Online bookstore rewrites plan

The reputed leader in online bookselling, , is girding itself for an onslaught by "brick-and-mortar" bookstores.

Today, the company slashed prices up to 40 percent on cover prices for its best-selling books and doubled its inventory to 2.5 million titles.

The reductions come one day before bookselling goliath Barnes & Noble is expected to launch its first foray into online merchandising through a site on America Online, a powerful marketing combination, company sources told CNET today.

Founded in 1994, Amazon.com pioneered online bookselling through its Web site, luring users with the offer of substantial discounts on cover prices and vast inventory of in-print and out-of-print titles. The privately held company refuses to disclose sales figures, but most analysts believe Amazon.com has tapped into what could grow into a lucrative market for virtual bookshops.

Craig Bibb, a book retail analyst at PaineWebber, estimates that online book sales currently account for less than one percent of the $16 billion consumer book market, but that figure could grow to as much to six percent in the next six years.

But now Amazon.com's brick-and-mortar counterparts--companies that run book shops in the physical world--are hoping to get a piece of that market. For one, Barnes & Noble hopes to compete closely with Amazon.com on price and selection. The company has said that it will offer a 30 percent discount on hardcovers and 20 percent discount on paperbacks from the more than 400,000 books it has in stock.

After it launches its AOL site this week, Barnes & Noble plans to open a Web site in the late spring, sources said. Borders books is also preparing to sell books online, according to analysts.

With Amazon.com's new price reductions, the company appears to have a price edge over Barnes & Noble. Previously, Amazon.com had offered a 30 percent discount on best-sellers.

"Because we don't have to support bricks and mortar and operate separately, we can afford to discount these books 40 percent," said Jennifer Cast, director of marketing at Amazon.com. "Physical bookstores have higher overhead costs."

However, analysts expect Barnes & Noble to compete aggressively on price, perhaps matching and even beating Amazon.com's discount. Still, Amazon.com could retain a technological lead over its competitors because it is purely focused on online selling.

"Amazon.com has a great site, a lead, and they have mind share," said PaineWebber's Bibb. "With Barnes & Noble, they're going to be there on price and on brand, but you don't know what the site's going to look like. It's going to be hard for a brick-and-mortar business to keep pace with the technology."