Amazon rival digs in for holiday challenge

One of Amazon.com's former partners is gearing up to wage a price war against the Web superstore.

Overstock.com, which buys goods from foundering companies and sells them online, is expected to announce Monday that it plans to sell more than 350 best-selling books for 10 percent below what Amazon sells them for, said Overstock Chief Executive Patrick Byrne.

Overstock, a company known as a "Web vulture" because it picks over the remains of dead dot-coms, struck a deal with Amazon last August to sell used computers at the e-tailer's computer store.

Two weeks after listing computers on Amazon's site, Overstock pulled out of the deal, citing poor sales. Overstock also canceled a deal it cut with Amazon to handle distribution and fulfillment of 700 electronics products.

Amazon responded to the move by saying it was "quite happy" with sales in its used-computer department, which at the time was brand new.

As the holidays grow near, more e-tailers are sure to coax customers to their sites by slashing prices, analysts have said. Some analysts predict that concerns raised after the Sept. 11 terrorist attacks may drive holiday consumers to shop on the Net rather than in their local malls--another potential boon for e-tailers.

Overstock, however, is tangling with the largest retailer on the Web--one with almost 30 million customers. Although Amazon's books, music and video business stopped growing for the first time during the third quarter, the category remains profitable.

Kristin Schaefer, an Amazon spokeswoman, declined to comment on Overstock's book sale other than to say, "We stay focused on providing great value, service and reliability to our customers and not on what competitors are doing."

Amazon shares rose more than 30 percent last week after one of its executives suggested that holiday sales were going well. Amazon ended the trading day Friday at $8.95, after starting the week below $7.