Why pay more at Borders?

This week if you download a coupon you can get 30% off a full-priced book at Borders. They regularly offer similar kinds of specials.

So far as I know, this is a novel strategy for booksellers in Australia: not discounts on a particular book, and not discounts across-the-board, but one discount on a book the customer chooses (is there a unique barcode for each coupon which protects against fraud?). If the strategy is to get people into the store it is a clever one. It allows all books to attract customers rather than just the specials, but unlike across-the-board discounting it increases the yield on additional purchases.

What Borders don’t tell you is that sometimes you need a coupon for shopping at Borders to make sense. My weekly notice from Borders, which I received yesterday, advertises Colm Toibin’s new novel Brooklyn for $36.50. A Toibin novel is likely to be worth $36.50, but there is no need to pay this much. Other bookstores are selling it for the publisher-recommended price of $32.99.

Manufacturer-recommended prices are fairly unusual in general, but standard practice in the book industry. It seems to be a legacy of 19th century book price wars, which led to legally-enforced price setting. This is now illegal, but advisory prices survive. Presumably most booksellers still like them, because customers feel like they are getting a discount if the price is below what the publisher recommended, without people buying non-discounted books feeling like they are being ripped-off by the bookseller.

Generating that concern about being ripped off is the danger Borders faces in charging more than the publisher’s recommended price. Though prices varying between stores is a normal aspect of retailing, as Sarah Maxwell argues in her book The Price Is Wrong: Understanding what makes a price seem fair and the true cost of unfair pricing, the history of pricing in an industry tends to establish norms of what is a ‘fair’ price. If Borders acquires a reputation for ‘unfair’ pricing or being expensive, it risks losing customers. Since I first read about this Borders practice a few months ago I have been wary of buying from Borders without first checking prices elsewhere.

Perhaps Borders thinks the risk is worthwhile. They probably know the book market well enough to judge that publishers price some books below what the market is willing to pay (I paid $32.99 for Brooklyn, but I would not have hesitated to pay $36.50 if that had been the going rate). The question is whether profits from ‘over-charging’ will exceed profits from lost sales.

13 Responses to “Why pay more at Borders?

  • 1
    Mikel
    June 21st, 2009 00:03

    I buy from Borders if I need or want a book immediately, and know I’m paying a premium for it. That works because they have a large range and are likely to have the book in stock.

    If it’s a specialty book that I can wait for, I’ll order it online from Amazon, and even after the hefty shipping costs it’s cheaper than I can get it elsewhere.

    On the occasions I want a mass market paperback, I know I can go to Target, Big W, Angus and Robertson, or Dymocks and pick the book up cheaper.

    Each store serves a different need.

  • 2
    Son of the Ratpack
    June 21st, 2009 18:44

    “Why pay more at Borders?”

    Because the ambience is nicer than Dymocks; you can sit and read and soak up the atmosphere have a cup of coffee.

  • 3
    Shem Bennett
    June 22nd, 2009 00:37

    Like Mikel I often order my books online. You can find vouchers online with a google for US bookstores such as “Barnes and Noble” that often grant 10% off a single purchase, and even after shipping the books are cheaper than buying them locally. They have the super-cheap shipping rate and a mid-tier shipping rate (4-14 days) that both work out cheaper- especially for bulk purchases. And it means the books are delivered to my front door.

    The atmosphere of a real bookstore is nice, but that’s usually all I go to one for. Shopping for books is one thing that really is best done online.

  • 4
    Krystian
    June 22nd, 2009 07:38

    Also like Mikel and Shem, I tended to avoid places like Borders and bought books through Amazon.com and waited the week or two (sometimes much longer though) until the book reached Australia. Now I am in the UK, I love that I can use Amazon.co.uk and get a book delivered the in 2-3 days (even through the second hand service sometimes, 2 weeks ago I got a book delivered within 24 hours of ordering from a second hand dealer on Amazon.co.uk). Which begs the question – Why doesn’t Amazon.com set up in Australia, or why doesn’t somebody else set up a similar operation?

  • 5
    Andrew Norton
    June 22nd, 2009 08:48

    “Why doesn’t Amazon.com set up in Australia, or why doesn’t somebody else set up a similar operation?”

    At a guess, because the market is too small. For Amazon, many of their more lucrative customers (people like me) are probably already using their US and UK services, further reducing the potential gains.

  • 6
    fxh
    June 22nd, 2009 12:35

    I’ll occasionally wander through Borders and buy a book, but mainly if it’s a more practical type book I want to have a squiz at first.

    I’m a big big fan of The Book Depository online. They ship free from UK. This is especially good when I make a list of interesting looking books from paper reviews or blogs, sit down at midnight Saturday or Sunday – order the book and then have it landed around 7 days later on my doorstep and usually cheaper all up then I can get it in Oz.

    Brooklyn would be $28.5993 AUD landed. The bonus is I usually get hardbacks from them cheaper than a softback here.

    The value of having it on my door mat one night when I arrive home is immense. No having to get in car and find a park and wander into bookshop to find out they haven’t got it.

    One does miss out on the unique experience though of motoring over to Readings in Glenferrie road to be treated with condescending disdain by their hip staff. Maybe it’s changed – I should make the effort to check it out again.

    You can use those Borders coupons on as many books as you like – in my experience I’ve printed out up to 4 and used them.

  • 7
    Borders Bargains? « Blogging The Bookshelf
    June 22nd, 2009 12:43

    […] related to a book on my bookshelf, but interesting for Melbourne readers nonetheless. Andrew Norton comments on Borders’ practice of offering frequent discount coupons on any full priced book in store […]

  • 8
    Thaddeus
    June 22nd, 2009 13:22

    I read an interesting article on The Australian on how the book industry in Australia is protected from overseas competition and that we actually pay more for the same book in the UK and in the US. The industry claims the usual: if the Government doesn’t protect us, our national industry will die, etc, etc…This actually includes textbooks which kind of runs against any reasonable education policy.
    Andrew, it would be interesting to see a post on this issue.

  • 9
    Matt C
    June 22nd, 2009 18:37

    Apologies if this is slightly off-topic, but the website Booko.com.au is very useful. It’s not an online shop itself, but allows you to instantly compare the cost of various online shops, with exchange rates and shipping factored in. Amazon.com is seldom the cheapest online seller.

  • 10
    Andrew Norton
    June 22nd, 2009 19:52

    Thaddeus – I have done a couple of posts in the past, though there is now a far more detailed examination from the Productivity Commission.

    As with most IP disputes, it is hard to know precisely where to draw the line between making innovative industries viable and not letting those industries rip off their customers.

    I’ve seen much hyperbole and no evidence from the industry to support their claims; but nor have I seen any clear evidence either that changing the rules would have significant benefits for consumers. Books do tend to be slightly cheaper overseas, but there is no guarantee that those price advantages would flow through to the local market. It would be interesting to see price comparisions of other goods which don’t have this local preferential treatment.

    My intuition is as always against the protectionists when there is no clear evidence, but I can’t nail the case.

  • 11
    Krystian
    June 22nd, 2009 21:00

    Yeah that’s what I thought too, that the market is too small. I didn’t mind using the US and UK Amazon.com in Australia, but it was a pain having to wait for the book to arrive.

  • 12
    Patrick
    June 23rd, 2009 02:39

    I’m temporarily in the US, and use Amazon Prime. This is the Sistine Chapel of the 21st century.

  • 13
    Thaddeus
    June 23rd, 2009 09:43

    I read in the same article that New Zealand is a succesful experiment. They used to have similar copyright laws but abolished them altogether in 1998. Economic reports concluded that “there was no evidence that the removal of the restriction on parallel import had had an adverse effect on investment in the book industry. And a report last year showed New Zealanders enjoyed domestic book releases within one to three weeks of Britain, instead of three to six months later.” Moreover “Export of books from NZ rose substantially. Of the 3600 domestic titles published in 2002, nearly 2100 were exported, especially educational books. The income of NZ publishers increased substantially. And the publishing and promotion of NZ titles has not been affected”. The Australian, Dec 13, 2008