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Monday, May 10, 2010

Borders, Book Competition and Your Pricing Policy

Borders Australia announces it a new pricing policy in direct competition to Amazon at http://mhpbooks.com/mobylives/?p=15017.  

For authors and publishers, this only means a reduced net profit. It means a reduced net profit for Borders as well. For a few customers it sounds like good competition,  but most will never follow up on a refund (or merely buy from Amazon). Those who understand this retail ploy will see it as manipulative, rather than a straight-forward "better price for all" policy.

A lesson here for retailers in general is that those TV beat-the-price ads for mattresses and other items--including this Borders policy--appeal to the few. They may feel like an assurance that the retail outlet will do its best to price low, but most know a gimmick when they see it. Most know that the expensive ads must be paid for, that the retailer must make a profit just as their competitors must.

Further, a gimmick like this sends some prospective customers to the competitor to check for prices. He or she may well stay there and buy if the price is the same. If the price is the same too often, the entire process will start to look like a game if not collusion. If the price is only a few pennies less (as it probably will be with something as low-priced as a book), it will look like trickery.

The most important reason that this is a poor policy is that, surprise! Customers want service. They want fast shipping. They want ease of checkout. Yes, they want low prices, too. But to focus on price like this seems a very, very bad move. And a dangerous one. Bookstores (like the rest of us) can ill afford a downward spiral in in our profit margins even considering high volume.



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Carolyn Howard-Johnson's FRUGAL book for retailers is A Retailer’s Guide to Frugal In-Store Promotions: How To Increase Profits and Spit in the Eyes of Economic Downturns with Thrifty Events and Sales Techniques launched at the National Stationery Show at Javits Center. Because she is the author of the multi award-winning how-to books for writers,The Frugal Book Promoter: How To Do What Your Publisher Won't and The Frugal Editor: Put Your Best Book Forward to Avoid Humiliation and Ensure Success, retailers will also find essentials of writing for blogs, Web sites, and newsletters on this blog. She is the author of an award-winning novel, This Is the Place; and other fiction and poetry. She blogs on better writing at The Frugal, Smart and Tuned-In Editor blog. Find her tweeting for retailers at @frugalretailing . If your followers at Twitter would benefit from this blog post, please use this little green widget to let them know about it:

6 comments:

  1. Just one more way Borders are shooting themselvs in the foot. I hope they stay in business as Borders allows me to do book signings. Many brick and mortar sites have shut down. In 2009 I had about a dozen book signings with Borders. Great employees and customers. I really like Borders. But the writing is on the wall. They'll be the first to go by the wayside.

    Stephen Tremp

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  2. Interesting post, Carolyn. One thing Borders Australia may not realize is any books that Amazon sells through Ingram, Amazon gets a huge discount. They then sometimes elect to take a loss on their costs to keep low prices at times.

    I don't know how they stay in business sometimes.

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  3. Thanks for pointing this out, Carolyn. It's good to know, as I was unaware of Borders doing this. Of course the best money for the author and publisher is buying through the publisher, but a lot of people don't realize that. They think if they buy a book through Amazon, the author gets paid the regular amount. Nothing could be further from the truth.

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  4. Very interesting post. It seems many book publishers and retailers are flailing about in this market. I don't think that's a good sign. Thanks for an interesting post!

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  5. Thanks Carolyn, if you knew the outrageous prices we pay for books over here in Australia, you might have a different perspective! I hate sending local (Australian) purchasers to Amazon (US) for my book but the biggest Aussie chain Angus & Robertson (who recently bought out the Aussie Borders…) were selling my paperback novel for $42.00 when it is $19.95 on Amazon! The book wholesales for a fraction of that, and as an author, I get 10% of the wholesale price whatever the retail price is. The real worry of this move by Borders is not for authors, but for the smaller bricks and mortar bookstores, who couldn’t purchase enough quantities of any book to compete on these kinds of markdowns. Customers won’t pay $30 for a book from their local shop, however much they love it, if they can get it from Borders or Amazon for $10. Also Borders will never carry small publisher books on their shelves – they just don’t sell enough to make it worthwhile. So these books will still need to be ordered and I have a very strong suspicion that they’ll not hold the guarantee unless the book is actually in their catalogue on the website, regardless of whether it’s in Amazon’s. Which would make this an empty promise. I’m not holding my breath, but if I am actually able to order my books from the local Borders or online for the same price as Amazon, it will be a big win for me as an author. That said, I have yet to see any evidence of this new pricing policy on the Borders Australian website. I'll be watching!

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  6. Interesting post and thanks for sharing. Some things in here I have not thought about before.
    Regards,
    Brand Consultant
    Neeti Biz

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