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All of a sudden books are hot again, and Wal-Mart Stores Inc., the world's largest retailer, isn't letting the opportunity pass it by - especially leading up to the crucial holiday shopping period.

But in slashing its prices on 10 highly anticipated hardback books to $9 (U.S.) on its U.S. website, Wal-Mart isn't just launching a price war to win the online book customer: It's also taking on rival Amazon.com Inc. as the go-to destination for e-commerce.

The giant discounter is revving up to become as dominant an online seller in the U.S. as it the brick-and-mortars retail space. And as it has squeezed traditional retailers with its aggressive pricing, Wal-Mart will inevitably pinch an array of Web retailers with its latest strategy.

"Books are an important category for Wal-Mart," said Jim Okamura, a senior partner at retail consultancy J.C. Williams Group in Chicago.

"It has a spillover to the core business ... This is a big year for books - it is going to be at the top of the list of a lot of holiday gift items. It's an area where Wal-Mart has to flex its muscle."

In bolstering its online site, Wal-Mart is focusing on taking some of the wind out of the sails of Amazon, which has been referred to as an online Wal-Mart for its expansion well beyond its core book business.

Now Wal-Mart, which has been drawing customers in the downturn with its low-cost message, is determined not to cede any space to Amazon.

Books are increasingly in the spotlight amid growing hype about e-books. Digital books are becoming so popular that Forrester Research recently raised its projections for e-reader sales in 2009 by 50 per cent - to three million units - in the United States, with 30 per cent of those sales being rung up in the holiday season.

Amazon.com has the advantage of selling its Kindle e-reader, while Wal-Mart carries other models such as the Sony Reader. The buzz about digital books is also raising the profile of the lowly hand-held book, prompting Wal-Mart to turn its attention to the category.

As well, there are some enticing titles slated to reach the shelves soon, including Stephen King's Under the Dome and Sarah Palin's Going Rogue - two of the books that Wal-Mart is trumpeting for $9.

"There's a renewed interest in books and the pricing of [e-reader]content," said Sarah Rotman Epps, an analyst at Forrester in Cambridge, Mass. "Consumers want books cheap - that's true of print books and it's true of e-books ... There is a battle going on now for the book-buying consumer.

"Amazon and Wal-Mart have been competing for that consumer for a long time. The reason why this is important now is that whoever has a strong relationship with the book-buying consumer today is well-positioned to keep that customer tomorrow," she said.

The price wars are worrisome for traditional booksellers, which have already been pinched by Amazon.com's discounting. Amazon and others have been charging only $9.99 for e-books, for example.

Wal-mart spokeswoman Ravi Jariwala said the retailer is reinforcing its low price commitment online by offering the lowest prices on the top book pre-sellers along with the recent launch of its online health and beauty category. "With these programs, we can help our customers shop and save money online, especially during an increasingly challenging year for many of them and right before the Holidays."

Wal-Mart is determined to grab online customers, partly by taking a page from the Amazon book of retailing. In August, Wal-Mart said it would allow outside retailers to sell almost one million items - ranging from baby products to sports memorabilia - at its site, following one of Amazon's key business models.

This week, Wal-Mart said it would expand its e-commerce in health and beauty products.

The company's latest move to sell inexpensive books online is a loss leader for the discounter, aimed at drawing customers to its site - and eventually buying more high-margin products, said Adam Froman, chief executive officer of consultancy Delvinia Interactive, which advises publishers.

Book selling generates low profit margins, and selling books for $9 means a 60 per cent or bigger cut on the price - probably selling the titles at a loss. Amazon promptly matched Wal-Mart's online prices, which it listed at $10 on Thursday but lowered to $9 yesterday.

Industry analysts also suggested that slashing prices on just 10 titles won't make much of a dent to the massive Wal-Mart's bottom line. "If Wal-Mart can use them to get people into the [online]store as a sort of loss leader, they can start selling them other higher margin products," Mr. Froman said. "Wal-Mart is essentially using it to build a database of online customers ... Wal-Mart is doing it to make a strong play in the online space."

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Tickers mentioned in this story

Study and track financial data on any traded entity: click to open the full quote page. Data updated as of 28/03/24 3:46pm EDT.

SymbolName% changeLast
WMT-N
Walmart Inc
-0.66%60.32
AMZN-Q
Amazon.com Inc
+0.28%180.33

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