Dot-Com Price War Redux
by Edward Nawotka -- Publishers Weekly, 7/1/2002
Online retailers Buy.com, Amazon.com and B&N.com are once again in a price war, using discounts and free shipping to lure new customers during the summer months.
Harking back to the heady days of dot-com bubbledom, Buy.com is offering selected bestsellers, including those listed on the New York Times list, at 50% off, with some qualifying for free shipping. For example, Divine Secrets of the Ya-Ya Sisterhood by Rebecca Wells (Perennial), originally $14, is on sale for $7, shipped free with no tax. Otherwise, any orders weighing less than 20 lbs. or costing more than $99 are also shipped free.
Amazon.com, is more restrained in its promotion and now offers free shipping on all orders of $49 or more, reduced from $99. The test is expected to last three to six months, though it may be extended into the holiday shopping season. Amazon offers a 30% discount on books priced over $15.
To counter Amazon's new discount, Buy.com has since proclaimed it will price all books at 10% lower than Amazon.com and is guaranteeing a refund if the book can be had cheaper at Amazon. The company took out a full-page ad in the Wall Street Journal to make the announcement.
Buy.com CEO Scott Blum said he hopes the discounts will "win Amazon customers over to us." Blum said that Buy.com offers the discounts because it relies on distributors, such as Ingram, for fulfillment, and forgoes the expense of maintaining inventory and warehouses.
Despite the extra discount, Blum insisted the company will still make money on each book sale, "or we wouldn't do it." The company said that within 24 hours of introducing the new discounts, book revenue increased by 800% over the average for the previous month.
B&N.com continues to offer free shipping when two or more items are purchased. It, too, has followed the discount trend, by launching a "summer sale"—30% off books published this calendar year.
In 2002, Buy.com is expected to have attracted five million customers, generating $400 million in revenue, versus Amazon's 25 million customers and more than $3.5 billion in sales. B&N.com estimates between $400 million and $450 million in revenue for 2002.
