On the surface, the price war between Wal-Mart, Amazon, Target, and Sears centers on books from bestselling authors being sold for under $10. But the war isn’t really about books at all.
What’s going on, as James Surowiecki of The New Yorker explains, is this:
Wal-Mart is making a statement that it’s a player in the online world, but the real goal of this conflict isn’t to lure readers away from Amazon, and it isn’t to get people to buy one of those ten books. It’s to lure them online, away from big booksellers and other retailers, and then sell them other stuff.
One other interesting point from the NYer story: Price-matching guarantees, oddly enough, often don’t work in the customer’s best interest. Why? Such guarantees tend to stop stores from initiating price wars in the first place:
One way to establish that peace-preserving threat of mutual assured destruction is to commit yourself beforehand, which helps explain why so many retailers promise to match any competitor’s advertised price. Consumers view these guarantees as conducive to lower prices. But in fact offering a price-matching guarantee should make it less likely that competitors will slash prices, since they know that any cuts they make will immediately be matched. It’s the retail version of the doomsday machine.
Read more:
Guess Who is Trying to Scoop Up All Those Cheap Books from Wal-Mart? Indie Bookstores
Sears Enters Book Wars with a Bonus: $9 Credit, Even if You Buy from a Competitor