Buy.com Slashes Book Prices To Undercut Amazon

A limited price war has broken out in the online bookselling arena as Buy.com, Amazon.com (Nasdaq: AMZN) and BN.com vie for customers, offering steep discounts reminiscent of the earliest days of online commerce.

Buy.com has fired the latest volley, saying it will sell 1 million book titles at 10 percent below Amazon's prices.

The discount follows Buy.com's decision last week to offer free shipping with no minimum purchase, a move that came just after Amazon lowered its own free shipping threshold to US$49.

"It's a bold move to specifically target the Amazon customer base," said Robert Price, president and chief financial officer of Buy.com.

Image Problems

Buy.com said its systems can monitor Amazon prices and lower its own in response. Alternatively, shoppers who purchase a book from Buy.com and then find a lower-priced version on Amazon within 72 hours may apply for a refund of the difference in price.

Buy.com chief operating officer Brent Rusick told the E-Commerce Times that the move reflects the fact that Amazon has 25 million customers and Buy.com about 5 million.

"We think our business model offers efficiencies that we can pass along to shoppers in the form of lower prices and free shipping," Rusick said. "At the same time, we can let them know that we sell a range of products."

In a way, Buy.com has the opposite problem to Amazon: It is well-known as an electronics e-tailer rather than a bookseller. Amazon, meanwhile, has been trying to convince its loyal legion of book, music and video shoppers to make purchases in other parts of the Amazon store, including the electronics aisle.

Sales Spike

Buy.com president Robert Price told the E-Commerce Times that a Buy.com review of Amazon book prices found Buy.com listed most titles at a 10 percent discount. "A lot of our prices were already at this level," he said, adding that the e-tailer will offer the discount "indefinitely."

According to COO Rusick, both the shipping offer and the discount -- and the publicity surrounding them -- are showing immediate results.

By mid-morning, Rusick said, the e-tailer already had doubled its entire day's book sales from last week.

And Buy.com claims to have seen a 30 percent increase in orders and more than a 20 percent jump in revenue since its free shipping offer went into effect last week.

Joining the Fray

Meanwhile, BN.com announced plans to offer 30 percent discounts on a catalog of about 50,000 titles published since the beginning of this year.

BN.com also said it will keep in place its own free shipping offer, which requires shoppers to buy two or more items at the same time. The company did not return calls seeking comment.

How Low?

These moves may test Amazon CEO Jeff Bezos' repeated insistence that the bellwether e-tailer will continue to push the envelope by lowering prices whenever possible.

But there is mounting evidence that shoppers turn to the Web not for cost savings but to save time and avoid the hassles of in-store shopping.

"Time after time, our research shows that shoppers are most interested in the convenience of the Web," GartnerG2 research director David Schehr told the E-Commerce Times.

In fact, a GartnerG2 survey conducted last fall found that 81 percent of online shoppers were driven by convenience and just 33 percent by price.

Stirring It Up

An Amazon spokesperson did not immediately return a call seeking comment on the latest Buy.com price move. But when Amazon unveiled its newest free shipping deal last month, it called the move just the latest in a series of price reductions dating back to last summer, when it began offering discounts on books and other items.

Whether or not the Buy.com and BN.com moves lure customers away from Amazon, they liven up the e-tail environment and give shoppers something to think about.

For instance, the Pulitzer Prize-winning novel "Empire Falls" was selling in paperback for $10.47 on Amazon and $10.46 on BN.com. In both cases, shoppers would have to combine that purchase with others to receive free shipping. At Buy.com, the book was listed for $9.42, exactly 10 percent below Amazon's price.

Repeat Performance?

Of course, e-tailers have bombarded consumers with free shipping deals and steep discounts before, but many of those companies shut down long ago.

It remains to be seen how far the various players are willing or able to go this time around.

Buy.com survived 2001 only because founder Blum stepped in to rescue the firm and took it private, shielding its financial condition from view.

BN.com has seen its stock return to the $1 level after a brief run higher and continues to post significant financial losses. The company lost $5.3 million in the first quarter, though it did report a 15 percent year-over-year gain in sales .

For its part, Amazon is hoping to keep reducing losses while growing sales in an effort to become consistently profitable. The company booked its first-ever in-the-black quarter during the last three months of 2001. Amazon also is expected to announce the opening of its Canadian site, its fifth overseas effort.