As you may have heard over the past few days or weeks, there's a price war going on between Amazon and Walmart in the wond'rous (and occasionally terrifying) arena of cyberspace. Both retailers are vying for the much-coveted title of Lord of the Lowest Prices—otherwise known as The Biggest Loser, since both parties are buying their books from publishers at traditional discounts and selling them at a loss—and with Target now getting in on the action, it's going to be a very interesting fight indeed. Popcorn, anyone?
In all seriousness, though, this series of (perhaps soon-to-be unfortunate) events has just about everyone in the industry worried. While publishers aren't losing any money on books at the moment—on the contrary, increased sales of the selected $8.99 hardcovers are only going to boost publishers' sales—they are concerned about the long-term implications of what Walmart, Amazon—and now, Target—are doing. Here are a few of the problems:
· None of these retailers are specifically book sellers, so they can afford to lose money on books while making an overall profit through the sale of other goods. Major chain stores like Barnes & Noble and Borders, as well as smaller independent book stores, can't afford to do this and may either be substantially downsized or actually driven out of business by these sales tactics.
· Should Amazon and Walmart achieve the majority of the large publishing houses' market share, they will eventually be able to collectively demand that publishers sell to them at a steeper discount (such that they can continue to sell books at low prices without hemorrhaging money). If you remember the Walmart/Rubbermaid debacle of a decade or so ago, this won't seem too far-fetched. This could further decrease publishing houses' already slim profit margins.
· Even if Amazon and Walmart don't push for increased discounting, their potential statuses as the country's largest book retailers will make it more difficult for publishers to secure promotional space on their websites (or, in the case of Walmart, brick-and-mortar stores) simply because publishers will be competing not only with other houses, but retailers of completely different goods and services.
Walmart already has a stranglehold on our tupperware, our Kraft dinners, our small kitchen appliances, our dorm furniture. Will books be next?