AMZN and WMT: 1-2 Punch

Did you see what transpired yesterday? If it’s any indication of what’s to come, we will have a highly competitive online market this holiday season. Yesterday alone held a back-and-forth price battle that provided entertaining sport (and a break from earnings). First, Wal-Mart announced it was cutting its online price for bestsellers to $10. Just a few hours later, Amazon cut its own prices to match. By the end of the day, both companies boasted books for a mere $9.00 and whopping discounts of up 70%.

 

AMZN and WMT: 1-2 Punch - 1

 

AMZN and WMT: 1-2 Punch - 2 

 

 

Obviously, this isn’t good for the overall profitability within the publishing industry (unless you believe in massive amounts of elasticity, which I don’t). In fact, moves like this just seem poised to hasten the demise of publishing profits with the digital transition about to shift into high-gear.

 

And in terms of Amazon and Wal-Mart, I won’t rush to any conclusions – other than to flag these moves as ones that I will keep on my radar screen. I can’t imagine that these price cuts will benefit anyone other than the consumers’ wallet, but the breadth and depth of such moves is what will really matter over time.

 

At the very least, to those that are writing off Wal-mart as a threat to Amazon – I say “not so fast”. This strikes at Amazon’s core and with increases in competition across Amazon’s portfolio (as I’ve highlighted in the past), moves like this are (on the margin) a negative.

 

AMZN and WMT: 1-2 Punch - 3

 

Google Trends tracks the rate at which people are searching for given terms (not necessarily visitors to a site). AMZN and WMT both show strong holiday seasonality in search.

 


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