NORTHERN CALIFORNIA INDEPENDENT BOOKSELLERS ASSOCIATION

HOLT UNCENSORED #33
by Pat Holt

Friday, January 29, 1999

B&N'S USED BOOK INTENTIONS (REVISITED)

Thanks to the many readers - used book dealers especially - who have responded to Holt U. #32 regarding Barnes & Noble's entry into used book sales and its ability through a deal with the Advanced Book Exchange to buy and re-sell books from independent dealers. The fear was expressed here, thanks in large part to the clarity and expertise of used book dealer Julie Stein, that Barnes & Noble is moving into this market in a big way and with the same corporate intention - to drive independents out of business - as it has moved into the new book field.

"A number of ABE used book dealers (including myself) are refusing to participate in the link-up [with ABE]," one dealer writes. "Some for moral reasons, others because B&N was demanding a 20 percent discount and the use of UPS (extra work for over-stressed shippers). B&N has recently dropped the 20 percent demand, but most dealers I've talked to are still not participating. I personally don't want to see my books listed on their web page. I wouldn't be on ABE either if I had my druthers, but try getting people to come to your small website

."

A different point of view arrives from Christine Volk of Volk & Iams, Booksellers, chris@vibooks.com, in Ione, Calif., whose lengthy (and worth it) response articulates the issue beautifully (Julie Stein's response follows Chris's): "I am one of the 'otherwise savvy' dealers referred to in your column who does permit my books to be listed on barnesandnoble.com's web site [for out-of-print or OOP or OP books], and I thought you might appreciate hearing the other side . . .

"I see no evidence that B&N is stockpiling used books to drive us out business (in fact, if they were, they wouldn't know the difference between the common junk and the real gems), and I don't think that they could if they wanted to. Even if B&N had a stock of tens of millions of books, that would be no more threatening to my business than the 10,000,000 books currently listed on ABE by 5,000 other dealers. I have confidence that my knowledge of the areas in which I have chosen to sell books (ranging from African American literature, poetry, women authors, to mysteries) will enable me to stand above any large entity employing minimum wage workers.

"But I do agree with you 100 percent on your comment: 'If ever an educational campaign were needed to show customers they're paying MORE for books at Amazon.com and at Barnes & Noble, this is it! Surely a poster or two, or handouts at the cash register, would be appreciated by those customers who, as Julie points out, "just don't know." '

"Please note that all of my comments on this issue are based on the fact that I strongly support independent bookstores - I consider (most of) them an important asset to their community and places which I like to visit myself. And I deeply regret the closing of so many stores, whether because of competition from chains, or on-line web sites like Amazon, or just changing demographics in an area. In fact, I am proud to consider myself an independent bookseller.

"However, there are several major differences between the out-of-print book business and the new book business, all of which would predicate against B&N (or any other major firm) totally dominating the market

:

"First of all, the B&N stores are sucessful mainly because of two things: their size offers an economy of scale, and they are able to sell books at a lower price. Because new bookstores get a significant amount of their business at any given time from the sale of a relatively small number of titles that are obtained from an even smaller number of producers (the publishers), then a large chain by exerting its pressure on the producers can obtain more goods, faster, and at a lower cost than the independents - which means that they can sell the books for less money.

"This is true of grocery stores and hardware stores and it's true of bookstores. Whether the chain bookstores do this legally, or get greedy and use their size to get special terms from the publishers, is probably irrelevant in the long run: In the short term, it accelerated the death of independents and kept B&N's profits higher than would normally be reflected by their discounted prices.

"In every respect, the used book business is the opposite: The supply of out-of-print books is almost limitless, and the sources are incredibly varied, ranging from garage sales to thrift stores, used bookstores, even new bookstores, catalogues, auctions, bookshows, library sales and on and on. Barnesandnoble.com has no control over any of those sources of supply, nor are they acquiring used books in a way which gives them an economy of scale. Each book is handled individually, presumably at a significant cost to them. Think about how much of the 'mark-up' on the average low-priced book sold on their web site is used up by the costs of shipping the book to them - not to mention the costs of handling, repacking, record-keeping, and loss from returns. And far from selling these books at a price that we can't meet, barnesandnoble.com is selling them at a significantly higher price.

"The dynamics of the used book business are totally different than the new one. If there are several new bookstores in a given area, whether all independents, all chains or a mixture, they are competing with each other. By contrast, when a number of used bookstores are open close to each other the overall level of business for each of these stores goes UP . . . A customer looking for a specific new book can go to any one of these stores and probably find it.

"On the other hand, because the number of OOP books is so immense, a customer looking for a used book might have a very slim chance of finding the book - but if there are six used bookstores within a few blocks, the chances become greater, and the customer is attracted to the area.

"Unlike B&N, which is profitable, barnesandnoble.com (and amazon.com) loses money every quarter - that is why the Internet business was spun off as a separate company. And I contend that for every OOP book that barnesandnoble.com sells, the more money it will lose for its parent companies - and anything we can do to help B&N lose money just might indirectly profit the independents. Certainly, anything that helps me prosper will help a few independent bookstores where I regularly spend money.

"Any change brings both benefits and disadvantages - many of these changes have impacted independent bookstores negatively. Amazon.com is another factor cited in many closings - yet, for some small presses Amazon has been a significant boon. The change in used bookstores from the traditional concept of dusty, dark and full of esoteric books to the newer model, brightly lit, appealing, where every book is covered in shiny dustjacket protectors, and where most of the books are very recent and many appear unread, has also impacted new bookstores: many buyers are now opting to wait a few months and buy the book used at half price.

"So, I do not think either barnesandnoble.com or amazon.com are a threat to the used book marketplace as a whole, and I am really sure that they do not threaten a bookseller who takes the time to learn about the books s/he is selling.

"On the other hand, they are providing a service to the customer who occasionally needs an out of print title and can find it easily on their web sites - and I think they are providing a definite service to us, the used book sellers, with their massive advertising campaigns.

"Used books are becoming 'hot.' B&N and Amazon are expanding the market tremendously, losing money doing so, and the best customers from this new market - the ones who become seriously interested in collecting books, who discover the pleasures of hunting for long out-of-print titles - are the customers they won't be able to keep - because we can offer three things: greater knowledge, more personal and individualized service, and lower prices overall."

Julie Stein responds: "I don't believe selling books to B&N can seriously be considered a strategy to cost them money, even if it is indeed having that effect right now . . . I don't believe B&N would do anything that wasn't ultimately going to further their plans (whatever they may be) to make them MORE profitable, even if it entailed an initial loss.

"This debate seems to have become focused on B&N's presence online, which actually isn't my foremost concern. It is true that B&N is currently helping, not hurting, used book dealers by creating more sales. Clearly the fact that B&N is overcharging customers maligns only B&N, not the dealers who sell books to them. Perhaps the future of the book industry is online and the playing field will be levelled that way.

"I do believe, however, that B&N poses a threat not as a virtual used book dealer online, but as a used book dealer with a storefront in our cities and towns. I believe that is part of their plan, and that their visibility online as an out-of-print search service is one of the steps in getting there.

"It is true that used books are a different entity entirely than new books. But a few years ago, many independent booksellers that are no longer in business believed that B&N could never compete with what independents had to offer their customers: personal service, in-depth knowledge, specialization, community, et cetera. Sound familiar?

"I should say that I am a new bookstore manager, used book scout, and online used book dealer, not a used bookstore owner. However, my friends who own used bookstores (only three, certainly not a representative sample) claim that the real bread-and-butter of their businesses . . . are the general, half-price paperbacks, not the real collectibles or OOP books. Surely that is a market B&N could mine with their own used book sections.

"Of course first editions and rare books are an extremely important part of these businesses, too (as well as what makes it interesting and worthwhile for many)--especially for those who are also online--but I find little comfort in the argument that B&N couldn't seriously enter the OOP and rare book business because 'they don't know what they are doing.'

"For one, they could learn. More importantly, as they have proven over and over in the case of new independents, B&N doesn't need to be a BETTER store, only a bigger, cheaper one.

"Some dealers may prefer to do their own scouting, which does indeed provide a greater profit. Many dealers, though, don't have staff to cover the store while they are out at sales and thrift stores, and are therefore dependent on and grateful for their local book scouts and customers who sell them books. What if the B&N in your community offers to pay 25 percent to your 20 percent?

"Not every community can support a multitude of used bookstores. Harvard Square in Cambridge MA, one of the country's 'book capitals,' used to have at least 3 more used bookstores a few years ago than it does now. We all hope that we can be the best, and that that will save us. Unfortunately, it couldn't save so many of the wonderful independents driven out of business by B&N."

One other response to this issue is perhaps the most humorous. It's from a college store manager who does book searches and responds to my statement (my hope, rather) that once customers hear they may be getting ripped off by B&N or Amazon, they'll happily turn to independents or learn to do their own searches.

"I've found a surprising number of otherwise computer savvy people who would rather I do the used books search for them. They understand this involves a markup on my part (100 percent, by the way, is not outrageous, more like the industry standard). It's almost like used books are located in the seedy, disreputable part of cybertown, and they don't want to go there. Don't understand it myself but I believe it's real."

Good heavens! Avast, ye (virtual) back-alley schlockmeisters! Off with your cybersleazy World Wide Cobwebby heads!

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