It seems that the retail book industry is currently in a state of flux. In recent weeks we have seen the collapse of Borders Australia and Angus and Robertson. Yesterday iconic Melbourne bookstore Reader's Feast announced its imminent closure after twenty years in business. To top things off, Amazon announced that it will buy one of its main competitors, the Book Depository.
The Book Depository has an aggressive business model. It seeks to undercut the prices of most of its online rivals, as well as physical bookstores, and waives shipping charges on all orders. It remains to be seen if this will continue under Amazon. Is this sustainable in the long term? One of my peers doubts it. He thinks that their long term strategy is to drive their competitors out of business, and when this goal is achieved, increase their prices to more sustainable levels. Consumers might be saving money in the short term by buying books online, but in the longer term they might actually be worse off.