Wal-Mart’s troubles in the international market are not slowing down what it is doing in the U.S. as the big retailer is now taking on Amazon in what on the surface seems like loss leader pricing but in reality is much more. Loss leader pricing is a strategy that is primarily intended to drive traffic to retail stores either to its physical location or online. But this battle between Amazon and Wal-Mart has all the makings of something much more. It appears the two are about to go down a road that could test Amazon’s role as the Internet’s bookselling king. And this battle is likely to expand beyond the book market.
In the past seven weeks, Bentonville, Ark.-based Wal-Mart has ratcheted up the competition in several retail arenas, beginning with an Amazon.com-like announcement in late August that it would allow outside retailers to sell nearly 1 million items — from baby products to sports memorabilia — through its Walmart.com site.
Amazon and Wal-Mart can probably handle heavy price competition but who else are likely victims of this battle?