Commentary

Competitors Lash Back At Amazon's Price Slashes

Overstock.com, which gleefully ignited a price feud with Amazon last month when it declared that it would undercut the latter’s prices by 10% for a limited time, yesterday announced that it would permanently go mano-a-mano on prices with the company that has made its market cap –- if not a profit –- by undercutting everybody else.

“Last month we started a book pricing war with Amazon,” said Overstock.com chairman and CEO Patrick M. Byrne in a news release yesterday. “We’re hoping to continue that battle, in a way that lessens any harm to the mom-and-pop booksellers we consider our comrades in arms.”

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“How so?” you ask?  

“According to Byrne, the offering undercuts Amazon’s book prices for Overstock.com’s most loyal customers, without adding undue pricing pressure on independent bookstores,” blogsPublisher’s Weekly.

Further details on exactly how the moms and the pops will be protected by Big Brother Overstock were not forthcoming in the coverage we gleaned this morning, although it’s also aiming to build on its own ability to retain customers.

“Sweetening the price matching deal, Overstock will give 15% rebates on book purchases to members of its $20-annual free-shipping loyalty club,” Greg Bensinger reports in the Wall Street Journal. “The rebates are good for future Overstock purchases, Byrne said.”

Overstock started the gamesmanship at the end of July “when it priced 360,000 books 10% lower than what Amazon was charging, and Amazon responded by dropping prices on many of its most popular books,” according to NPR’s Annalisa Quinn, who reported at the time that the hardcover edition of Gillian Flynn’s Gone Girl was $11.81 on Amazon and $10.63 on Overstock — “a huge markdown from the list price of $25.” 

Overstock isn’t the only competitor attempting to put the squeeze on Amazon’s already thin margins by undercutting it. 

Tom Gara reports in the Wall Street Journal that a new study out of BB&T Capital Markets finds that “those looking for fluffy white towels, scented candles and curtain rods will now find cheaper prices, on average, at the brick-and-mortar Bed Bath & Beyond than they will at Amazon.”

Amazon prices were 9% cheaper than BB&B when BB&T started its comparative study in early 2012. In the report released this week, the bricks-and-mortar retailer was cheaper by 6.5% on average. Best Buy is among the other retailers also slashing it prices. 

“If [Amazon] was a retailer, Jeff Bezos would have been fired years ago,” BB&T equity analyst Anthony Chukumba tells Gara. “There’s a fundamental disconnect between how investors evaluate Amazon and how they evaluate brick-and-mortar stores.”

Meanwhile, untold customers in the U.S. and Canada were left stranded with their shopping carts full for a while yesterday as Amazon’s servers crashed starting about noon Seattle time.

“Some users saw a message saying the website was temporarily unavailable while improvements were being made,” reports Paresh Dave in the Los Angeles Times. “Others saw an error saying, “Oops! We’re very sorry, but we’re having trouble doing what you just asked us to do.”

The Seattle Times points out that the 15- to 40-minute disruption (reports vary) follows outages both at Google and on Microsoft’s Outlook and Skydrive services last week. 

“With the three largest cloud software companies in the U.S. all having glitches in the same week,” Brier Dudley quips, “you’ve got to wonder if the NSA is updating its routers or something.”

BuzzFeed’s Matthew Lynley calculates that Amazon might have lost $1,104 in sales for every second its North American site was down, as the New York Times’ Nick Wingfield reports. Similarly, Forbes’ Kelly Clay estimates that “this outage theoretically cost Amazon $66,240 per minute -- or nearly $2 million -- based on Amazon’s 2012 net sales.”

But Wingfield suspects that most users did what he did himself when his search for an air mattress was interrupted by the outage. He waited until service was restored and made the purchase. 

Wingfield also cites a Twitter user with the handle @pourmecoffee: “Amazon is down! I have two disease-free chickens to barter directly for a curved blacksmith’s veining chisel which I need in great haste.”

Clever and delightful, although as a Tuesday-morning quarterback I suggest that @pourmecoffee instead might have tweeted as @barleytea, a homemade fave at medieval breakfast tables. Multiple brands are available in this century through Amazon, of course.

2 comments about "Competitors Lash Back At Amazon's Price Slashes".
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  1. Patricia Friedlander from Word-Up!, August 20, 2013 at 8:15 a.m.

    Good luck, Overstock! Amazon's intuitive web site (or at least we all now believe it is intuitive) beats your hot mess any day. And go to a bricks and mortar store for fluffy towels? in what lifetime? 1970? Here in Chicago with the price of gas and the price of parking, not to mention lost time, going to BB&B is just plain unimaginable. Amazon has become the company that business writers/analysts love to hate. For the rest of it? the prices are right, the process is painless, and Amazon has transformed the retail experience.

  2. Paula Lynn from Who Else Unlimited, August 20, 2013 at 2:08 p.m.

    Note: BB&B has great never expiring coupons, too. Parking is free on their big lots in shopping centers from coast to coast. Plus, I always wind up seeing things I would never find on line as they well know. Selection of items are more in person. (Yes, I do buy on line for some things, too.) You should want to feel material before you buy.

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