Walmart, Amazon, Target Rationing Below-Cost Books To Keep Independent Bookstores From Cashing In

Independent book stores can’t even buy new releases for the low prices that Target, Walmart, and Amazon are offering them to the public — which has led to rationing in order to keep the independents from buying and reselling the books at a profit.

Apparently one can now buy new release books for about $5 cheaper than the wholesale price. From the WSJ:

The retailers are losing money on each copy sold because publishers charge them about 50% of a book’s hardcover price. The prices for the 10 books involved in the promotion are also lower than the wholesale price independent booksellers pay for the merchandise.

Arsen Kashkashian, head buyer at the Boulder Book Store, in Boulder, Colo., said he had intended to buy as many as 70 copies of Barbara Kingsolver’s “The Lacuna” from Walmart.com, Target.com or Amazon, because their prices are “more than $5 cheaper than what we can get it for from the publisher, Harper.

The books in question are from Stephen King, John Grisham, Dean Koontz and James Patterson among others. The books have list prices of $22 to $35, but can be found at retailers for about $9.

Amid Price War, Three Retailers Begin Rationing Books [WSJ]

Comments

Edit Your Comment

  1. gStein_*|bringing starpipe back|* says:

    I’ve noticed that books at Costco are usually about $5 more than i can get them for on amazon (as new books, directly from amazon.)

  2. usa_gatekeeper says:

    Does this constitute price fixing collusion? RICO?

    • Esquire99 says:

      @usa_gatekeeper:
      There has to be an agreement on an actual price to constitute price fixing. It’s arguably an exclusionary boycott, but that can be tough to prove.

      I can’t see it being RICO, as that requires a number of independently illegal predicate acts done in furtherance of an overall enterprise.

    • NICU says:

      @usa_gatekeeper: No, competition is not illegal. Smaller book stores have plenty of options to differentiate themselves from the likes of Walmart, Amazon, and Target. The smart ones will be able to adapt and survive.

      • TheWillow says:

        @NICU: yes. Those lazy independents can compete by expanding to make HUGE profits off of products other than books, so that they are also able to sell books at a loss until all of their competitors who sell only books go out of business, and then raise the prices slowly and make even more profit in the long run.

        Walmart did it, why can’t mom & pop.

    • Cant_stop_the_rock says:

      @usa_gatekeeper:
      The crazy ideas people come up with on this site always make me chuckle. RICO… hah.

  3. FatLynn says:

    The big guys bully the publishers into a wholesale price at which they lose money. The independent guys can not compete. I see two ways to fix this: 1) publishers band together and fight back or 2) publishers drop prices to the little guy, though not as low as to the big guys.

    For example, wholesale price is $10. Big guys can buy it for $5 and sell it for $7, assuming they will make up the money elsewhere. The little guy would rather buy from the big guy for $7 than from the publisher for $10, but if the publisher offered it to the little guy for $7, he’d go there.

    This is still a bad solution, though. Sigh.

    • Traveshamockery says:

      @FatLynn:

      The big guys bully the publishers into a wholesale price at which they lose money.

      I’m sorry, but the ignorance of this statement is mind-boggling. You’re claiming that Walmart makes publishers sell books AT A LOSS? Nobody signs a contract to sell books at a loss. There’s no point in it. Come on.

      The independent guys can not compete. I see two ways to fix this: 1) publishers band together and fight back or 2) publishers drop prices to the little guy, though not as low as to the big guys.

      1) Publishers banding together could very easily become collusion, and get charged under price fixing laws. 2) Why would the publishers drop prices if the little guys are willing to pay current prices?

      The best solution would be for little guys to create a large buying group of independent bookstores which could offer, as a whole, volumes comparable to the national chain book stores.

      • FatLynn says:

        @Traveshamockery: If you don’t think that WalMart bullies its vendors into selling products at a loss, I suggest you google “Vlassic pickles Walmart” and see what turns up.

        The publishers are almost certainly selling the top titles at a loss, because the threat of not being in WalMart at all is much worse than having to take hits on some of the books.

        • Trai_Dep says:

          @FatLynn: Add to that, this is another Tragedy of the Commons situation.
          Big Box retailer sells items at a loss to build traffic to their high-margin goods, destroying the sacrificed loss-leader segment.
          They did it with music, now books.

        • lchen says:

          @FatLynn: i can’t speak for books. but when i worked for a watch company, Walmart did force us to really squeeze our vendors (in china) for lower price points. and then Walmart decided to cut us out of the equation and buy straight from the vendors who have all our designs already.

    • Tim says:

      @FatLynn: Both of those ideas would probably violate antitrust laws. Publishers banding together would be a cartel. Publishers charging different prices to some retailers and not others would be … I don’t know what it’s called, but I’m pretty sure it’s illegal.

      Furthermore, this big distributors aren’t getting the books at lower prices than the little guys. They’re getting them at the usual wholesale price, then selling them for below the wholesale price, and losing money.

      • NeverLetMeDown says:

        @TCama:

        “Publishers charging different prices to some retailers and not others would be … I don’t know what it’s called, but I’m pretty sure it’s illegal.”

        Nothing illegal about it – nothing forces a vendor to charge all customers the same price. Do you think that Walmart and your local pharmacy pay the same wholesale price for toothpaste?

        Furthermore, this big distributors aren’t getting the books at lower prices than the little guys. They’re getting them at the usual wholesale price, then selling them for below the wholesale price, and losing money.

        This is absolutely true, and it’s what people are missing – Walmart/Amazon/Target are selling these books at a loss, Walmart to promote their e-commerce business, and Amazon to prevent Walmart from positioning itself as the “cheapest place to buy online.”

      • lmarconi says:

        @TCama: I’m not sure whether the article is clear about whether the major retailers are selling below the wholesale price at a loss (which I guess they could do hoping people purchase other things while they’re at the store/on the site) or whether they are actually getting them at lower than the wholesale cost for the average independent retailer because they are buying a greater volume of merchandise….

    • P=mv says:

      @FatLynn: After years of dealing with the insanity that is college textbook prices, I have ceased to care about publishers.

    • crackblind says:

      @FatLynn: It actually sounds like the big guy retailers are selling at a loss, not the publishers. It makes sense for the smaller bookstores to turn to them as wholesalers.

      • FatLynn says:

        @crackblind: I don’t doubt that the big guy retailers use them as a loss leader, but the odds are very good that they are also bullying their suppliers down to a price that the suppliers can not afford to offer to small book stores. WalMart has a history of doing this, and consumers should be aware of it when they go get their $20 book from WalMart for $9.

        In short, I think we are both right.

  4. SkokieGuy says:

    “their prices are “more than $5 cheaper than what we can get it for from the publisher” – well duh!

    Since an independent bookstore might buy a few hundred copies and Walmart might in excess of a million, it’s not unexpected they can buy cheaper.

    Walmart does this with many of their products, often dictating to the supplier the price they will pay. Walmarts negotiated wholesale price and lower selling price has put thousands of small retail business out of business.

    Dear Independent Bookstore Owner: Don’t even attempt to compete on price. Compete on service, selection, friendliness of staff, special events, (book signings, story time for kids) and things that Walmart can’t compete with YOU on.

    Oh, and don’t have a receipt checker.

    • Techguy1138 says:

      @SkokieGuy: Doesn’t sounds like they are trying to compete on price. Sounds like they just want to stock their shelves for cheaper and are will to let Walmart pay to do it.

      This alone could become rationalization for publishers to let everyone have the books at walmarts price. If they are going to screw the industry might was well readjust expectations and models.

    • Traveshamockery says:

      @SkokieGuy:

      Oh, and don’t have a receipt checker.

      Cost savings!

    • johnfrombrooklyn says:

      Unfortunately (or fortunately), hundreds of bookstores that are now out of business did try to compete with Wal-Mart et al. on service, selection, special signings, and big events. But at the end of the day customers still want to buy something the cheapest they can. @SkokieGuy:

  5. sbcpunkrocker says:

    The business/profit/greed focus in this country has really sent us downhill.

    • Illusio26 says:

      @sbcpunkrocker: Oh no, businesses want to make a profit! Oh the humanity. News flash, if the business aren’t making a profit, then they aren’t in business and people aren’t employed.

      Profit = Good

      • sbcpunkrocker says:

        @Illusio26: AIG, Lehman Bros., Citi, WaMu, etc. were all the business of making profits and did it quite well for awhile, except they did it at any cost. Now millions are paying the price. Newsflash, Wall Street posting gains, profits, and still no jobs.

    • harvey_birdman says:

      @sbcpunkrocker: If there were no business/profit/greed focus then NOBODY WOULD DO ANYTHING. Seriously, do you show up at your job because you enjoy it? If like most people you show up because food, electricity, and the occasional craigslist hooker cost money. The government can’t provide those things to you free of charge, as much as you might like to pretend otherwise. Grow up.

  6. pmcpa4 says:

    And this is why you Local Stores are dying… It’s not because of Greed on the owners part, it’s because there is no way to actually make a profit and pay the bills.

    Support your local stores!

    • morlo says:

      @pmcpa4: Write a “letter to the editor”

    • tbax929 says:

      @pmcpa4:
      If my local stores could figure out how to do it correctly, I’d gladly shop with them. Why would I pay more just so I can be smug about how I only shop locally? Give me a reason to solicit your business, and I’ll solicit it. Otherwise, I’m off to Walmart, Target, and their ilk.

      • leprechaunshawn says:

        There is a reason why I gladly shop big box retailers. The little guys cannot compete with price and nobody really needs customer service anymore since you can research just about any product online. If small local stores cannot compete, they go out of business. That’s just the way it is and the way it should be.

  7. diasdiem says:

    Couldn’t they get around this by just making multiple accounts and buying the max with each of them? What mechanisms do the big stores have in place to prevent such a practice?

  8. winshape says:

    The retailers have a price they want to sell their books at. Independent bookstore owners are willing to pay that price.

    If the retailers don’t want people buying large quantities of books, they should raise the price.

    • Cant_stop_the_rock says:

      @winshape:
      Or they should just limit the number of copies a customer is allowed to buy, because it’s a loss leader.

      Oh snap! That’s what they’re doing. There’s nothing wrong with it.

  9. GMFish says:

    When I worked at a music store back in the 90s, stores such as Best Buy were selling CDs cheaper than we could buy them. Eventually, the independent music store died out. Apparently, it’s only a matter of time before the same thing happens to book stores too.

  10. miss_chevious says:

    The big box guys have lowered their prices as a result of the digital book phenomenon — when people can buy the ebook on the Kindle for $9.00, they don’t understand why they should have to pay four times as much for a hard cover. So they’ve brought prices down on certain physical books to compete. The general consensus is that the low priced new releases are loss leaders for the big box stores–no one gets out of Target for less than a $100 no matter what they go in for–in order for them to remain competitive with Amazon in the book area. It’s your basic Clash of the Titans.

  11. SteveBMD says:

    I just deal with the whole corruption/corporate-greed issue by not reading.

  12. Techguy1138 says:

    Seems like the rationing should be ruled illegal. I can remember when movie studios sold copies of movies to video stores for much higher than public prices. It was ruled that they couldn’t do that.

    If the stores are going to sell items at a loss they they should reap what they sow. They shouldn’t be able to have it both ways.

  13. Tim says:

    If they’re selling below cost, it’s an unsustainable model. So they’ll probably sell at cost for enough time to knock out a sizable number of competitors, then jack the prices back up so that they profit again. Then they won’t have to worry about competition!

    I know this doesn’t fix the specific problem at hand, but I say buy from the publishers! Much more money goes to the publisher that way, more goes to the author, and of course, much less goes to big box retailers.

  14. jaya9581 says:

    The library has books way cheaper than $9, but I don’t hear independent bookstores clamoring for libraries to close.

    I *will* buy the new Stephen King book, though. I just wish I could return the new Dan Brown one, what a waste of $15.

    • valueofaloonie says:

      @jaya9581: I know! The Dan Brown was a piece of crap. That being said, I’m donating my copy to my local library, since the waiting list currently sits at ~700. Might as well let *someone* get some use from it.

  15. Outrun1986 says:

    As far as local stores go, not all have better service. Sometimes you get the same level of service at the big box store as the little guy. The little guy (regardless of type of merchandise sold) might also be a fly-by-night operation which means they will be gone after the holidays or gone after a month or 2, this means no return period or guarantees on what you buy there. If you need to return at Walmart or Target, you know they will be there and not close before the return period on your item ends. In the event that a store does enter liquidation, you always have another store nearby or at least they announce when returns of items bought before liquidation ends.

    Service is going to depend on the employees, managers and many other factors. The attitude of district managers does trickle down to individual retail stores. There are good employees in Walmart too, I have seen it. A lazy employee or one that does not care can be found at a big box store or the little guy.

    I just love how everyone here loves the little guy, but the little guy might not always be the best solution.

    I am not trying to start a Walmart debate here but the big box stores have brought jobs to our area when there previously were very few.

    I am just having flashbacks to those people who buy stuff at those carts in the mall only to find out it does not work after they give it as a gift on Xmas day, and when they go back to return it on the 26th, the mall cart is gone. Seen it happen too many times to count. And the fly-by-night bridal shops that manage to screw over tons of customers.

  16. Paper says:

    A friend recently told me of something similar happening in Japan with games retailers. Apparently Amazon Japan sells videogames online at a lower price(including shipping) than retailers can buy them from their suppliers.

  17. SpaceToast says:

    Here’s a tip: Publishers enforce “Strict on Sale” dates for hot titles like Lacuna. If you find a retailer selling a copy before Nov. 3, in theory you are to report them to the publisher, and they will suffer severe sanctions. I doubt it would be enforced against Walmart or Target, though; the conglomerates have wanted small players out of their hair for years.

    Short of the library, shopping at a big box will certainly get you the cheapest price on blockbuster hardcovers, because they can afford to take the loss (say, -$8 per copy of The Lost Symbol sold). They buy the big hits only, non-returnable, which is where the 50% discount comes from. For a retalier to offer a real selection, they have to buy at returnable rates and take chances. Returnable rates are typically more like 40%-43% off cover price, and no, it doesn’t work like consignment.

    Bottom line, if you want the next Nevada Barr book, renewing your library card is still cheaper. If you want the next Nevada Barr, shop at an independant. Finding you new writers you’ll like and knowing books is… kind of our job.

  18. Radi0logy says:

    People still buy physical books?? Psh! With my Kindle, I can downl.. ppppbbtt! HohoHaha! I just couldn’t keep that up. I mean seriously, who would be dumb enough to buy a Kindle?? Haha oh that’s rich.

  19. saigumi says:

    This is the same thing with board games.

    When I owned a Board Game store, anything by Milton Bradley or extremely large American publishers like them, it was cheaper from me to buy them retail at Walmart and resell them at my store than to even bother ordering them from my distributors. Most of them, Walmart sells for $10. My distributors wanted $15. Suggested retail was $16. So, I would buy at $10 and sell for $13.

  20. rootehound says:

    This has been going on in the music industry for years. Best Buy, Amazon and Target sell CDs for significantly less than they cost independent retailers. Stop by a Traget or Best Buy any Tuesday morning and I’m sure you’ll see indie record store owners shopping for new releases. I know. I am one.

  21. Etoiles says:

    This happens with nonfiction books, as well. Amazon sells some books I need to buy in quantity for work for far less than anyone else — even including in bulk from the publisher (even including the shipping). But depending on the title, I can only buy them 10-20 at a time. That gets annoying when you’re trying to get 150.

  22. duncanblackthorne says:

    This sounds potentially illegal?

  23. rhys1882 says:

    The Board of Directors of the American Booksellers Association sent a letter to the DOJ to look into Amazon, Wal-mart, and Target for illegal predatory pricing.

    [www.booksinc.net]

  24. StanTheManDean says:

    Ah yes, the good ole “sell it at a lose and make it up in volume”.

  25. SkokieGuy says:

    @floraposte: For halloween are you going as the Evil Mistress of Snark? You’re hearted for this one. Bravo!

  26. Smashville says:

    @squinko: *hits man with car*
    “Oh my god! Are you Stephen King?”
    “No. I’m Dean Koontz.”
    “Oh.”
    *puts car in reverse and runs over him again*

  27. bhr says:

    @treimel: Now Joe Shmoe in Podunk, WV has access to 1000s of books he can’t find at the local book store.

    Local owner refuses to carry Christian books, Walmart.com has them.

    Local owner refuses to carry books about guns.. Amazon has them

    Local owner refuses to sell steamy romances… Target has them.

    The internet distribution model is the greatest leap for literacy since the Guttenberg Bible.

  28. henneko says:

    @treimel: “And what big, bad method are they using to censor?”

    It’s well known that Wal-Mart gets record labels to edit their music so as to not offend Wal-Mart’s customers. At least they label these albums as such.

  29. treimel says:

    @harvey_birdman:

    Agreed–I love a cozy old bookstore as much as anybody. There’s a used bookstore in my town that I’ve spent countless hours in. However, Amazon and alibris has scratched every weird, obscure book itch that have had so far. Brick and mortar? Not so much.

  30. nbs2 says:

    @treimel: Indeed. As stories at this very site point out, Amazon presents an ideal situation for many cases. They provide WM pricing and small seller service while offering a selection that neither can compete with. Their only downside is the waiting period to get your product.

  31. Powerlurker says:

    @saigumi:

    Heck, at one point, Newegg’s print ads explicitly encouraged people to check out merchandise at big box stores and then order it online from them.

  32. Smashville says:

    @zzxx: Because Random House is such a mom and pop organization.

  33. halcyondays says:

    @zzxx: Newsflash: THEY’VE ALWAYS CONTROLLED BOOKS. The big publishers are actually losing their stranglehold because of desktop publishing, print on demand, self-publishing, and the internet.

  34. ecwis says:

    @GMFish: I thought the independent bookstore already died out. I’ve been to one independent bookstore in the past 10 years. If I ever go to a bookstore, I go to Border’s or Barnes and Noble. I wouldn’t even know where to find an independent bookstore if I wanted to.

  35. melloncollie128 says:

    @NICU: It’s called predatory pricing and could lead to a coercive monopoly.

  36. Techguy1138 says:

    @harvey_birdman: Because they are doing it to drive the competition out of business. It’s one thing if they actually figured out how to make a profit on the item or if they were clearing out an old inventory. They have a business plan where they sell the items at a loss, thus driving smaller, profit driven stores out of business.

    This is called dumping. Prices inevitably go up at some point once the competition is gone. Allowing the independent book sellers to stock their inventories from that practice actually is a free market way of solving the issue.

    Otherwise the FTC should get involved.

    It would be interesting if the publishers did the same thing and restricted the number of copies Walmart could buy due to them driving the purchase price of their product below the wholesale cost.

  37. Smashville says:

    @halcyondays: Shh. In 1986 he went into an independent bookstore run by an independent book publisher…

  38. dragonfire81 says:

    I think it is legal to charge different entities different prices for the same item.

  39. sbcpunkrocker says:

    @dfens42: Yeah that “trickle-down” bull certainly has done wonders for the American middle class since the 1980s.