Price War Begins Between Wal-Mart and Amazon

Everything should have its own nemesis in order to able to make it more and more perfect. Ali has Frazier, Coke has Pepsi, and the Yankees have the Red Sox. That's the strength of competition. Now Wal-Mart, the mightiest retail giant in history, may have to compete with its worthy adversary: Amazon.com - the number one online retailer.

It appears to be one of the hottest stories in 2009 shopping-season after a terrible economic recession. Wal-Mart and Amazon are waging an online price war through common product areas such as books, toys, movies and electronics.

Everything started last month in a relatively triviality, as the public highly concerned about which company would had the lowest prices on the most anticipated new books and DVDs this fall. But since last weeks, the prices war has spread to video game consoles, mobile phones and toys.

Last Wednesday, Wal-Mart dropped the price of the Easy-Bake Oven - a small oven to heat up small cakes - to $17 from $28 as part of its "Black Friday" deals. Later in the same day, Amazon immediately also cut its price, which has also been $28, to $18.

Of course, as it has been a bad year for businesses due to the economic downturn. It is foreseeable that retailers will fight for every dollar customers spend this holiday shopping season. It is also applied to the Wal-Mart and Amazon case. "It's not about the price of books and movies anymore. There is a bigger battle being fought", said Fiona Dias, executive vice president at GSI Commerce. "The price-snipping by Wal-Mart is part of a greater strategic plan. They are not going to cede their business to Amazon."

Wal-Mart is a monumental retailer with $405 billion in sales last year - higher than Gross Domestic Products of several countries in the world. It dominates the market and offers affordable prices to Middle America in its 4,000 stores. In compared with that giant, Amazon seems quite smaller with $20 billion in sales, but they are still the best choice for affluent urbanities who would rather shopping online than driving far away to buy some stuff.

This fight, which is almost inevitable as e-commerce grows up and struggle to gain the shares from the market. Besides, the two companies have enough resources to keep this fight happen till the end of the shopping season. And we customers are in the best positions to benefit from lower prices of competing retailers.