Amazon denies Euro debut will spark price war

The entry of Amazon.com, the world’s leading online book retailer, into the European arena is unlikely to provoke an immediate price-cutting war in the UK sector, according to the bookseller’s head of global marketing.

Amazon.com announced last week it was to buy UK-based Bookpages (www.bookpages.co.uk) and leading German online bookseller Telebook (www.telebuch.de), alongside US-based Internet Movie Database in preparation for a move into the video sell-through market.

According to David Risher, senior vice president of marketing and product development at Amazon.com, the acquisitions follow a marked reduction in the proportion of overseas sales being generated through Amazon.com’s main site compared to domestic sales.

Overseas sales now account for just over 20 per cent of Amazon.com’s overall sales, compared to just under 50 per cent in its first year of operation. Amazon is to pay a total cost of $55m (32m) to acquire the three businesses.

The company made losses of $9.24m (5.5m) on sales of $87.4m (51m) in the first quarter of this year. The loss-making business is attempting to raise $275m (162m) of debt financing on the back of spectacular sales growth, which has seen it establish itself as the US’s third biggest bookseller in just two and a half years of operation.

According to Risher: “In the short term, there will be no dramatic changes in the UK or

German bookstores. The people in other markets have a lot to teach us, rather than the other way around.”

Risher suggested that heavy price discounting, a marked feature of the US online bookselling market, was unlikely to be felt as severely in the UK and other European markets.

“Bookpages has been involved in experi-menting in discounting in its own right, but perhaps not in quite such an aggressive way as we have seen in the US online book retailing market,” says Risher.

“I’m not sure how far price discounting online in the UK has to go. We do offer deeper discounting than physical bookstores, but we are not trying to develop ‘bargain basement’ bookshops online. The US model of aggressive price discounting may not be as appropriate elsewhere – but it is something we will have to explore.”

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