon Discounts Go Deeper Than Ever

Yesterday Amazon.com quietly began discounting many bestselling hardcover titles between 50% and 65%, levels we've never seen in the history of Amazon or in the bricks-and-mortar price wars of the past. The books are from a range of major publishers and include, for example, Inferno by Dan Brown, which has a list price of $29.95 but is available on Amazon for $11.65, a 61% discount; And the Mountains Echoed by Khaled Hosseini, listed for $28.95, offered at $12.04, a 58% discount; Lean In by Sheryl Sandberg, listed at $24.95, available for $9.09, a 64% discount; and The Fault in Our Stars by John Green, listed at $17.99, available for $6.55, 64% off. A notable exception is The Cuckoo's Calling by J.K. Rowling, using the pseudonym Robert Galbraith, which is discounted 42%.

The changes appear largely to be in response to an Overstock.com campaign launched this week to be 10% lower than Amazon's on "the roughly 360,000 books sold on both Overstock.com and Amazon.com," according to Internet Retailer. Overstock has said the anti-Amazon campaign will last indefinitely although its site says "one week only."

The discounts are, of course, far higher than the usual 40%-50% range offered by Amazon, warehouse clubs and other discounters--including Overstock--and are more typical for remainders than frontlist hardcovers. In some cases, the hardcovers are priced below the Kindle editions.

Some have speculated that Amazon is also emboldened to engage in dramatic price cutting--which hurts traditional bricks-and-mortar stores and feeds consumer perception that a fair book price is lower than its cost--by the Justice Department's victory against five major publishers in the e-book agency model case as well as Wall Street's acceptance of continued losses by Amazon for now in the expectation of retail domination--and major profits--eventually. This last point was seen most recently on Thursday, when Amazon's quarterly results included a net loss and were below Wall Street expectations but did not provoke the usual rush to sell, as is the case with most companies whose results are disappointing.

Another possible reason for Amazon's boldness is its apparently cozy relationship with the Obama administration--whose Justice Department pursued the agency model case, which mainly benefited Amazon. This relationship will be highlighted this coming Tuesday, when the president will give another major speech on the economy and aiding the middle class at, of all places, the Amazon warehouse in Chattanooga, Tenn. This is roughly equivalent of going to a Wal-Mart and calling for more of the kinds of jobs it offers. --John Mutter

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Editor's Note: Late last Friday we found out about Amazon's current deep discounting and President Obama's visit Tuesday to the Amazon warehouse in Chattanooga, Tenn. We publish only Monday through Friday, and didn't want this important story to wait 60 hours.
 
Saturday morning I wrote a story. If the subject had been less complicated, tweets and Facebook posts would have sufficed to get the word out, which is what we usually do in such situations. But this story was not so simple, so we sent out a special issue, which is very unusual for us. After the special issue went out, I learned from a former Amazon employee about the Overstock.com anti-Amazon promotion, the immediate reason for Amazon's deep discounts. This added a new element to the story, but the gist of it is as valid as it was before--and even if Amazon wasn't primarily targeting the book industry, the effect of its deep discounting was the same and follows the pattern of its hostile approach to the rest of the book world.
 
We quickly updated the story on our website and left out the quotation from Jack McKeown, president of Books & Books Westhampton Beach, since he said it without knowing about the Overstock campaign. We also sent out a press release to news media about the story using the updated version. In our eagerness to get out the updated version, we neglected to add a line that it was an update.
 
In addition, since we published the story, we have been inundated with e-mail and phone calls from people who were shocked by both Amazon's deep discounting and the president's implied approval of Amazon, and in each case, we've made sure they knew about the Overstock angle and the updated story. Likewise, our Monday story and all other references mentioned the Overstock campaign. In more than eight years publishing more than 2,000 issues, we have always updated or amended stories as needed in this way. --J.M.

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