Harry Potter book magic spells losses for booksellers

Millions of people will descend on stores for a copy of "Harry Potter and the Deathly Hallows" in July, but deep discounts mean many will struggle to turn a profit from the jamboree.

Graham Marks, children’s editor at the British based trade magazine Publishing New, says all the discounts offered by book stores are ridiculous and insane. The book stores with such strategies won’t make much profit out of it. He said the world has gone mad with discounts.

Amazon.com and Wal-Mart Stores have already started selling these books online as a pre-order item at 50% off the original price $34.99. Because of this other independent retailers are forced to do the same.

Barnes & Noble Inc. and Borders Group Inc., the world's largest booksellers, are selling it at 40 percent off.

These price cuts spur sales, but ends up with a minimal profit margin. Retailers who offer such discounts rely on book loyalty cards and make them shop again says Jefferies & Co. analyst Tim Allen.

The conclusion to J.K. Rowling's saga about the boy wizard's battles with the forces of evil could be among the fastest-selling books in history, and some large retailers have broken records for orders well ahead of its July 21 release.

Amazon.com has so far received 1 million advance orders for the book which is a record compared to its previous pre-orders of Harry Potter books. Barnes & Noble.com also has topped 500,000 pre-orders so far.

While the bigger chains have minimum profit margins, the smaller independent book stores are not selling this book because of this heavier discounting by major chains.

"The bookselling trade has lost millions by having to discount Harry Potter as heavily as they do," said Caroline Horn, children's editor at Bookseller, a British trade magazine.

"A lot of independent bookstores won't be selling Potter. They say it would be cheaper to buy it from a supermarket than the publisher."

Some book sellers, like The Chapter One Bookstore, Montana, instead of discounting, they sell the book at full price and donate $7 for each sale to a library of their choice.

Scholastic Corp. -- the U.S. publisher of the "Potter" series -- is planning to release a record-breaking 12 million copies of "Deathly Hallows," so retailers expect no problems getting inventory.

All the book sellers have no worries about getting the orders from Scholastic Corp, who will be supplying the book to every store, only the discounting is a problem for them. Most of them will order based on the pre-orders they receive from customers.

Whether the book has a happy ending for Harry Potter and his wizard friends is still not generally known, but booksellers say the series has been able to create millions of young readers in an era of video games and the Internet.

Mark Suchomel, President of Chicago based Independent Publishers Group, says everyone young and old are chatting about the book at the time of release, for a few weeks it is like a national book club.

Booksellers even with a minimum margin will still be making good profits with related sales, readers usually buy more than one book. I doubt they will ever sell Harry Potter at a loss.