Wal-Mart cuts price of books online

CHICAGO — Taking a page from its original playbook, Wal-Mart Stores launched a full-fledged price war with Amazon.com and a nation of book retailers, lowering online prices on certain highly anticipated hardback titles to $9.

The volley of discounts, which began Thursday when the retailer listed prices for some upcoming hardcover releases such as Dean Koontz' "Breathless" and Stephen King's "Under the Dome" at $10, was answered with a similar price cut by Amazon, the largest online bookseller. Then the two competitors lowered the prices even further to $9.

The book discounts, the latest in a series of aggressive online maneuvers by the world's largest retailer, could position the company to do to the online marketplace what Wal-Mart did to local merchants decades ago.

"While it's the largest retailer in the United States, it's not the dominant online retailer in the United States," said Albert Greco, professor of marketing at New York City's Fordham University.

The price war also is foreboding news to the large chain bookstores Borders Group and Barnes & Noble, which have been squeezed by Amazon.com's discounting and a decline in their music business.

In the past seven weeks, Bentonville, Ark.-based Wal-Mart has ratcheted up the competition in several retail arenas, beginning with an Amazon.com-like announcement in late August that it would allow outside retailers to sell nearly 1 million items — from baby products to sports memorabilia — through its Walmart.com site.

But it was the announcement about books — the base from which Seattle-based Amazon.com built itself into a powerhouse — that created the biggest stir.

The discounts are a cut of 60 percent or more from cover prices, which means the two competitors are likely selling the titles at a loss.

Hardcover releases, which typically have a suggested retail price of at least $25, are generally sold to merchants with a wholesale price that's a 47 percent discount.

Walmart.com spokeswoman Amy Lester said its latest efforts to beef up its online discounts are part of the company's overall strategy to sell products at the lowest prices.

Wal-Mart has built its strategy on using its size and massive buying power to undercut competitors. But it sells enough products in enough categories to make up any losses on individual items it uses to bring people into its stores.

The price cuts come at a time when Amazon.com and other sellers have been charging just $9.99 for e-books, a price that publishers worry is unrealistically low. The reductions also make it increasingly hard for independent sellers, which can't afford such large discounts, to compete for the most popular books.

"They can't bring (prices) that low," said Michael Norris, a senior analyst with Simba Information. "As a whole, it's very hard for traditional bookstores, large or small, to compete with this kind of nonsense."