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First it was books. Now it’s DVDs.
Wal-Mart started another price war Thursday, trimming the online preorder prices of some upcoming DVDs after its price cut on books last month. And once again, competitors Amazon.com and Target scrambled to match the prices.It’s the latest salvo in an ongoing online low-price push by Wal-Mart.The retailer, based in Bentonville, Ark., said late Thursday that it will lower the online prices of new DVDs such as Harry Potter and the Half Blood Prince and Star Trek to $10.But when Amazon responded by reducing some of its DVD prices to $9.99, Wal-Mart cut its DVDs to $9.98 as of Friday morning. Target got into the act Friday morning, too. All three companies also offered free shipping for the DVDs.The goal of such tactics is to drive profits off higher volume, said Wayne Hood, a BMO Capital Markets analyst. Businesses like Wal-Mart and Target can afford to lower their prices and still be profitable because of their low-cost distribution models, he said.But not all retailers appear to be engaging in the tug of war as Best Buy, Barnes & Noble and Borders all had higher prices for some of the DVDs on Friday.That might cost them some sales but also might not be a bad idea.Hood said that some of Wal-Mart’s rivals need to remain competitive on price but that trying to undercut Wal-Mart, with its huge scope and buying power, is a losing game. Wal-Mart sells enough products in enough categories to make up for any losses on individual items that it uses to pull people into stores or onto its Web site."On an everyday basis, customers expect Wal-Mart to be the benchmark or standard for pricing," he said.Wal-Mart, which generated more than $400 billion in sales last year, has been aggressively trying to stake its claim online. The DVD discounts and last month’s book discounts are part of an attempt to draw shoppers to Wal-Mart’s Web site.In October, Wal-Mart, Target and Amazon.com lowered online preorder prices on titles such as Under the Dome by Stephen King and Ford County by John Grisham as low as $8.98.As books in the price war have come to market, prices have gone up, though the sellers are still discounting them heavily.Wal-Mart announced late last month that it would reduce prices weekly on top-selling items from bananas to board games and hold those cuts through the holiday season. It is also offering more than 100 toys at $10 during the holidays.
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