RealTime IT News

New Chapter in the Tale of the Booksellers

Overstock.com is taking aim at the King of the Hill in the online book business, looking to undercut Amazon.com on prices - and by 20 percent.

Salt Lake City-based OverstockOverstock said it is offering customers 20 percent discounts to Amazon.com prices on more than 100,000 books.

And the company said that shoppers will also be able to view and compare the price of books offered on both Amazon and Overstock.com.

"Offering a side-by-side price comparison with the company that has become the de facto standard in Internet book sales provides a vivid and objective demonstration of our value proposition," said Patrick Byrne, CEO of Overstock.com.

Overstock doesn't actually allow the shopper to make a side by side comparison in real time, but instead lists Amazon's price and then its own. A check on prices for the upcoming release of "Harry Potter and the Order of the Phoenix" did indeed show that Overstock was selling it for $14.38 and Amazon was listing it at $17.99, just as Overstock claimed.

Amazon, of course, offers free shipping on orders of $25 or more, but if a customer just bought the one book, shipping would be charged. Overstock says it charges $1.40 for shipping a single "media item," including books, and $2.95 for two or more media items -- in the continental U.S. only.

Byrne said that while most books on Overstock.com are priced at least 20 percent below Amazon.com, he expects customers will save up to 70 percent versus Amazon.com on some titles.

Rival Buy.com is advertising 10 percent off Amazon's prices and offering free shipping with no minimum purchase, on selected items. Buy.com's price was $16.17 for the new Harry Potter book and shipping was free.

Overstock.com, which is better known for selling things like electronics and clothing, started selling a significant number of books in the fourth quarter of 2002 and now offers a selection of more than 100,000 titles.

Margins, of course have to be razor thin and getting thinner as the competition intensifies, so it will be interesting to see how the book battles play out.

"As the bigger player, with greater economies of scale and greater bargaining power with suppliers, Amazon can sustainably offer lower book prices than its online-only competitors," said Ken Cassar, senior analyst at New York City-based Jupiter Research.

"However, Amazon's emphasis on low price does make it vulnerable to aggressive market share acquisition moves by competitors, and may put pressure on Amazon to further reduce prices, putting margin pressure on the company. As such, Amazon's profitability will hinge heavily on its ability to cut costs."

Meanwhile, Amazon sent a notice to its U.K customers advising them that they, too, can qualify for free shipping, or orders over 39 pounds (about $63 at today's exchange rate). "There still may be reasons to shop on the High Street, but price is not one," said an e-mail send to U.K. customers and signed by Amazon CEO Jeff Bezos.

Full details on the offer are available here.