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The earliest reports had Walmart.com and Amazon going head to head in a price war over book sales. First, Walmart.com lowered the price on selected bestsellers to $10.00. Amazon matched. Walmart.com then lowered to $9.00. Again, Amazon matched. Walmart lowered to $8.99. Amazon didn't make the next move. Target did, but that's another story.
It soon became apparent that calling the activities between Walmart.com and Amazon "a price war" is a little like calling the War in Iraq, Operation Iraqi Freedom. No, the price war on books is more akin to the Battle of Fort Sumter in the Civil War. It was just Walmart.com's first attack.
Within a week of the book battle, Walmart.com launched an all out attack on everything from DVDs to electronics. On Black Friday, Walmart.com was selling a Phillips 7-inch DVD player for $49.00. You could buy the same player at Amazon for $87.99.
Walmart CEO Raul Vasquez is quoted as saying,"If they react and match our prices, we're going to continue to lower our prices."
As an article in The New Yorker explains, this is about Walmart finally deciding it's time to dominate online retail, much the same way it dominates retail in the brick and mortar world.
...the real goal of this conflict isn’t to lure readers away from Amazon, and it isn’t to get people to buy one of those ten books. It’s to lure them online, away from big booksellers and other retailers, and then sell them other stuff. Usually, price wars wreak havoc because they erode the pricing power of an entire business. But, because this price war involves just ten items, its impact on revenue will be small, and outweighed by the positive effects of all the publicity. (It has garnered publicity because it involves books. A big banana price war has been raging in Britain, but you probably haven’t heard about it.) It’s textbook loss-leader economics.
With nearly a $40 price difference on that Phillips DVD player, it would be very hard to justify buying it at Amazon. In the spirit of the holidays, I'm grateful I'm not in the market for a Phillips 7-inch DVD player because I don't want to shop at Walmart.com. There, I've said it. I'm rooting for Amazon.
The rationale for this decision is completely irrational, and I know it. I'm the one who buys airline tickets on Priceline. I delight in getting incredibly low prices on rental cars and hotels at Hotwire. I don't feel badly at all for companies who are offering these products at deep discount. I spent a week bidding at DFWbid.com to "win" gift cards for a penny. And, I have spent a decade buying merchandise on eBay.
With that kind of history, you would think I would relish that Walmart.com and Amazon are lowering their prices to gain my loyalty. And yet, there is something so powerful in the Walmart brand that it pushes me away from that store with a vengeance. I don't even want to know what their everyday low prices are.
I'm hoping that Amazon can hold their spot as the number one online retailer. This, despite the fact, in my business life I'm developing strategies for a client to compete against Amazon. The question I have to ask myself is: Why do I have such a visceral disdain to shopping at Walmart.com?
It's not as if I have to go into their store. I just have to click on their URL.
It has a lot to do with branding. When I think of Walmart, I think of hypocrisy. Maybe you remember their campaign about 10 years ago, "Our Nation: Supporting the American Manufacturers that support American jobs." At the same time Walmart was positioning itself as the all-American business, 85% of their products were made outside of the U.S.A. I think that may have been the start of my vitrolic reaction to all things Walmart. I'm not big on hypocrisy. I actually wrote my 11th grade term paper on that theme, and it was getting an "A" on that paper that made me decide to become a writer. I digress.
When I think of Walmart I think of a bully first, low prices second. I think of a company, the number one employer in the entire country, and it had to come kicking and screaming into offering employees health benefits.
I think of the price all of us are paying for the privilege
