Life at the Bottom

by Craig Stark

#55, 7 November 2005

Part I: - Making Penny Selling Work for You

Printer Friendly Article

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.

Enter Book Title or ISBN

Powered by FetchBook.Info
New & Used Books