--- title: "The lesson from the US price war: Amazon, Walmart, and Target" type: "Topics" locale: "en" url: "https://longbridge.com/en/topics/35966792.md" description: "Price wars are everywhere, and they are not the end but a catalyst for business evolution.$PDD(PDD.US) $Amazon(AMZN.US) $Wolf Energy Services Inc.(WOEN.US)  In the fall of 2009, a seemingly insignificant move shook the U.S. online retail market: Walmart Online reduced the pre-order price of ten popular new books to $10. Amazon and Target followed suit, with prices dropping in rounds: "10 → 9 → 8.99 → 8.98"..." datetime: "2025-11-04T10:04:38.000Z" locales: - [en](https://longbridge.com/en/topics/35966792.md) - [zh-CN](https://longbridge.com/zh-CN/topics/35966792.md) - [zh-HK](https://longbridge.com/zh-HK/topics/35966792.md) author: "[25号观察](https://longbridge.com/en/profiles/13849785.md)" --- # The lesson from the US price war: Amazon, Walmart, and Target ![image](https://pub.pbkrs.com/uploads/2025/590bcea607313acaa82125ce1cbf3aae?x-oss-process=style/lg) > Price wars are everywhere, and they are not the end but a catalyst for business evolution. $PDD(PDD.US) $Amazon(AMZN.US) $Wolf Energy Services Inc.(WOEN.US)    In the fall of 2009, a seemingly insignificant move shook the U.S. online retail market: Walmart Online reduced the pre-order price of ten popular new books to $10. Amazon and Target quickly followed, with prices dropping in rounds: "10 → 9 → 8.99 → 8.98," almost daily pushing consumers' psychological limits. This was not just a numerical plunge but a direct showdown between emerging e-commerce giants and traditional retail forces. This price war 15 years ago was a microcosm of business history: some won the future, while others lost their way. Its outcome may now foreshadow the direction of price wars in China's e-commerce and food delivery sectors.   # 1. After the 2008 global financial crisis, U.S. consumer spending contracted sharply, leaving retailers facing dual pressures of "declining sales and inventory buildup." As the e-commerce leader, Amazon leveraged the low-cost advantage of online channels to rapidly capture market share with a pricing strategy. Traditional giants like Walmart (the world's largest retailer) and Target (the second-largest discount retailer in the U.S.), despite their vast offline networks, had to counter Amazon's online impact while also tackling the challenge of "attracting younger consumers and increasing online penetration." Additionally, the rise of Amazon's Kindle, with its "e-books + physical books" low-price strategy, disrupted the traditional publishing industry's pricing system, becoming the "spark" of this price war. In October 2009, Walmart Online slashed the pre-order price of ten bestsellers to $10, igniting the price war. Amazon immediately followed, and Target joined soon after. The three chased each other, driving prices down to $8.98. The war spread from books to DVDs and audio products, and within weeks, the U.S. retail industry was ablaze.   # 2. The process of this war has been dissected in countless business studies, but the outcome is even more noteworthy. **Surprisingly, in the short window of 2009-2010, all three won—their revenues and stock prices grew.** **1.) Amazon: Trading Losses for Ecosystem, Winning the Future** Amazon was both a passive participant and an active defender of its online dominance in the price war. In the short term, gross margins for books and DVDs declined, even resulting in losses, but during the war, Amazon's core users and market share saw steady growth. Long-term, the war reinforced Amazon's ecosystem logic: realizing price wasn't the only competitive edge, it later enhanced membership services, add-on sales, and logistics advantages, turning short-term losses into long-term moats. Amazon "traded losses for traffic," building a sustainable online retail ecosystem. **2.) Walmart: Testing Online Waters with Low Prices, Building Momentum** Walmart leveraged its strong supply chain and procurement power to attract massive online traffic during the price war. Short-term gross margins dropped noticeably, but the low prices drove visits and exposure, offsetting its online disadvantages. Long-term, this battle marked the start of Walmart's digital transformation. It began strengthening online operations, introducing a differentiated "buy online, pick up in-store" model to attract younger consumers, countering Amazon's online edge and securing its footing in the U.S. retail market. **3.) Target: Differentiation and Category Optimization** Target was a follower in the price war, quickly matching low prices to attract price-sensitive users. It gained some traffic in the short term but, lacking scale and logistics advantages, saw limited marginal gains. Long-term, Target realized it couldn't sustain an advantage in price wars alone and turned to differentiation, increasing the proportion of "exclusive brands" (e.g., Target Home, Target Fashion) to boost product value and maintain profitability amid low-price competition.   # 3. While none lost in the short term, this price war had a profound impact on the U.S. retail industry. **First, the retail landscape was reshaped, and Amazon continued to rise.** Through low-price strategies and ecosystem expansion, Amazon's online sales grew 40% YoY in 2009, with market share rising from 15% in 2008 to 20% in 2009, maintaining rapid growth thereafter. Meanwhile, Walmart and Target, primarily offline players, saw revenue growth slow significantly, dropping from around 10% pre-2009 to low single digits. Market cap changes were even more striking: from late 2009 to today, Amazon surged 35x (with at least half the credit going to its cloud business), Walmart 7x, and Target 2x. **Second, traditional publishing and small retailers collapsed.** Amazon's low-price strategy caused profits in traditional publishing to plummet (down 30% YoY in 2009). Many small publishers folded under the pressure, while large publishers shifted to "digital publishing" (e-books, audiobooks). Small retailers also suffered heavy losses. **Third, consumers emerged as the biggest winners.** They could buy more at lower prices while enjoying better services like free shipping and same-day pickup.   # 4. Today, looking back at the 2009 U.S. price war, it seems to be replaying in China. E-commerce, food delivery, instant retail, live-streaming sales... new forces are invading old markets, prices are being driven down, and competition is intensifying. What lessons does this war hold for us today? 1) **Price wars are, at their core, battles of business ecosystems and operational efficiency.** The real winner isn't necessarily the one with the lowest prices but the one that can turn low prices into systemic advantages. Amazon relied on its ecosystem, Walmart on its supply chain, and Target on differentiation. 2) **Low prices can buy traffic but not the future. Long-term competitiveness lies in business ecosystems and operational efficiency.** Without technology, content, fulfillment systems, and user service support, price wars only bring temporary noise. When subsidies fade, what remains are bleeding merchants and exhausted users. 3) **Low prices reshape user psychology.** Once a "price anchor" is set, users struggle to accept higher prices. Just as the U.S. e-book market post-2009 fell into a "low-price inertia" cycle, physical bookstores continued to shrink. ### Related Stocks - [PDD.US](https://longbridge.com/en/quote/PDD.US.md) - [TGT.US](https://longbridge.com/en/quote/TGT.US.md) - [AMZN.US](https://longbridge.com/en/quote/AMZN.US.md) - [WMT.US](https://longbridge.com/en/quote/WMT.US.md) - [WOEN.US](https://longbridge.com/en/quote/WOEN.US.md) - [AMZU.US](https://longbridge.com/en/quote/AMZU.US.md)