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This issue we're going to start at the beginning, a recap so to speak on how to begin and operate an online (or brick and mortar combination) book selling business by following the outline of Ina's online selling workshop we held a couple of weeks ago in Waterbury.
The first step in any endeavor is: Know what you're getting into!
This entails much more than finding a shop location or buying a computer. It means researching the book business and deciding where your place in it lies. One of the best pieces of advice I read when first starting was "know your place in the food chain." But you first have to know what that "food chain" is.
In the book business, it is the level of business that is most comfortable for you and will bring you the highest yield. Now, believe me, these two ideas do not always go hand in hand and this means you have to approach your business with a good deal of adaptability.
What is this book business anyway? This has been a conundrum for those within and for those voyeurs without. The North American Industry Classification System (NAICS) lumps this industry in with other collectible and second-hand venues and incorporates the paperback exchange as a part. For those who sell online, it is clear that the mass market paperback offers too small a return in which to base a livelihood and so the market of used books really ought to be divided between those exchanges and the rare, used, and collectible market. No small task, especially when you consider the participants who are, as a rule, conservative and reticent about sharing personal and business information. It is an industry; after all, that attracts individualistic types.
Very recently though, former studies have been pushed aside in favor of two studies (one building upon the other) done by Susan and David Siegel of Book Hunter Press. Our profile on them and their contribution to the book trade is another story in this issue.
Susan's research began over ten years ago with data compiled through her publishing company that produces the Book Hunter Guides to America and Canada. Having a background in research and a love for data, she corralled the information she had and sent out questionnaires in 1999 and again this past October to 4233 used book dealers, with 3,695 being received and 827 being answered (a return of 22.4%, a very high figure but representing the high regard with which the Siegels are held in the industry).
From these 827 responses, Susan organized the information into categories of study: brick and mortar shops, online sellers, and those dealers who utilized fairs, catalogs and other miscellaneous methods for selling. Helping her compile the data was Dr. Marc Weinstein, Assistant Professor at Lundquist College of Business at the University of Oregon (also a used book dealer).
A synopsis of the findings is as follows:
There are approximately 8,000 to 10,000 professional dealers selling books online, selling books at an average price range of $10 - $19.
There are currently 4079 open shops in the US exclusive of paperback exchanges. From 2001 to 2003 there was a drop in sales of 6.9% to $76.2 million in a market of 172 million books. Gross sales in 2003 ranged from $25,245 to $235,273.
22% of those participating in the study had bookselling as their sole source of income and of these, 83% were generalists.
Of the selling venues hosting online books for a multitude of dealers, most dealers used the following for their internet sales: Abe.com (78.8%), followed by Amazon at 58.1%, B&N (50.7%), Alibris (44.4%), their own Web site (39.8%), Ebay (26.5%), and other, smaller sites (less than 9%). To be clear-this is the percentage for sites being used by dealers to handle sales.
The percentage of total sales for Internet stock is slightly different. Abe generated 39.2% of the income, Amazon contributed 17.3% followed by Alibris at 12.9%, Ebay at 9%, personal Web sites generated 8.6%, B&N 7.5% and other smaller sites contributing less than 1% each for all else.
Susan's summation includes my favorite quote within the entire 60-page study, "In the used book business, the only constant is change."
The past five years has demonstrated marked dramatic changes within the used book industry and it is likely to change some more throughout the next five years. The Internet will continue to have an impact on the business, affecting supply and demand, prices, and the population of booksellers. It will be a competitive marketplace populated by an increased number of novice sellers and newcomers and a more Internet-savvy buyer.
For more experienced sellers, there will be a decrease (through retirement) of old-time sellers who spent years studying their craft and dedicating a great deal of time and money to their trade. With personal computers and Google taking the place of well-honed research libraries, tomorrow's sellers face a rather simplified entry, learning while they earn.
The stability of a small industry is being replaced by an unsteady playing field as newcomers begin to get their bearings and grow in knowledge and experience. This transition may result in seasoned professionals feeling pushed aside and a fear that the trust built up within this trade between buyer and seller may disappear overnight.
Yet, Susan Siegel believes that, "Viewed from a different perspective, online selling could be considered a positive factor that is helping to create a new generation of used book dealers who will become tomorrow's "knowledgeable and professional" dealers."
We all have to start somewhere,...
The multi-dealer Internet sites like Abe, Alibris, Amazon, et al will continue to experience a love/hate relationship with its sellers but this relationship will continue to provide a more exposed marketplace. The price for this, however, will most likely be a continued push by these large sites for a greater share of the market.
It is important for both sides to recognize and respect their symbiotic relationship.
Current prices are a direct result of supply and demand and we've all witnessed the "race to zero" currently being played on the Internet market with some books selling for as little as a penny. This pressure to drop prices has affected the "bread and butter" books, those in the $10 to $30 range, resulting in dealers needing to acquire books for less, thus affecting the public's willingness to call in a used book dealer to liquidate the family library. It also means that the cost of employees will further burden the competitive edge for larger sellers.
Today, anyone with a portable computer and a willing relative can dispose of the family books without involving an outside dealer. Additionally, library sales and the like have a larger picking population seeking out the better, more saleable books. To make matters worse, charities and Friends of the Library can choose to utilize their own Web sites to sell books directly to the public - books that are donated for free and listed by volunteers.
The upshot of this upheaval seems to indicate that a shakeout will occur. The penny sellers will wake up to see the damaged market negatively affects them as well and prices will level off. After all, penny books may mean more sales but they also mean each book has to be housed and shipped with the bottom line increasing only a penny at a time - hardly worth the effort.
The low-end dealer will recognize the value of using the multi dealer sites to their full advantage, leaving the more experienced sellers to upgrade their inventory or specializing.
It is highly unlikely that anyone will choose to abandon the Internet, though there may be a few who shun the multi dealer sites. As for open shops, contrary to the idea that more dealers will prefer to work from home, more shops are actually opening. Those that have closed, Susan found, have a high percentage of retirement being the reason rather than being driven from the market by eBay and company.
While retirees may opt to spend their days working from home with a more select inventory, newcomers to the Internet market now have an advantage when it comes to establishing a store. Their inventory is already listed and working for them. The shop will allow for greater storage and an open door for buying books.
Susan's findings were that for those shops currently existing, a third of the annual sales are generated by the Internet, thus creating a steady revenue stream that was unavailable twenty years ago. The cash flow continues throughout bad weather, light foot traffic, and on days when the shop is closed.
That does not mean the Internet will guarantee a shop's success. Susan has found that bad business decisions can be made no matter what market you employ.
What the Internet is sure to continue to do is redefine the terms scarce and rare. What may be a unique item in Dubuque may be common as dirt in Peoria. With the global buying population having access to all, the price of the Dubuque book will drop because of competition. On the flip side, a truly rare item will shine forth no matter who is looking and where it is located.
How one approaches the Internet is individual. Tailoring the inventory to meet your geographical region, your personal knowledge, and the worldwide market will take some skill and thinking.
I must take a moment to remind our readers that the above is a glimpse of the information contained within the study. For those thinking of increasing their participation in the industry, those who are merely curious about the business they're already in, or for those who want to service this industry this is the study where you should begin, they should read the entire report. Unlike the facts and figures thrown about by the selling venues that had a commercial stake in their findings, this study is an objective look at an industry in flux - a good hard look. It will be useful for newcomers to analyze past and current trends and it will be useful in preparing a business plan if you decide to seek loans or grants.
The Siegels are selling copies of the study for $25 and may be purchased through their Web site: bookhunterpress.com.
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