Amazon (NASDAQ:AMZN), Target (NYSE:TGT), and Wal-Mart (NYSE:WMT) are apparently sharply limiting the number of books customers can buy under their programs to sell popular titles at discount prices. Book publishers have already claimed that the three companies are trying to monopolized book distribution.
The Wall Street Journal surmises that the reasons for the restriction on the number of books any one customer can buy has been set at two or three is that small book stores are buying the books and then marketing them up in price for their customers. While that may be true, the entrepreneur with one or two stores cannot offer the discounts that Amazon can. The huge e-commerce company can afford to lose money on the titles because visitors to it website may but other items. The book shop owner cannot afford to adopt the same tactic.
While Amazon, Wal-Mart, and Target want to prevent book stores from using their low prices to create a second market for the corner book store, they do face the prospect of antitrust action. Small book retailers can make the case that three large companies which flood the market with merchandise at below market prices are almost certain to run some of their more modest competition to insolvency. That may not be the intention of the three big companies. They may simply be battling for market share in the e-commerce business as the holidays approach. The death of small book sellers may just be collateral damage.
But, collateral damage is damage nonetheless. The book selling industry cannot afford to see its financial model completely destroyed because Amazon wants to keep a large distance between the number of online customers it has compared to Wal-Mart.
The discount book battle will end up in court, or at least in the crosshairs of the Justice Department. The bad publicity of hundreds of small store owners going under cannot go unanswered.
Douglas A. McIntyre
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