Thursday, November 05, 2009

Other Side of Predatory Pricing

Price is the easiest way to win or lose a customer. As the large retailers like Walmart, Amazon and Target (WAT) fights among themselves by lowering bestselling book prices among them, they also attracted the unhappiness of the American Book Association (ABA) as discussed in my previous blog post.

Apparently, not everything seems to be going for the WAT. Their strategy of low prices has backfired on them, as small retailers buy their books in bulk so that they can re-sell them for a tidy profit. Talk about entrepreneurship and opportunists. Check out the news below:

- "Amid Price War: Three Retailers Begin Rationing Books" (Wall Street Journal, Nov 2nd, 2009)
- "Book Wars come to Grinding Halt" (Vox, Oct 30th, 2009)

Allow me to apply Newton's law, that with every action, there exists an equal and opposite reaction. Likewise, with every benefit offered by the retailers, there is a corresponding cost they have to pay. That's Newtonian dynamics applied to predatory pricing.


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