Walmart believes Amazon’s Achilles’ heel is the
costs and delays of shipping online purchases to
buyers. Customers who buy some of the more than
1.5 million products on Walmart.com can have
them shipped free to a local Walmart, and pick up
their purchases at these stores. Internet shoppers
may be tempted to pick up other items once they
are inside the store. New service desks at the front
of some stores make it even easier for shoppers to
retrieve their purchases. A Walmart on the outskirts
of Chicago is testing a drive-through window, similar
to those found at pharmacies and fast-food
restaurants, where shoppers can pick up their
Internet orders.
In late 2009, Walmart.com began aggressively lowering
prices on a wide variety of popular items, making
sure in each instance to undercut Amazon’s
price. The types of items Walmart discounted
included books, DVDs, other electronics, and toys.
The message was clear: Walmart is not going down
without a fight in e-commerce. And Walmart.com
executive Raul Vazquez echoed the same thought,
saying that Walmart will adjust its prices “as low as
we need to” to be the “low-cost leader” on the Web. In
other words, the two companies are now locked in a
price war, and both sites are determined to win.
The most high profile area where the two
companies have done battle is in online book sales.
Amazon’s Kindle e-book reader may have started the
conflict by offering the most popular books in e-book
format for just $9.99. Though many publishers have
since balked at allowing their books to be sold in the
e-book format for that price, the battle has raged on in
traditional formats. Several high-profile book releases,
such as Stephen King’s newest novel, Under the Dome,
illustrated just how low both companies are willing to
go. Walmart lowered its price for the novel to just $10,
claiming that it wasn’t in response to the $9.99 e-book
price. Amazon matched that price shortly thereafter. In
response, Walmart dropped the price to $9.00 a few
days later. The book’s retail cover price is $35 dollars,
and its wholesale price is about $17. This means that