August 27, 1997 2:15 PM PDT

Online booksellers in price war

Signaling that fierce competition among online booksellers won't die down anytime soon, Book Stacks Unlimited announced today that it is further slashing the prices it charges for books it sells on the Net.

Known as Books.com, the company will introduce discounts of 30 percent off hardcover books and 20 percent off paperbacks. Books.com previously provided a 15 percent discount on most of the books it sold.

The move is designed to compete with online booksellers Amazon.com and Barnesandnoble.com, which offer the same discounts. But Books.com has upped the ante by offering customers who pay an annual membership fee a 40 percent discount on hardcover books and 30 percent off paperbacks.

In addition, all buyers will continue to receive a five percent cash bonus on most purchases and get a 40 percent discount on best-selling titles.

Neither Amazon.com nor Barnes & Noble offer either of these discounts.

The announcement comes as competition among online booksellers continues to ramp up. On September 9, Barnesandnoble.com is expected to announce partnerships with a number of Internet sites, including one involving Microsoft, in an attempt to lure more online buyers. Barnesandnoble.com already has such an alliance with Lycos and America Online.

Amazon.com has forged alliances with some 8,000 sites, which receive compensation based on the number of buyers they bring in to the bookseller, as opposed to the number of visitors.

Books.com is no stranger to such alliances. But the outfit, which is owned by direct marketer CUC International, is betting that it can gain more market share by lowering its prices.

"We wanted to be able to go out and say we have the lowest prices on the Web," said Mary Fair-Taylor, director of marketing at Books.com. "We're offering items at a lower price in order to encourage purchasing on the Internet and also to encourage people who are already purchasing on the Net to come to Books.com."

Fair-Taylor added that the company is attempting to hold onto its customer base by selling its merchandise at cost to members.

Nicole Vanderbilt, a senior analyst at Jupiter Communications, gave the strategy a mixed review. "Subscription-based models online have not been proven," said the analyst, who follows online booksellers. But she added that providing price incentives for repeat customers may make sense on the Net, where competitors' Web sites are only a mouse click away.

"Trying to entice consumers with even lower prices is a pretty strong play to get people to join their site," she added.

Barnes & Noble launched its online service on May 12, the same day it sued Amazon.com over the latter's claim that it is the "world's largest bookstore." Three days later, Amazon.com raised $54 million in what by all accounts was a successful initial public offering.

Last week, Amazon.com countersued Barnes & Noble for unfair competition, alleging the company improperly omits sales tax for books it sells online.

Noting the fragmented market for books among brick-and-mortar retailers, Vanderbilt said there's plenty of room for competition online. "Competition will stay heated in this market and people will go at it in different ways."

 

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