Wal-Mart.com triggered an online price war for its 10 hotly anticipated hardcovers from big named authors by posting them on their website for $10. All of the books have November release dates, and the pre-order is already creating bestsellers.
Hours later Amazon.com Inc. (AMZN, Fortune 500) marked the same booklist on their online website for $10. Wal-mart's price fell to $9. Amazon's fell accordingly. Last Friday, Wal-mart tipped its hat with a one cent slash to $8.99.
Patterson's "I, Alex Cross" dropped from $27.99 to $8.99. Stephen King's "Under the Dome: A Novel" dropped from $35.00 to $8.99. The discounted booklist includes John Grisham's "Ford County" and Sarah Palin's "Going Rogue" at more than a 60% discount from the cover price. This means that both online competitors are selling titles at a loss. Publishers have started commenting on the potential effects on the supply side effect on publishers, authors, agents, and the brick & mortar retail booksellers.
A Wal-Mart spokeswoman e-mailed a press release stating the company will “continue to adjust our pricing so that Walmart.com offers the lowest prices on these top pre-sellers in books.” Amazon declined to comment.
This Wal-Mart/Amazon competition has brought about a race to the bottom with the customer benefiting tremendously. At the same time, it is important for a society to take note of strategic planning announced by its oligopolists. Oligopolistic competition can give rise to a wide range of different outcomes, such as creating real market entry barriers from artificial price reductions. Should U.S. antitrust law care about protecting new market entrants? Why or why not?
DISCLAIMER: Because of the generality of this update, the information provided here may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations. This profile may constitute attorney advertising. Prior results do not guarantee a similar outcome. Any correspondence with this blog does not constitute a client/attorney relationship. Neither the content on this blog nor transmissions between you and the blogger through this blog are intended to provide legal or other advice or to create an attorney-client relationship.
Hours later Amazon.com Inc. (AMZN, Fortune 500) marked the same booklist on their online website for $10. Wal-mart's price fell to $9. Amazon's fell accordingly. Last Friday, Wal-mart tipped its hat with a one cent slash to $8.99.
Patterson's "I, Alex Cross" dropped from $27.99 to $8.99. Stephen King's "Under the Dome: A Novel" dropped from $35.00 to $8.99. The discounted booklist includes John Grisham's "Ford County" and Sarah Palin's "Going Rogue" at more than a 60% discount from the cover price. This means that both online competitors are selling titles at a loss. Publishers have started commenting on the potential effects on the supply side effect on publishers, authors, agents, and the brick & mortar retail booksellers.
A Wal-Mart spokeswoman e-mailed a press release stating the company will “continue to adjust our pricing so that Walmart.com offers the lowest prices on these top pre-sellers in books.” Amazon declined to comment.
This Wal-Mart/Amazon competition has brought about a race to the bottom with the customer benefiting tremendously. At the same time, it is important for a society to take note of strategic planning announced by its oligopolists. Oligopolistic competition can give rise to a wide range of different outcomes, such as creating real market entry barriers from artificial price reductions. Should U.S. antitrust law care about protecting new market entrants? Why or why not?
DISCLAIMER: Because of the generality of this update, the information provided here may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations. This profile may constitute attorney advertising. Prior results do not guarantee a similar outcome. Any correspondence with this blog does not constitute a client/attorney relationship. Neither the content on this blog nor transmissions between you and the blogger through this blog are intended to provide legal or other advice or to create an attorney-client relationship.
