Wal-Mart And Amazon Book Battle — Blah!

Wal-Mart and Amazon.com are battling toe-to-toe in the book market. Shortly after Wal-Mart announced plans to sell 10 new books for $10 apiece yesterday, Amazon.com announced that it was matching the price. Wal-Mart responded by saying that it would sell the books for $9.

Wal-Mart is serious. According to Walmart.com’s CEO Raul Vazquez:

If there is going to be a ‘Wal-Mart of the Web,’ it is going to be Walmart.com. Our goal is to be the biggest and most visited retail Web site.

My take: Maybe it makes sense to aggressively compete for book buyers with low, low price. I can see the rationale for this strategy: Books are already a commodity, so why not cut prices and build scale so you can squeeze cost from the supply chain and cross-sell other products. But that’s a very boring and uncreative strategy.

So how would I go after this market?

I’d add value to the overall experience. The first step would be to uncover the unmet needs, wants, and desires of different segments of book buyers. This would include ethnographic studies of how consumers buy, use, and discuss books as well as an examination of successful independent book stores. I would then use this information to create experiences that would reduce some of the price sensitivity

Even without the research, I can already think of potential options for creating value for some segments of book buyers:

  • The Reading Plan (return a purchased book for a specific price based on how long they keep it and the condition of the book when it is returned. Return could be cash or credit towards another book).
  • Usage Price Plan (the price of a book takes into account the return price; buyer agrees to return it in a certain time in a certain condition).
  • Author Appreciation Plan (buy a book from an author and you can return it for a significant discount on another book by that same author).
  • Book Loyalty Club (buy “x” books and you get the next one for free.)
  • Virtual Book Club (earn points based on book purchase and turn points in for experiences like presentations from authors, books with personalized signatures from the author, discussions and lectures from literary figures and professors, and early access to new books).
  • The NetFlix Plan (pay a fixed fee for a certain number of books you have out at a time. Maintain a queue online and get the next book in the queue after you send back your current book).

The bottom line: Book buying experiences don’t need to be a commodity.

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I am a customer experience transformist, helping large organizations improve business results by changing how they deal with customers. As part of this focus, I examine strategy, culture, interaction design, customer service, branding and leadership practices. I am also a fanatical student of business, so this blog provides an outlet for sharing insights from my ongoing educational journey. Simply put, I am passionate about spotting emerging best practices and helping companies master them. And, as many people know, I love to speak about these topics in almost any forum. My “title” is Managing Partner of the Temkin Group, a customer experience research and consulting firm that helps organizations become more customer-centric. Our goal is simple: accelerate the path to delighting customers. I am also the co-founder and Emeritus Chair of the Customer Experience Professionals Association (CXPA.org), a non-profit organization dedicated to the success of CX professionals.

6 thoughts on “Wal-Mart And Amazon Book Battle — Blah!”

  1. If you are going to buy a book and then return it for cash back or credit, why not forget about money at all and use the library? They offer books for free (unless you return them late). Yes, you must physically go to the library to pick up your materials and return them but most libraries allow you to go online to put books on hold. You don’t go until you are notified that your books are available for pick up and every library has a book drop, most located so that you don’t even have to get out of your car. Free versus paying=smarter choice. Personally, I rarely buy a book unless I know I’m going to keep it and reread it or pass it on to someone else.

  2. Bruce,

    Great post! It caught my eye because I work for a company that already does “The NetFlix Plan” for books – BookSwim.com

    A few things to add to the mix of questions as to how Mal-Mart plans to be the most visited retailer. Obviously this price cut was direct move against amazon, but the big question is – while amazon is the largest online retailer for books (and most other items) – are books really what Mal-Mart wants to go with as their message?

    I’m a firm believer that the value of a book is in the story it tells. Hardcover, paperback, audiobook, e-book, the only thing that matters are the words and how they are relayed to the user. I also see a trend in people wanting to own a book less and less. As ownership of a book loses value – yet reading is still demanded – the publishing industry needs to find a change.

    Wal-Mart has no stated plan on how to deal with that change. The options you have shown are great (for startups/small businesses) but can you see a Wal-Mart really implementing a rental model or special return policy? It is too far removed from what their core is – putting products in people’s hands.

    Amazon is attempting to change the industry with the e-book but that is a future game – as there are many who refuse to use e-readers (due to cost or a lack of desire to hold a mechanical device), but as real books don’t crash, don’t require battery, and don’t break the piggy bank to acquire – they will still remain a huge driving force in the next few years.

    Again – great insight into the battle.

  3. Melissa,

    There is a key issue with the library. While many americans have great libraries in their areas, there are a majority of people who’s libraries are very small (less than 2000 books total). On top of that, libraries have limited hours and have difficulty stocking the latest bestsellers and there is a large waitlist.

    Libraries are amazing. I love them and am a member of my local library, but for me to say that I will exclusively use the library is a bit of a stretch. People want what is new and they want it now – Libraries have failed to provide in that area for a long time and due to budgetary constraints as well as a difficulty embracing technology, there will always be a market to sell/rent books.
    -Nick

  4. I strongly agree that the best way would be to discover the unmet need and add value to the overall book-buying experience. I find it odd though, that after questioning Amazon’s and Walmart’s strategies to discount book prices, the first four of your “options for creating value” involve some form of a discount.

  5. Hi everyone: Great comments!

    There’s probably a segment of consumers, like Melissa, who like their library (or at least the concept of the library). So I’d add a study of libraries to my ethnographic research project.

    Nick says that he thinks the value of the book is the story it tells. So maybe there are experiences that can enhance the stories for customers. Special podcasts from the author about what he/she was thinking about a particular character, perhaps.

    Richard and Nick also have some strategy questions. Can Walmart really do a rental model? I don’t know. Give me Walmart’s full backing and I’d find a way to make it work. Will they? Probably not. They have a lot of categories to think about. Which leaves the opportunity to redefine the book buying experience (besides eReaders) to other firms.

    Richard points out that my first 4 ideas had to do with price discounts. I hadn’t really noticed, but you’re right. I wouldn’t read too much into that. Since I didn’t actually do the research, those ideas were off the top of my head.

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