Harry Potter & the Great Price War

Major happiness this weekend as I finally got myself a copy of the final chapter to the seven-part witchcraft & wizardry adventures of Harry Potter!!! I didn’t pre-order the book, I didn’t camp outside bookstores, I didn’t fight with anybody and I didn’t even queue to get my hands on ‘Harry Potter & the Deathly Hallows’!!! That was because I knew going to major bookstores like MPH or Kinokuniya at places like Damansara, KL and Subang Jaya were impossible to get a copy, so I drove all the way down to place where readership of the Potter books may be a little less enthusiastic. I went down to Ampang instead, and hearing that hypermarkets were selling them at a cheap price, I quickly parked my car at Tesco Ampang and within 10 minutes, the book is in my hands ready to be caressed and molested day through night by my eager hands and eyes. But what was interesting was not how I got the book, but what happened instead prior to the high-profile launch of Book 7…

As most Malaysian would already know (unless you were living in a cave eating dumplings and having tea with Osama), a battle of the price wars erupted between hypermarkets and major bookstore chains across the country. Hypermarkets like Tesco and Carrefour sold their stock of the latest Harry Potter book at a very attractive price of RM69.90 (considering it’s a hard cover of a latest book) versus bookstore’s price of RM109.90 (MPH, Popular, Harris & Borders). The bookstores were disgusted with the ‘price-dumping’ move by the hypermarkets, and decided not sell the books at all until further notice. The bookstores’ reasoning is that the hypermarkets’ main products of profit were not books; hence they can afford to sell the books at a lower profit margin. But for the major bookstores, books and especially latest blockbuster novels like Harry Potter, are the main income generator for them, hence they need to squeeze as much profit from these books as much as possible (which explains the high price). With competitors (the hypermarkets) selling at a much lower price, the bookstores would need to lower or match the market price, which would result in eroding their profit margins steeply (and causing their company budgets to divert way off track). If the bookstores do not lower the price, I believe the bookstores may face a big problem in the future with over-stocking and storage (since demand is shifted to the hypermarkets with a lower price) which will involve more cost and erodes the profit margin further. With higher cost and declined profit margins, the bookstores therefore did not want to sell the books at all, even to the point of risking disappointing their customers, and instead plan to return the books to the publisher (Penguin Books) for a maybe full refund. It is also seen as a move to pressure Penguin Books to re-call the books from the hypermarkets, but pricing matters are up to the people that bought the books from the publishers (that’s why publishers print a ‘Suggested Retail Price’ tag on the covers as they can only suggest and not fix a price to sell to end-users, i.e. readers).

But what is interesting is that the hypermarkets can sell the books at RM69.90 at profit, which is a big difference of RM39.90. Imagine what’s the profit margins are like for the bookstores? If we take the cost per piece to be RM 30 for example, and sell it at RM109.90, the profit from just one book is a massive RM79.90!!! Now imagine the bookstores have 5,000 books in stock, and they manage to sell them in one month: a profit of RM399, 500!!! Of course there are no Harry Potter books every month but still, it’s good to know, doesn’t it? But I would love to know the actual cost per piece of these Harry Potter books, just would love it…

But whatever the outcome in the end, we the consumer got a good deal from the price competition and the hypermarkets got a great load of free publicity from all of this. As for the bookstores like MPH, Times and Harris, well, their move to pull out the sales of the books are understandable but great damage has been done to their image for not meeting the requirements of the consumers. Good or bad, the important thing is that ‘Harry Potter & the Deathly Hallows’ are in my hands and…the fate of Harry is…he DIES!!!! AAARRGGGHHHHH!!!!! (just joking…or am I…?)

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