Quote:
Originally Posted by charmian
Sgrener: I'm confused by your answer. It is true that Amazon also faces expenses, but as we all know, bookstores' costs are higher than Amazon's, which is why they aren't able to price-cut as much.
...In other words, I don't think anyone in the industry believes that B&N would have a prayer of survival if they price-matched Amazon and challenged them to a price war on all of their inventory. They don't even price match bn.com.
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Let's say I order a NYT Bestseller from Amazon that is $14, with a list price of $30. I get free 2-day shipping, which typically costs over $7 from UPS. So Amazon gets $7 for their $30 book. B&N discounts their book 40% (which they can somehow afford to do, but only for bestsellers.) So they sell it for $18. Now, you can tell me that Amazon has lower overhead, and I'd agree. But if B&N's overhead is such that they truly could not make it selling that book for $14, then traditional retail is sunk.
Target and BestBuy recently announced that they will price match Amazon.com in their stores. Obviously, they will get less money in sales by doing that. But they have faced the reality that customers will not buy enough products in the store to make up the difference. In other words, they lose so many sales because of their markups that it's actually better to take the lower price than nothing. BestBuy has been hurting in recent years, but Target is a strong company with a solid profit margin. And they're seeing this as a necessary step in surviving as retail stores. Now neither of them are price matching with their actual sale price (and that may be difficult to do, since Amazon changes prices on some products more than once a day) but you show them the price on your phone, and you get that price at the register.
The fact the BN won't even do this with their own web site shows that they are not interested in making more sales for a lower price. They'd much rather make no sale at all. And that is the kiss of death for a retailer.