Direct from Target, Amazon and Walmart: Book Rationing

Looks like Amazon, Walmart and Target are not too crazy about the idea of subsidizing the indie bookstores around the country by selling those stores bestselling books at prices lower than those at which the stores can obtain them from publishers on their own.

Indies were quick to recognize a win-win situation when they saw one. All they have to do is buy the books at these giveaway prices, mark them up enough to make a tidy profit, and still give their loyal customers a nice discount. Indies are happy; their customers are happy; Amazon, Walmart and Target are ticked off. What a deal.

This Wall Street Journal article has the details:

Wal-Mart Stores Inc. has limited its online customers to two copies each of certain bargain books. Amazon.com Inc. has a three-copy maximum on certain discounted titles and Target Corp. has a five-copy limit online.

[...]

The retailers are losing money on each copy sold because publishers charge them about 50% of a book's hardcover price. The prices for the 10 books involved in the promotion are also lower than the wholesale price independent booksellers pay for the merchandise.

Arsen Kashkashian, head buyer at the Boulder Book Store, in Boulder, Colo., said he had intended to buy as many as 70 copies of Barbara Kingsolver's "The Lacuna" from Walmart.com, Target.com or Amazon, because their prices are "more than $5 cheaper than what we can get it for from the publisher, Harper.

Mr. Kashkashian said he was surprised to see that the three retailers were limiting the quantities sold. "We're a big store, and if a customer wanted to order 100 copies of anything, we'd sell it to them," he said.

[...]

Joel Bines of consultancy AlixPartners LLP said retailers commonly ration loss-leader promotions to stop competitors from buying up the merchandise. In the book promotion, Mr. Bines noted, some independent booksellers surely would purchase Wal-Mart's books in bulk if possible at their below-wholesale price. He said some of the books would also probably end up on eBay, offered by speculators.

"It's to prevent a run on the bank, so to speak," Mr. Bines said of the limits. "They are losing money on every item they sell at this price, so they want to make sure the items actually go to customers, who might then buy something else."

I understand why the three big retailers are trying to protect themselves from this kind of thing and I wish them luck. I also understand why the indies, who are being crushed one-by-one by Target, Walmart, Amazon, Barnes & Noble and Borders, would jump at an opportunity to stick it to the bullies on the block. Are the indies crossing an ethical line if they have employees, friends and family members order the maximum number of books allowed by Target? It's definitely a gray area but I think that if I were in the shoes of an indie bookstore owner, I would do it. (And I know that Target, Walmart and Amazon would do the same if the shoe were on the other foot.)