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Life at the Bottom
Making Penny Selling Work for You

by Craig Stark

#55, 7 November 2005

Part I: - Making Penny Selling Work for You

If you're a regular at the Amazon forums, you already know the answer to this question: what type of bookseller is looked upon with more disdain than any other?

Easy. Penny sellers. Penny sellers, you see, are in large part responsible for the destruction of a major sector of the used book market. And probably global warming as well. Price your books at a penny - or even a buck or so - and you make it impossible for the rest of us to make any money on the same titles. Your fault. Not ours. End of story, right?

But wait - what's with these sellers? How could anybody be crazy enough to price books at a penny in the first place? At Amazon, this question gets asked about every 10 minutes. Is it because sellers are trying to liquidate their personal collections? Accumulate feedback quickly? Or do they just have nothing better to do with their time? Speculation on seller motivation is endless, and of course there really is no definitive answer. As with so many other things, it depends.

But another possible motivation, far more intriguing than the latter, often comes up in these discussions as well: maybe it's possible to make money selling penny books? Yeah, right. And somebody does the math to "prove" it. Here's a paraphrase, point by point, of a frequently cited breakdown:

  1. A book is listed for $.01 and sells.

  2. Amazon charges the buyer $3.49 shipping and handling plus $.01 - a total of $3.50 - and returns the sale price minus commission (in this case, there's no commission) plus a $2.26 shipping allowance to the seller. $2.27 total to the seller.

  3. If the seller is a ProMerchant (at $39.99 a month), there's no $.99 listing fee.

  4. If the packaged book weighs less than one pound, Media Mail shipping is $1.42.

  5. The seller's cost for the book is negligible or nothing because books in this class are often available for the taking.

  6. Recycled packaging materials are used. Cost - again, nothing.

  7. Net to seller: $2.27 minus $1.42, or $.85.

Of course, this doesn't take into account the $39.99 monthly fee; therefore, for this model to work at all, either 100s of books (if not a 1000 or more) would need to be sold every month or the seller's sales would have to include higher priced books. Assuming the former, how on Earth would a seller have time to list, stock, pull, package and ship that many books, not to mention do everything else associated with operating a bookselling business?

Well, guess what. There are booksellers who do make this model work. BookThink recently interviewed two of them - Shane Smith and Dave Farquhar - and I think it's safe to say that many traditional booksellers would envy their incomes. How the heck do they do it? Read on.

BOOKTHINK: Before we get to the topic of penny selling, to the extent you feel comfortable doing this, could you give us some idea of your net annual income from bookselling?

SHANE: I do hesitate to say, mostly because I have found that anything other than being humble and understating success in this or any other venture tends to generate jealousy and resentment, not admiration and appreciation. I will say that I have been fairly successful at several jobs in the past and I am presently making more money selling books than I have made previously.

DAVE: I agree with Shane that throwing out a dollar figure will breed resentment and/or come across as bragging. For us, it's a part-time job, but we can see the day when one of us could do this full-time. It's safe to say that we make more doing this than we would if we spent the same amount of time working a retail or a fast-food job, and we get to pick when and how long we work - and the amount we make is increasing.

BOOKTHINK: On average, what percentage of books do you have listed for under $1?

SHANE: Currently I have about 1/6th of my inventory listed at under $1.00. The ratio has been higher in the past. I do not try to have lots of cheap listings, but if it is pitch it or list it, I list it as long as it will sell.

DAVE: Around 5 to 10 percent, but it can vary. My wife and I have a short list of sub-$1 titles we know will sell within a week and give us a quick profit. We don't have very many of those types of books right now, but we'll be right back in the game as soon as more become available.

Let me say that unless you're a member of Amazon's reseller (ProMerchant) program, you lose money if you list a book for less than about $1.18. doesn't let you sell a book for less than 75 cents. Since's fees are lower, it's practical to sell 75-centers there.

BOOKTHINK: What percentage under $10?

SHANE: 2/3rds of my listings are under $10. I tend to go for a quick sure sell versus stocking high priced but unlikely to sell items, so most of my inventory is fairly low priced.

DAVE: Probably 60-75 percent. I agree with Shane - I love quick, sure sells. I grab every high-dollar book I find, but if I were relying solely on those, I'd only be making $100 a week.

BOOKTHINK: What would you say your average sale price per book is? Is it increasing over time?

SHANE: I do not have a firm number for sale price. Early on I figured I netted around $2 per sale average, and that number has been moving up over time. I have started cross-selling on Alibris, and my average there is around $8, but this is misleading because only higher priced items tend to sell through them.

DAVE: I think $4 is fair. I'm afraid to say whether it's increasing because book prices are like stocks. I'm trying to get that number to increase, but we buy what we know will sell.

BOOKTHINK: How many books do you typically sell in one day?

SHANE: Sales fluctuate quite a bit, depending on how many I list in a given time, but if I stay at it, my sales are around 80 per day.

DAVE: Shane moves a lot more books than I do. I'm at 15-20 a day. I figure I would need to move 40 a day for this to be worthwhile as a full-time job. If I really stay on top of things I can sustain 20+ a day. The more books I list in a week, the more books sell.

BOOKTHINK: Where do you sell your books?

SHANE: Mostly through Amazon, but I have been exploring.

DAVE: and

BOOKTHINK: Do you work alone?

SHANE: My wife helps out and has a part time job, and the kids package everything but the special items.

DAVE: My wife and I do this. I have a full-time job. She is a student.

BOOKTHINK: How many hours a week do you work?

SHANE: I am a workaholic. If I am awake, I am at least thinking about books.

DAVE: I probably work 20 hours a week at it. My wife does a bit more, since she does most of the book scouting. Maybe I work 20 and she works 30.

BOOKTHINK: If you didn't have your children to help with packaging, would this business model work for you?

SHANE: It would require more of my time, but I could still probably do almost as much volume.

DAVE: We don't have children, so this is working for us without them. When we have kids, we'll involve them in it. I think it's important for them to know how a business operates.

BOOKTHINK: How do you package your books?

SHANE: So far I have been using XPAK poly bubble mailers and boxes for the fragile/high-value and multi-item sales.

DAVE: The majority of books go in #1 or #2 bubble mailers. At our margins, of course we buy whatever brand we can get cheapest. We use Priority Mail boxes for expedited shipping. Books that don't fit in the bubble mailers we have on hand go in b-flute. Expensive books go in b-flute also because it gives better protection. But my wife can stuff 10 books in envelopes in the time it takes me to flute one book, and at these margins, we have to consider the time involved.

BOOKTHINK: How much do you spend per book for packaging materials?

SHANE: Depends on size, but around $.18 per book for all but the largest, $.14 for most of the penny sales.

DAVE: About $.15 to $.20.

BOOKTHINK: If you sell, for example, an average-sized MMP for a penny, approximately what is your net profit?

SHANE: The least I make is $.74 ($2.30 postage paid less $1.42 actual cost and $.14 mailer), assuming no cost for the book as I never intentionally buy them to resell, only get them as a side effect of large purchases and bag sales etc. I make $1.10 if it sells expedited ($4.95 paid less $3.85 actual cost) - no cost for mailer because of free Priority boxes. If it sells international, I make $3.95 ($8.95 paid less $5.00 cost for flat rate global priority mailer)

Multiple sales are better. These add $2.30 to $4.95 for each extra item purchased, less the minor charge for extra weight. This wasn't a sale of MMP penny books, but yesterday I sold for 21 books to one buyer, sent them Priority, and made almost $100 on shipping alone. More merchandise is a boost even if it happens to be low end.

DAVE: About 70 cents. If the book weighs less than 5 ounces and can be mailed First Class, we make more. A 3-ounce book costs 83 cents to mail, so a really short book can make us $1.29.

BOOKTHINK: Do you offer international shipping on all of your books? If so, how do you make this work for you?

SHANE: I only offer it on lightweight books or ones that will not get damaged in flat rate mailers.

DAVE: When I sell an average MMP to Canada, profits jump. Amazon gives me $8 or $9 for shipping, and I can probably ship that book for $2 to $3. Shipping to most other countries is about $1 less than what Amazon gives me, which still isn't bad, and sometimes I get lucky and make a profit of a couple bucks. It really depends on the book and where it's going, but it's actually easier to make money selling them abroad.

Heavy books are another story. I sold a heavy $50 book to a buyer in Japan earlier this month, but it cost me $25 to ship it (and I got $8.95 shipping credit), so in reality I only made about $30 on the book. Heavy books have to be priced high enough that I can absorb heavy shipping losses. Of course that makes it less likely that it will sell in the United States.

BOOKTHINK: Do you use sales rankings to determine which books to list and which not to? How (please be specific)?

SHANE: Yes, I find rank just as important as price. If a book is going for $100 but never sells, then a penny book that sells is worth more to me. I am constantly changing my buying standards, but currently I divide the rank by 100,000 to get the least profit I am willing to make in order to buy a book, with a $5 minimum above a 100k rank. In other words, if a book is a million rank I want to make at least $10 profit before I will bother buying/listing it. I do try to stick with books 100k or below unless I get them really cheap or they are going pretty high.

DAVE: Absolutely. If the book has a rank of 3 million, it had better pay for the shelf it's sitting on because I know it's going to sit there a long time. There are three factors that are important to me: selling price, rank, and weight. Finding a lightweight top-1000 book is instant money. If the rank is over 500,000 I don't mess with it unless it's a high-dollar book ($25 or more). That standard is probably too generous. 100,000 would be better, but I get greedy sometimes.

BOOKTHINK: Where do you acquire your inventory (no need to be too specific here - just general categories - thrifts, FOL sales, etc.)?

SHANE: I get them anywhere and everywhere. The hunt is the part I enjoy most. The rest is just time and monotony. I get a steady flow from trading with local bookstores, also some referrals from them when someone wants to sell and they are not interested in buying or trading with them. I used to do garage sales but gave it up as it was not paying off, time to quantity. FOL sales are good, but getting way too competitive. Nothing beats GPS and a good phonebook.

DAVE: Thrifts, FOL sales, garage sales. Books are everywhere. Especially cheap books. I told someone the other day that books find me. I wasn't exaggerating all that much.

BOOKTHINK: Roughly, what percentage of your work day is devoted to bookscouting?

SHANE: I usually scout 3-4 days a week, about 7 hrs each day unless on an extended trip.

DAVE: Probably 50 percent. That will increase next year when my wife's class schedule changes.

BOOKTHINK: Do you use a price-lookup tool (like ScoutPal) on scouting trips?

SHANE: Yes, I have four scanners, one extra for me as a backup and two that the family use on a 50/50 split for anything they find.

DAVE: Yes. You can't do this without it because the prices on cheap books change too quickly. And while there are some books that you know on sight that aren't worth selling (like, say, Windows 95 for Dummies) you can't know everything. Even if you know that one of the editions of Golf for Dummies sells for enough to be worth your while, do you know if the copy on the shelf is the right one?

BOOKTHINK: How large is your inventory?

SHANE: Currently it is around 8,000 but I badly need to cull out older items from early on when I was green and learning.

DAVE: Probably 1,500. Ideally it should be less because you want a book to sell the same week you buy it. That doesn't happen as often as we'd like, of course, so it's growing. We know of a few people who are doing basically the same thing locally and most of them have about 4,000.

BOOKTHINK: Where do you store it?

SHANE: We just moved into a much larger house and use the downstairs and extra bedroom as our warehouse and a large garage to store items waiting to be listed. I considered building a shop but find that the closer you have the books, the less time listing/pulling takes.

DAVE: In the spare bedroom and in the basement. I prefer to keep them upstairs where conditions aren't as hostile, but that's not always possible.

BOOKTHINK: What system do you use to organize it?

SHANE: That is one area I actually need to work on. Currently I tag all my descriptions with a shelf number.

DAVE: Roughly alphabetical, which takes a lot of time. We're always looking for ways to improve our efficiency. It takes about as long to find a book as it does to pack it, but we actually have a little control over how long it takes to find.

BOOKTHINK: What about customer service? Does this take a back seat when you're moving as many books per day as you do?

SHANE: Customer service definitely slows things down sometimes. I do try to keep the customers happy but don't do a lot of the dealing over shipping and special-deal emailing back and forth like I used to when I had more time. We keep up our rating by giving no-questions-asked refunds and apologies for any complaint. This cuts into profits but cures most of the bad feedback.

DAVE: A little. No, I don't send mail out to every buyer telling them exactly when the book shipped. Of course, they don't get tracking and insurance for no charge (we'd lose money). But when a customer has a question, I answer it. If a customer has a complaint, I do what I have to do to make them happy (full or partial refunds or whatever). I definitely don't give premium-level customer service but I do what I can to take care of them.

BOOKTHINK: What, if any, are the disadvantages of selling at the low end? Shane, you used the word "monotony" to describe the time you spend on tasks not associated with scouting.

SHANE: Well, the main one is time. If I was doing this and trying to keep another job, I wouldn't have time. Or if I just wanted to make enough to get by and stop there, then I wouldn't bother with the low end. I like to stay busy, so I don't really mind the extra time. Oh, and space, I suppose. Always space.

DAVE: There are some of the tasks that I enjoy less than my wife does and vice-versa, so we try to split those up. Moving our packing operations around every once in a while helps too. We can do our packing and shipping from any room in the house, and the change of scenery can help break the monotony.

It's easier to make mistakes when you're shipping a high volume of books. Would you believe that some ISBNs get duplicated? We found out the hard way - twice - that it happens, usually with smaller Publishers.

I think the biggest downside is dealing with irate customers. When you deal in large volumes, you're going to have occasional problems - the package gets lost in the mail or it gets run over by the truck on the way, the customer doesn't bother to read the description and complains that the book had writing in it, or the customer complains that Media Mail didn't get the book to them in three days. I had one customer give me the wrong mailing address not once, but twice. I'm sure you've had all of this happen to you, but when you ship out 20 books a day instead of four, it's going to happen more often. And it's the torqued-off customers you hear from the most.

BOOKTHINK: Do you invest dedicated time in acquiring book knowledge? Or does most of your knowledge come indirectly from scouting, etc.?

SHANE: Most from scouting. I do stop in the bookstores (campus and regular) and browse what they are pushing so I can spot it easily. I also occasionally glance through the top 200 best sellers for several book categories - same intent.

DAVE: I try to learn something new every day, and I probably spend an hour or so in pursuit of that knowledge. Some days I end up spending more than that, if I find a hot lead. It's possible to learn an awful lot from scouting and there's no substitute for that, but I read a lot of books, and I read everything I can find online. It also helps to spend some time just wandering around Borders and Barnes & Noble just to see what's selling right now. The majority of old best-sellers are worthless, but today's best sellers are lucrative when you find them. And we do find them.

BOOKTHINK: Talk about re-pricing some. Do you use a re-pricing tool? If so, which one? How often do you adjust prices? Do you always lower them, or does it sometimes make sense to raise them?

SHANE: My re-pricing tends to be pretty involved. I do use several tools but am not willing to be specific. Pricing strategy, to me anyway, is what makes or breaks a seller.

(Additional comments.) I appreciate the chance to stand up for the penny book. I do not think it is for everyone and agree that in most cases people listing penny items are just clueless, soon-to-be gone newbies. Let them have their fun. I myself miss the days of listing anything I could get my hands on, regardless of any criteria and doing a happy dance every time I made a sale (even a penny one). I just made my biggest sale ever today - $270 - and did not even do one of the previously mentioned happy dances. The fun is in the game, not the logic.

I did get quite a few good ideas from reading BookThink's message boards. I have been looking for new ideas to ramp up business lately and was scouting around your site for anything about PDA scanners. I noticed I fell into many of the categories that were getting bashed (packaging included). I have been XPAK mailing for weight savings but definitely see the advantages of alternatives after reading the forum.

I enjoyed reading postings on your site. You seem to keep a pretty good reign on the usual meaningless banter. I used to count cards before getting into books and never could find an info site that wasn't just a bunch of blow hard wannabes. Most of the posters on your site sound like the real deal and actually have something intelligent to contribute.

DAVE: I have experimented with re-pricing tools, and I've done it by hand. In a way it's unfortunate that when you join Amazon's reseller program the listings no longer expire, because that always forced me to re-price a book if it didn't sell after a couple of months. I can't tell you how many times a book sold right after I re-listed it.

The more inventory you have, of course, the more important re-pricing tools become. I can re-price 300 books using Amazon's stock listing in 15 minutes, but I'll sit there waiting for the computer nearly as long as it took me to key in all those prices. In theory, the more often you re-price, the more books you'll sell. That's what the people who sell the software say, and it seems to be pretty true.

Sometimes I raise prices too. There's no point in me selling a book for 50 cents when the second-lowest price is a dollar. The question is whether my copy should sell for a dollar, $.99 or $.89 cents when it's up against another dollar copy. You can make an argument for any of them, but if I undercut someone by $.11 cents, and then someone comes along and undercuts me by $.11 cents, the price deflates awfully quickly and that isn't good for any of us.

I'd much rather sell books for a minimum of $4 or $5, since that's still really cheap, but it's high enough that they don't look like junk. I know people think penny books must somehow be a rip-off because it's the first thing people ask me about when they find out I've sold books on Amazon. There's gotta be a catch, right? Is this like that CD club where you have to buy a bunch at regular price too? Or are these just people who take your money and never ship? Or maybe people think the book must not be any good, if someone's willing to sell it for a penny, so they move on to another book. Amazon always has alternate recommendations right there on the page. When you buy something and half the subtotal is shipping, on some level people have to feel ripped off. I don't always get to do it that way, so I do what I have to do in order to compete.

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