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Amazon Board Urged by Hachette Group to End Pricing Row - Analyst Blog

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E-commerce giant Amazon.com Inc. 's ( AMZN ) 10 board members have been approached by more than 1,000 Hachette Book Group authors to solve the pricing dispute between the two companies.

A group called Authors United, which consists of Hachette's writers, has signed a letter and sent it to Amazon's board, asking the board to end Amazon's sanctions on sales of their books. The writers, including Stephen King and James Patterson, have insisted that the board steps in to end refusal of pre-orders, holdup of shipping and reducing discounts of their books.

The pricing dispute started between the two when Amazon pulled out consumers' pre-orders for books and postponed shipments of the publisher in a bid to extract better pricing terms. This affected nearly 90% of the sales of both e-books and printed books on Amazon's website.

Its pricing strategy harms not only the authors but consumers as well. Buyers buying books published by a Hachette publisher, face problems ranging from higher prices to availability issues while buying those titles.

Amazon has in the past withheld sales of certain products as a part of its strategy to gain leverage in negotiations with content providers. It also went into a pricing dispute with Time Warner Inc's ( TWX ) Warner Bros Studio over DVD pricing, withholding DVD pre-orders of Walt Disney Company's ( DIS ) smash hit movies including Captain America: The Winter Soldier and Maleficent.

Amazon is facing criticism from authors and other insiders in the publishing industry, who allege that the e-commerce giant is exploiting its position as a major retailer to extract unfair pricing terms from its suppliers.

The pricing disagreement between Amazon and Warner Bros. did not last long. However, the dispute between Amazon and Hachette will likely continue for a while.

The e-tailer is under a certain amount of pressure from investors who are increasingly unimpressed with its huge investments that continue to yield low returns because of its aggressive pricing strategies. The shares went down over 2% yesterday.

Currently, Amazon's shares carry a Zacks Rank #4 (Sell). A better-ranked stock worth considering is Mercadolibre, Inc. ( MELI ) sporting a Zacks Rank #1 (Strong Buy).

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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