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.
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Comments:
Does this constitute price fixing collusion? RICO?
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.
"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.
The business/profit/greed focus in this country has really sent us downhill.
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!
@usa_gatekeeper: No. They did not agree to set a certain price, one company did it and the others followed.
@FatLynn: Pre the web, it was a deep dark secret that publishers sold books at different prices to different retailers, and it was quite the scandal when a misplaced invoice revealed that fact.
@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.
@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.
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?
@floraposte: For halloween are you going as the Evil Mistress of Snark? You're hearted for this one. Bravo!
Big business controlling books.........scary....
Welcome to the United Corporations of America
Koontz's novels are not worth the wholesale price, let alone the crazy price of $9.
@FatLynn: Smaller independent bookstores should focus on the things that Walmart/Target can't - they could focus on customer service, finding exactly what the customer wants, having a knowledgeable staff that can recommend books. They could have/host book clubs, they could do launch parties (like Harry Potter). Smaller independent stores can do a lot more than just whine about pricing on a few books. They can focus on the customers who love books.
@SkokieGuy: I love a compliment, but candor forces me to admit I was being completely factual, and given your moniker you'll be interested to know that the retailer in question was Stuart Brent Books on Michigan. Here's an article that mentions the incident: [www.springerlink.com]
@floraposte: All right, "deep dark secret" is probably overstated, but "largely unacknowledged and occasionally denied fact" is still pretty close.
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.
@pmcpa4: Local stores had better offer me something better than Walmart/Target offer. Its really not hard to top them in customer service or extra offerings. If you offer the same experience and customer service for a higher price you'll go out of business (and deserve to). IF you can offer a better experience and better service then you'll do just fine.
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.
@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*
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.
I just deal with the whole corruption/corporate-greed issue by not reading.
@gStein_has joined the star bandwagon: That's probably on scale with every technical book (which are usually in the $50 range) I've looked into lately which have been about $20 cheaper on Amazon than even Borders and B&N.
@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.
@sbcpunkrocker: The business/profit/greed focus is what turned America into a powerhouse international economy, the envy of the rest of the world. It causes some problems, but the market straightens it out. Care to suggest a better method?
Profit-bashing has become so trendy lately!
@GMFish: Best Buy actually sells a lot of new-release CDs and DVDs below cost for the first week or two to drive traffic to their stores. If they lose a buck on 100 CD purchases, but the 101st guy buys a the lossleader CD plus an HDTV, the equation works out.
@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.
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.
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.
@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.
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.
@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
@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."
@pmcpa4:
When my local bookstore offers the selection and service of Amazon, I'll gladly pay their higher prices. It doesn't, so I'll continue with Amazon, thanks.
@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.
@zzxx:
And what big, bad method are they using to censor?
By offering them at really low prices .. hmm.... you seem easily frightened.
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.
@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.
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:
@jaya9581: You don't get a book from the library and "own" it. Eventually you have to return it. Many people like to buy books and own them.
@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.
@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.
@FatLynn: After years of dealing with the insanity that is college textbook prices, I have ceased to care about publishers.
@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.
@pmcpa4: Local independent stores are going the way of the family farm. It's a new world, adapt or die.
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.)