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Amazon and Walmart have been engaged in an online price war over holiday sales of bargain books. The whole thing began when Walmart announced that it would let customers preorder 10 of the most highly anticipated upcoming books for as little as $10 each. In a matter of hours, Amazon matched the price for all of the same books. Walmart then dropped the price to $9. Then Amazon did the same.

After this, Walmart dropped the price to $8.99. At this point, even Target decided to get in on the action and also posted prices for the same books at $8.99 a piece. Then Walmart lowered its price by another penny.

As a result of this price war, traffic to the product pages of these books jumped. The following graph from Compete shows you how.

"Over the course of this war, interest in these books at Walmart has been fickle," says Compete's Debra Miller. "Despite lowering prices first, Walmart has been unable to unseat the online book king in terms of the number of people shopping for these books.  In fact, over the last few days, interest in these books at Walmart has declined even more while traffic to Amazon has stayed high."

Here are Compete's key findings regarding the situation:

- Despite lowering prices first, Walmart has been unable to unseat Amazon; in fact, over the last few days, interest in these books at Walmart has declined even more while traffic to Amazon has stayed high

- Traffic to the product pages of the 10 bargain books jumped significantly after the initial price cuts and continued to climb as prices fell

- Target jumped in late in the game, which proved to be detrimental and has still not been able to drive customers to its site as well as Amazon or Walmart

- Additionally, Walmart bargain book shoppers are twice as likely to shop for these titles at Amazon as Amazon shoppers are to shop at Walmart.  It seems that when offered comparable prices on books, consumers prefer Amazon.

"So what can we learn from the Book Price War?" asks Miller. "Loss leaders work?  Maybe.  Amazon is a fierce competitor?  Probably.  Customers love a great deal?  DEFINITELY!  If the past 2 weeks are any indication, we are sure to see a highly competitive holiday shopping season packed full of deals for consumers, and perhaps a few more price wars.  Maybe next we will see Toys R Us match Walmart’s selection of toys for $10..."

It will certainly be interesting to see if other significant price battles between major retailers pop up as the holiday season gets into full swing.

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