Until Overstock began its price war with Amazon in late July, the companay and its CEO Patrick M. Byrne had kept a relatively low profile in the book business. But the Stanford Ph.D. and Marshall scholar at Cambridge University has popped up in other news this year. In January, he was arrested for carrying a concealed and loaded gun in a carry-on bag at Salt Lake City airport. On July 27 he appeared in a full-page ad in the Wall Street Journal, where he “congratulated” Steven A. Cohen on the indictment of several employees of his SAC Capital Advisors hedge fund by federal prosecutors. Although Byrne has likened Cohen to a Sith Lord, a villain from Star Wars, in a phone interview with Publishers Weekly he reserved his animosity for a different villain—Amazon, which he labeled “the evil empire.”
Just days before that WSJ ad, Byrne took on Amazon in the category where the mega e-tailer began and announced that between July 22 and July 31, Overstock was pricing its print books at least 10% below Amazon. “We’re having a great year and want to thank our loyal customers for making it happen,” said Byrne in a press release, referring to the company’s recently released second-quarter figures, in which revenue was up 22%, to $293 million, compared to the same quarter last year. Byrne told PW that the company changed its prices on 360,000 books, and that Amazon dropped theirs in response on 6,000 bestsellers (a number that Amazon had not confirmed at press time). The two then continued to change prices, with Amazon meeting many of Overstock’s deep discounts of 55% and higher.
Byrne called the timing of the price war on p-books, shortly after the verdict against Apple in the government’s e-book price-fixing lawsuit against Apple, “coincidental.” He chose books over some of the 14-year-old company’s most popular areas, like home, jewelry, and apparel, because, he said, “our customers have an appetite for books. It’s one of our smaller categories, [but] our good customers like it. And it’s been growing. We sell in the millions of dollars in books.”
Even with several hundred thousand titles to Amazon’s millions, Byrne claimed that Overstock has 95% of the books people are looking for. “We definitely have all the mainstream titles,” said Byrne, who would like to see publishers bring him their overstock to liquidate. If they would do that, he said, Overstock could increase its book business a hundredfold. He said people go to Overstock not only for bestsellers but to look for bargains on other titles. “For 10 years, we’ve been trying to get publishers to see the light.”
If publishers prefer to pulp excess inventory or sell it to buyers other than Overstock, they might be surprised to learn that Byrne views his company as the online alternative to Amazon. Similarly, independent booksellers, who could become collateral damage in a protracted pricing war, might also have trouble seeing Byrne’s point that Overstock’s book discounting is a blow against Amazon’s “monopsonistic” practices. (Note: a monopsony is when business dictates terms to its suppliers, distinguishing it from a monopoly, which is a dictation of terms to buyers.) “We’re not the enemy. I think of ourselves as going out to slay a dragon,” said Byrne. “I’ve always loved independent booksellers. My fantasy is to form a consortium with independent booksellers so that we can synthetically create what Walmart offers. This is what the gods of economics want to see happen.” In this scenario, a customer could order an item from Overstock and pick it up at an independent bookseller in a particular community and function much like Amazon lockers at 7-11 stores. That would give indies, said Byrne, “the brick-and-click charm of Walmart, Target, and Amazon.”
As to what’s next, Byrne intends to review the company’s book-discounting decision, which has already been extended for a second week, weekly. Also on the docket are three proposals for Overstock to move into e-books. The company flirted with them briefly through an announced partnership with Barnes & Noble in late 2011. The agreement dissolved, according to Byrne, because the customer had to leave Overstock’s site to complete the transaction. Under a new e-book program, which could launch as early as the fourth quarter of 2013 but more likely in January 2014, the sale would be made on Overstock.com. As for digital readers, Byrne has no intention of entering that market, but Overstock does continue to carry Nook and Kindle cases and covers.
Byrne as Translator
In addition to his other credits, Byrne is also a translator. With an undergraduate degree in Asian studies from Dartmouth and a certification from Beijing Teachers University, Byrne served as the translator of the Square One Publishers edition of Lao Tzu’s Tao Te Ching: The Way of Virtue.
Square One founder Rudy Shur said Tao Te Ching was one of the first books he acquired when he started the company in 2000 and that it continues to be a steady seller for the house.