On the First War of Christmas, Amazon is Attacked on Three Sides

The upcoming winter holiday period is shaping up to be one of the most competitive, wildest shopping seasons ever. Stores started hosting Christmas displays way back in July, and toy store skirmishes are already well under way. And now, preeminent online retailer Amazon is fighting battles on several fronts.

Trying to steal some of Amazon's thunder makes sense. Last year's winter holidays were considered one of the worst ever (from the retailers' standpoint), with shopper traffic down 27% and luxury good sales down 35% from the year before, per the WSJ. On the other hand, e-commerce sales fell just 2%.

Big, traditional brick-and-mortar retailers Wal-Mart and Target now want a bigger piece of the online pie, so they've started a price war revolving around books, sales of which helped make Amazon what it today. Last week, Wal-Mart dropped prices at its website for a number of best-selling books below the $10 mark. The company's CEO was quoted as saying: "If there's going to be a 'Wal-Mart of the Web,' it's going to be Walmart.com. Our goal is to be the biggest and most visited retail Web site."

Next, Target jumped into the fray, offering pre-orders on some expected best-sellers for $8.99, prompting Wal-Mart to then drop its price by a penny, to $8.98, per the WSJ. Wal-Mart is banking that its customers are literal penny pinchers.

From the Washington Post, on the penny one-upmanship:

"It's madness," said Michael Norris, an analyst at Simba Information who works with publishers. "There's really nowhere to go with this. What will happen next week if Wal-Mart drops its price another 2 cents? Is Amazon going to drop its price another 3 cents? How far are they willing to go?"

Kelly Basgen, a spokeswoman for Target, said, "That really is the question of the day."

The other question is what any of this means inside physical stores. Thus far, the fiercest book battles are limited to online sales. One way of looking at major discounts at retailer websites is that they're sabotaging sales at their own physical stores. Why buy a book for $25 inside a store when you can order it for $9 without leaving your home?

The other hot retail war is being fought for e-reader dollars. After enjoying pretty much a monopoly on e-readers with its Kindle, Amazon now is matched up against Barnes & Noble's e-reader, the Nook. The WSJ live-blogged about the product's launch yesterday, and the NY Times noted that the Nook's retail price, $259, is the same as the new Kindle. Probably just a coincidence.

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