Used books are for sale everywhere: at garage sales, thrift shops, on Internet retailers and auctions and finally in general bookstores. As sales for the publishing industry either remain flat or slump, selling used books is one of the few bright spots.
Although the ABA has never done a study on used book sales or retailers, IPSOS consumer data from 2001 shows that used book stores have increased their market share. (IPSOS is a marketing firm that conducts the Book Industry Study Group's [BISG] consumer buying studies; the 2002 report on this topic is expected shortly.)
The IPSOS data showed that in 2001, 1.1 billion adult books were purchased. Some 3% of those were purchased in used book stores. The study states that consumers spent $10.6 billion on adult books overall. The report showed that in 2001, the market share on adult trade used book units was 3.3%; that increased to 4.8% in 2002. In dollars, used books represented 1.1% of market share in 2001; 1.3% in 2002.
Growth Opportunities
"Many of our stores have told us that they see their best growth opportunities, in both sales and profitability, from used books," Michael Hoynes, ABA marketing officer, told PW. "I think if you look at the trends, what we see here is that more consumers appear to be buying used books. Even some of Amazon.com's profit increases have been coming from used books."
PW informally polled retailers about the various ways they are selling used books. Overwhelmingly, booksellers praised selling used books, citing both the favorable profit margins and customer satisfaction. Neal Coonerty of Bookshop Santa Cruz, Calif., believes that more independent booksellers are moving into used book sales, and he called it an attractive aspect of bookselling. "I think it teaches independent booksellers how to price things and if they figure out how to do it right, they can get better margins," he said. "As the economy sours, it's a healthy thing to do."
Hungry Customers
Kathleen Mahinske, owner of The Books Connection in Livonia, Mich., which carries 85% used books, quipped that her store has been called "the Barnes & Noble of used bookstores in southeastern Michigan." Her store "caters to the voracious reader who, after being introduced to a new author, will come back in and want every title that author has ever written. Backlist is what we live by!"
Amy Thomas, president of Pandora's Books (which owns Pegasus and Pendragon Books in Berkeley and Oakland, Calif.), has 53% used books in her inventory. "Used books have always been a core business for us. We revel in used books, love them, are fascinated by them. We would not enjoy running a purely new book store." Lilla Weinberger, co-owner of Readers' Books in Sonoma, Calif., agreed. While only 20% of her stock is used, "People love them. It gives us a chance to serve people who can't afford new books, as well as collectors. It also takes the financial pressure off carrying absolutely every book in an author's backlist."
Used books can be a valuable draw. Diane Patrick, manager of Snowbound Books in Marquette, Mich., said, "Often, customers will buy a new book if a used one is not available. They also use us to search for out-of-print books."
Bookworms!, a paperback exchange bookstore in Wautoma, Wis., stocks 70% used books. Co-owner Mary Santi said that many of her customers are retirees and tourists, and both groups appreciate the value. Her local public library frequently buys books from her store for its stock.
Pass It On
Because most of the retailers obtain their used books from customers, store inventory is limited by what stock becomes available from those customers. "We are always trying to increase the number of used books we carry," said Robert Sindelar, manager and buyer at Third Place Books in Lake Forest Park, Wash. "Many sections, like fiction, seem to take care of themselves, but building up a rich and rotating used books stock for sections like philosophy is always a bit more difficult." He estimated that one-third of the titles in his store are used.
The majority of those PW spoke with said customers usually sell their used books for store credit, not cash. If cash is paid, it amounts to about 25% of the cover price. At Powell's Books in Portland, Ore., where 50% of the books are used, customers get a choice of cash or store credit, according to Dave Weich, director of content and marketing at powells.com. Sindelar offers cash or 1.5 times that amount in credit. Lilla Weinberger at Readers' Books said she has switched to a credit-only policy.
Other sources of used book inventory are garage sales, remainder book distributors and book scouts. Neal Coonerty explained that book scouts "know what we like and get books at yard sales, library sales, at thrift shops. That's kind of a hidden economy in the U.S. These scouts make part of their living this way." Currently, Coonerty's store carries 20% used books, but he is eager to carry as many as his customers can bring him.
Last spring, Coonerty's store sales went down 15%, but sales in used books increased 30%. "We buy good, clean copies of what we're carrying new, and we sell them at 60% of the cover price," said Coonerty. "Our dollar margin is the same: for a new $10 book, we pay $6 to the publisher and we make $4. On the same book used, we pay $2.50 [25% of the cover price], and sell it at $6. It's easier to sell a $6 book than a $10 book, and there's no invoicing and no accounts payable to deal with."
Tracking... and Cyberselling
Some retailers use their computerized inventory systems to keep track of their used books, while others use lower-tech means. Dave Weich and Robert Sindelar's stores use the inventory system Square One, which allows multiple entries under the same ISBN. This means there is no confusion if the store stocks three copies of The Color Purple with one selling at a new price and two selling at different used prices and all under the same ISBN. Kathleen Mahinske uses Used Book Inventory Control software, developed, she said, "by a guy named David Packwood down in Florida, whose wife owns a used bookstore, so he knows what's needed." Mahinske explained, "You have to pay attention when you ring up books because sometimes a used title will ring up at the new price, but there's an 'edit' function on the register that allows us to quickly change the price." On the nonelectronic inventory side, Jean O'Donoghue, owner of J. O'Donoghue Books in Anoka, Minn., and Mary Santi echo the comments of Pandora's Books's Amy Thomas, who said that in her stores they "check stock frequently and keep lots of information in our heads."
The Internet is another supplementary outlet that retailers use to sell used books. Powell's, Third Place Books, The Books Connection, Pandora's Books and Readers' Books all list and sell used books on bookselling sites such as Alibris, Abebooks and Amazon.com. Patrick uses eBay to sell "odd items that come our way that do not seem to have a place in our store. The problem with eBay is it's labor intensive and takes a bit of handholding—e-mailing back and forth and such—but it can be useful during slow times." However, booksellers like Kathleen Mahinske and Neal Coonerty say that it's not always worthwhile to list books online. Coonerty told PW, "The theory is, if you can't reorder it, don't take the time and effort to do the database management."
The Future
Hoynes observed that the BISG data—which takes all books into account—suggests that the number of new books sold in 2006—2007 will be no higher than the number sold in 2000. "And this has been the trend for a number of years," he warned. "So if publisher revenue is going up 10%—12%, it can only mean that book prices are going up. But what's the consumer reaction going to be when the average price of a new book goes over $30?"
That's why he thinks it's wise for retailers to add used books to the mix. "It can be a good marketing strategy for stores: a customer buys a book, reads it, then returns it for store credit," Hoynes said. "That leads to good customer loyalty. A study would find that the average good book is probably passed along at least three times, to friends and relatives. We need to get those people to think, 'Instead of passing it along, let me sell it!' The draw is not so much the cash, but the credit toward more books. The trend is there."
