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Can Bricks-and-Mortar Bookstores Win a Price War with Amazon?

By Alex Mutter

Is Bookworld risking too much for the sake of being competitive?

Australia’s Bookworld has guaranteed its customers that it can beat Amazon’s prices, and those of other online retailers, The Australian reported today.

Bookworld customers can now claim a 10% discount off of any standard title if they find the same book for less, including shipping, handling and other fees, from a different online retailer.

“This is the first time a local online book retailer has directly competed with the major international online players,” said James Webber, Bookworld’s CEO.

The offer is a direct challenge to both Amazon and the UK-based Book Depository, to which Australian consumers have been flocking as a result of the strength of the Australian dollar and the high price of books in the country.

The company has stated that it is willing to slim its margins in order to further competition and growth.

According to The Australian, books bought from international e-retailers can often be up to 20% cheaper than books bought from Australian retailers. One of several reasons for this is that the Goods and Services Tax (GST) is not applied to purchases made from foreign online retailers.

Not everyone is happy about the increased competition, however. The Australian reports that Joel Becker, head of the Australian Booksellers Association, worries that the “price blitz could put traditional bricks and mortar store sales and profits under even more pressure.”

In the United States, Amazon is facing simliar competition from bricks-and-mortar stores who are tired of losing customers to the Seattle giant. Both Target and Best Buy have agreed to “price match” Amazon on certain items and are encouraging shoppers to use their smartphones to compare prices in store — primarily in the hope that shoppers will opt to use the bricks-and-mortar stores’ apps or else buy on the spot. Books are not specified in either stores’ announcements, but Target has a strong, albeit modest, selection of current bestsellers, so there’s no reason to think the same policy wouldn’t apply to them.

So tell us, do you think Bookworld’s stores can beat Amazon on price? Or are the margins simply too slim and the chance of losing revenue during the all important holiday shopping season, to even take the risk? (And please note, we know this question only applies to countries without fixed price laws).

Let us know what you think in the comments.

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One Comment

  1. James Papworth
    Posted November 9, 2012 at 5:43 am | Permalink

    The GST issue is very unfair. Not sure why the Australian fiscal authorities think it is ok to put their own bricks and mortar taxpayers under such pressure or why they are happy to let so much money vanish into foreign pockets……. I’m sure they have good reasons that elude my logical mind.
    Matching algorithms programmed to sell at the lowest price, no matter what the consequences, is a whole other challenge. In years to come the above mentioned e-tailers business models will be studied with interest……………….right up there with Commodore’s C64.

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