By virtue of its $45 million in revenue in 2003, Alibris, which announced plans to go public earlier this month, has quickly become a significant channel for selling used books. According to the company's filing with the Securities & Exchange Commission, Alibris generated 59.5% ($26.8 million) of its sales from retail customers, and 40.5% ($18.3 million) from its online business customers.
Alibris defines its retail business as sales made directly to consumers from its www.alibris.com Web site and sales to libraries through its www.alibris.com/library site. The company said it has "acquired" about one million customers since its inception and estimated that approximately 30% of new customers make a repeat purchase within 12 months. In 2003, Alibris had 6,000 library customers.
On the business side, Barnes & Noble.com and Amazon. com are its two largest customers and accounted for 18% ($8.1 million) and 14% ($6.3 million) of total sales, respectively. The company said it is negotiating a renewal of its agreement with B&N.com that expires in April. The filing notes that both B&N.com and Amazon, while currently Alibris's largest customers, are also potential competitors. Other large business customers include Borders, Books-A-Million and eBay.
The 46% increase in sales last year was achieved through a 39% increase in units sold to its retail customers and a 74% jump in sales to business customers. The gain in the retail side was driven by marketing initiatives and a $1.2 million deal with a library customer. The jump in business unit sales was attributed to the decision to have booksellers ship titles directly to customers, rather than to Alibris, which would then ship the book to consumers. The shift allowed Alibris to lower prices, which boosted unit sales. Sales outside the U.S. and Canada also rose in the year, to $5.3 million, accounting for 11.8% of sales.
Alibris's underlying business premise is to create a more efficient, organized method for selling used books in what has been a fragmented market. Because of the fragmentation, the Alibris filing states, "we believe there is a considerable degree of unsatisfied demand in the market for used and hard-to-find books." More efficiency will lead to higher sales for both independent used booksellers and new book retailers, Alibris contends.
The company is complementing its used book selections by offering new titles supplied by Ingram, and by adding music and movie titles. Sales of the latter "have not been significant to date," according to Alibris.
