Wal-Mart (WMT) Joins E-Book Wars

The competition in the e-reader and e-book industries gets more brutal by the day. Amazon (NASDAQ:AMZN) is the e-reader leader because of the success of its Kindle. Other companies including Sony (NYSE:SNE) have come out with products of their own and price cuts have already begun, presumably as a tactic to gain market share.

The e-book business is also becoming much more competitive. The largest book retailer in the country, Barnes & Noble (NYSE:BKS), has increased its presence in the sector in which Amazon is the clear leader. Google (NASDAQ:GOOG) has announced that it will launch an online bookstore.

Wal-Mart (NYSE:WMT), which has one of the most visited e-commerce sites in the US, has launched a new program to sharply increase it market share in the e-book business.

Walmart.com is offering ten upcoming blockbuster titles at $9 each, which is nearly 70% off of the retail price of most of the books. The list includes new books from Sarah Palin, John Grisham, and Michael Crichton. Each is schedule to be released in the next few weeks.

The move is clearly trying to take customers from Amazon. Many of its best-sellers are priced at $9.99.

Wal-Mart’s new pricing program comes as the holiday season swings into gear and the world’s largest retailer attempts to take market share from a number of large rivals. Its new “100 Toys for under $10” will almost certainly hurt companies like Target (NYSE:TGT).

Wal-Mart may be losing money on its books and toys programs. It has the balance sheet to take the risk that customers who buy books and toys will also buy other items for the holidays. But, the consequences go beyond that. The public will now expect e-books to be priced under $10 forever. That may not be financially realistic for sellers and companies like Barnes & Noble, which get almost all of their revenue from book sales, could find that the price war backs them into a corner which it cannot get out of.

Douglas A. McIntyre