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BOOKTHINK: Is that 30% increase in sales based on dollar value?

KOHN: It is based on retail dollar sales. Just our retail channel. It doesn't include our business partners, and it doesn't include the Amazon seller program. Some sellers might experience 200% growth, some sellers might experience negative growth, but this is the average that we're seeing. We do keep track of the percentage of our sellers who are generating sales. We are cognizant that we don't want the bulk of our sales to be focused on just a narrow band of sellers. That's not a business model that we want.

BOOKTHINK: Then to sellers experiencing poor sales on Alibris, you would say it's not due to additional sellers coming on board - if you are saying that the number of new sellers has leveled off?

KOHN: Yes and no. I mean the issue is that the quality of the sellers in the network has risen dramatically in the last year. The total number has gone down. Pretty much in one fell swoop we have gotten rid of 1,000+ sellers who had virtually abandoned their accounts and didn't have a lot of inventory in there. We basically said, we've tried to contact you and you're not available, and we don't want you cluttering up the system. We don't want your inventory to sit there and replace legitimate inventory that others are actively trying to sell. In that sense, I think we have better sellers than we had two years ago.

BOOKTHINK: So much depends on a seller's inventory, and I think people who do well in the bookselling business realize that. Every year you learn more about what sells, how to recognize collectible books, how to buy quality inventory that is in demand. Accumulating longer-term sellers would be a big boon for you because they have the ability to get stock into their inventory that is in demand, is that correct?

KOHN: Absolutely. I hear that every year from sellers. It's not something that they can set into stone and walk away from. The markets change; they change dramatically sometimes. Those who are out there and actively understanding where the market is and can find and mine a niche do well. There is a lot of knowledge involved, and that's a great testament to the fact that bookselling will not be overrun by hobbyist sellers who come on with a couple of books and think they can make a business out of it. There is some true knowledge that you have to soak up and understand and learn about so that you can really make it a business.

BOOKTHINK: What is the average sale price per book on Alibris?

KOHN: That's one question I'm probably going to have to decline because of the competitive nature of our marketplace.

BOOKTHINK: What generates the most income for Alibris - rare books, new books, other media, general lower end used books?

KOHN: It's not movies or music, I can tell you that. That is an area that we are now looking at expanding, however. It has been a place holder for a number of years. We have focused our attention on books, but I think in 2007 you'll find that we'll be doing some things in movies and music, and we'll reach out to those sellers and hopefully replicate our success with books.

In terms of most income, I think it really is general used books. We're not looking to sell penny books; it's generally moderately price used books. We do a healthy business in new book sales. We have a lot of people who buy new books from us. But we are still positioned as a used book/rare book/out-of-print book site.

BOOKTHINK: I'm kind of surprised to hear that you're planning to expand the movie and music portion of the site.

KOHN: No plans have been put into action yet, and it may look completely different than it looks today. We want to stay focused on media; we're not going to go out and do lawnmowers or Tupperware. But we do feel that music and movies are related products, and that we can do some of the same things that we've done with books. We really have not invested that much into those areas. Books will still be a big focus for us, but I think we can do a lot in those areas, and there's another set of sellers focused on those items, rather than books, that we think we can help.

BOOKTHINK: Are there any other new directions that are being explored for the site?

KOHN: There's a lot of talk about that. You'll see changes over the course of next year - nothing that I can talk about - but we are definitely looking at some interesting things. The big thing I'm hoping happens in the future is that we'll probably re-dedicate ourselves to the rare book and collectible market at some point and perhaps have a tab for them.

We may experiment with several new tabs at some point, although I can't say that for certain. But it's something we talk about - having a textbook tab during textbook season so we can clearly get people to that inventory, and to have a rare book tab and in that rare book tab start to have a better search interface for folks to easily find the collectible material they want. We have some ideas as to how we can do that. I think Dick Weatherford will play a big role in helping to craft that portion of our site. We are cognizant that is the old core of Alibris, and it is a core that we are certainly not going to abandon, and hopefully will start to invest more in.

BOOKTHINK: Do you foresee developing a more international market, in addition to the UK platform that you mentioned earlier?

KOHN: Soon when people come to the site they will be able to see prices in their local currency - hopefully by the holiday season. This will help make it just a little bit more accessible for international customers to come to Alibris and see what we're about. We have a very healthy international business as it stands, and that's without having a lot of international-friendly presentation, so we feel that's a good first step.

BOOKTHINK: Can a better method be developed to monitor and rate sellers than solely by order fulfillment?

You know, it's hotly contested. I've talked to sellers about this, asking, "How would you feel about a customer rated system where after you get your book you come back to your account on the site and rate the seller?" I don't think that we would want to get into an Amazon-style rating where you are having customers write reviews.

We wouldn't get rid of our fulfillment system, but it is an interesting idea to contemplate having a quantitative rating and also have qualitative rating from customers, and present both, allowing customers to decide which is more important. If we were to do it, it would be fairly streamlined. I don't want booksellers to have to be consumed with worry about customer feedback. Meaning, if you are doing your job well, you shouldn't have to worry. We want to keep our booksellers focused on providing the greatest service they can instead of the back and forth debate over ratings.

I'm happy that we've been able to integrate more data points into our reliability metric now, so that we are giving an accurate presentation of fulfillment. I'm very happy that we've been able to do that.

BOOKTHINK: Many sellers would like to be able to upload digital photographs of the books they offer on your site, rather than relying on Alibris' stock photos, which often aren't an accurate depiction of the book being offered. Do you foresee adding this feature to the selling site?

KOHN: It's been discussed. I don't think we would do it for all books. I don't think there is any real benefit from getting individual pictures of the paperback edition of The Da Vinci Code from every seller. That is not a good use of a bookseller's time, it certainly is not good use of our server capacities in terms of storage, and that's really what it comes down to.

When you allow booksellers to do this, there is a storage issue. Yes, I know people say, "Come on, storage is cheap these days." When you have this many sellers and this much inventory, it's not trivial. That being said, we're toying with the thought, particularly when we get to really investing back in our rare and collectible market, of allowing digital photos for certain levels of merchandise. So if there is a book that is over $100 or a book that is marked as collectible, then we would allow a seller to attach an image to that file and have it presented. Because I do think it does help to increase sales between customers and sellers if they are actually able to see the image of a book that is of higher value and of greater interest. The conversation has happened, it's being debated, and we do see the value in it.

BOOKTHINK: I'm thinking it would have to help, as far as descriptions go. Many sellers don't give a description, or they give an inaccurate description. I think it makes it easier for customers and helps them overcome a certain level of mistrust that naturally arises in buying something you can't see from sellers you don't know.

KOHN: We see value in it for the higher end of our seller's stock. When we think about launching a new tab for rare books, it may be a part of that project. If we are really going to help sellers sell the upper end of their stock, we have to look at what they need. I do like having sellers give us suggestions and tell us what they want. We may not do all of them, but we certainly are not going to be able to understand the needs of our sellers unless they are vocal about their needs. I've talked to a couple of sellers who have really helped to push things forward and to give some instruction. We need to hear from them, and we are definitely listening.

BOOKTHINK: Do you get returns from people who get their book and say it doesn't look like the stock photo they saw on the Alibris site?

KOHN: Less often than you'd think. If it's a higher price item, maybe, but for books that are $20 or under, generally not. It's not really that much of an issue. I think we could do a little bit more because we have additional stock photos, meaning we could actually match editions a little bit better. We could perhaps actually start displaying more specificity with our stock photos, and that might be the next step we take down this road.

BOOKTHINK: Is there any plan to make technical support more easily accessible to booksellers? Any chance of having a phone number that sellers can call to receive seller-related assistance when they need it?

KOHN: Not likely. One of the things which I hope that we've started to do is to be upfront and honest as to what we are about. It would be really expensive to offer phone support, and unfortunately, the amount of efficiency we get through email is so much higher.

It should be known that we reach out on the phone. We don't do inbound, so people can't really call us. But when an issue rises to a point where it's going to be easier for us to resolve by picking up the phone and calling the seller, we do that. There are a lot of times when there are issues that can be easily solved where we simply point them in the right direction via email. If we were to do that over the phone, it takes a lot more time, and it takes away efficiency to deal with more complicated issues which we do thoroughly research and get back to.

We are proud of the support that we provide in that we think we really provide real answers to the questions when they come in and we take the time to really figure out what's going on and respond versus just cranking out a response that may or may not answer your question.

BOOKTHINK: Some sellers have concerns about Alibris' seller shipping reimbursement - they feel it should be raised, or that sellers should receive the actual shipping amount that is charged to the customer. What are your thoughts on this?

KOHN: We've heard this; we feel the increases too. When people ship to Alibris with our MRS labels, because we do a lot of consolidation for our international and library orders, we are not immune to these increases either. It's not something that we take lightly. We keep an eye on the cost, and we still think it's a fair reimbursement at this point.

Some sellers say, "I want all the reimbursement that you are charging the customer, and the customer doesn't know that you are taking some of this money, etc." The bottom line is that sometimes the customer doesn't know that Media Mail $1.21 to send the book to them when the seller is getting a higher reimbursement, either.

BOOKTHINK: But it's the seller who is buying bubble wrap, shipping tape and boxes to package and ship the books, and maybe driving them down to the Post Office.

KOHN: If we were able to increase the amount we were charging customers, we would be able to increase the reimbursement rate. But right now it's a competitive environment for shipping, and if we were to do that, it would be likely to grossly negatively impact sales volume - that is what it comes down to. We are in a position where we need to match our competitors in that area.

At the end of the day, we would rather folks worry about making their profits on the sale of their books and not trying to squeeze more and more profit out of shipping. Part of this also allows us to ensure that we don't have penny sellers just making their money on the shipping.

I know people say, "Let us set our own shipping rates." Our view on that is, we don't want a situation where the customer gets surprised when they buy a $5.00 book and find the shipping is $12. Having uniformity over the site makes it very accessible to customers, they are comfortable, and they have an expectation of what they are going to be charged.

I don't really want sellers to start to have another avenue that they have to be price competitive on. You have to be savvy about pricing your books competitively in the marketplace. Do you really want to have to compete over who has the lowest shipping price as well? I know it's an issue. We do feel the present reimbursement does cover most of the cost. The other part of the money is used to drive sales. We are able to build these business partnerships and do the marketing that we do from the amount we take from that as well.

BOOKTHINK: Do low shipping reimbursements encourage poor packaging by sellers?

KOHN: I got a book one time that was wrapped in a grocery store bag and shipped in an Alpo dog food box. We had a little talk with the seller. I don't know, but I hope not. I can tell you I am reaching out and trying to broker some discounts and deals with providers - ink providers, bubble wrap providers, etc. It's part of what I'm hoping to do in the latter half of this year, to at least have some discounts available to Alibris sellers to purchase materials, so that we're providing a little bit of a better ability to buy their materials at a lower cost.

BOOKTHINK: Could the shipping reimbursement be raised in exchange for letting sellers handle the burden of returns?

KOHN: Returns is an expensive process; it really is. Trust me, we look at that quite a bit. At this point, I would say probably not. But shipping is looked at as a separate area. I don't think we would do any trade-offs there.

BOOKTHINK: I'm thinking that if booksellers are responsible for their customer returns that they are going to be more careful about what they are shipping out and how it's packaged.

KOHN: The trade-off with returns would be, if the seller is directly taking returns, they would have to have direct access to the customers. This is something we hear from many, many sellers. Probably the number one complaint I hear from our sellers is, "You don't let me talk to my customer." So I think if we were ever to go to direct returns, we would open the other end of the spectrum, which would be direct contact with the customer.

BOOKTHINK: And that's not something that Alibris looks at, allowing direct contact with the customer?

KOHN: You might see something in the future. If we were to do it, I'm sure we would have a lot of sellers in our network who would say, "But I liked it the other way." I know we have a fair sized group who enjoy the fact that they don't have that customer contact and don't have to deal with returns. So if we were to move to that model, it wouldn't be without some bumps along the way.

BOOKTHINK: Don't you think the committed bookseller would rather have the contact?

KOHN: I think that is why we are considering this more now than we would have in the past, because our network is now composed of more professional booksellers. We have done quite a bit to ensure that we have the right booksellers on Alibris, and if we were to make this change, that we wouldn't get a rash of feedback from customers that could be negative as a result of direct contact with sellers. We're far more interested now in thinking about it, knowing that we've done our best to make this a premiere network of sellers.

BOOKTHINK: Alibris lists its own books on the site as well. How many books are typically listed, and where do they come from? Does Alibris actively seek books for resale, or are these books that have been returned by customers to Alibris?

KOHN: There are anywhere from 300,000 to 500,000, I would say. Usually, these are books we source from remainders and secondary sources. We buy skids. We have a pretty advanced algorithm which basically says "keep or dump." So we can analyze a skid and determine whether we can sell the books quickly, or if there's not enough there that we can sell, and pass on it. We don't list nearly the amount that we used to; we are focusing elsewhere. The warehouse is still a vital part of our program because many business partners need that. It also allows us to reduce the shipping cost on international orders and insure that our domestic sellers aren't shipping internationally. I know that some of them want to, but a lot of them actually enjoy the fact that they don't have to do the customs and they don't have to figure out all that stuff; they just send it to us, and we can use our volume to reduce the price of shipping internationally.

BOOKTHINK: While we're on that subject, do you think the Alibris warehouse is still the most efficient way to ship books overseas or to libraries? From a seller's point of view, although there is an upside - no cost to booksellers for shipping, consolidation of book orders, etc. - there is also a downside. Books may be lost on the way to or in the warehouse, experience long delays in delivery - and there is no delivery confirmation available on merchant return mailing labels unless the seller pays for shipping the package.

KOHN: I can tell you that we heard this from booksellers at our reception at BEA. We took it seriously, and we are investigating - and we will be able to address some of those issues. I can't really go further than that. We have seen a slight increase of issues at the warehouse, and we've taken note and are addressing it. In terms of getting books from here to the international space, the warehouse still is the best. I think the issue that we're seeing is that media mail, in some pockets, is letting us down, and we do need to stay on top of that. We have to talk to the USPS and figure out what's going on. Media Mail taking greater than 30 days from a U.S. bookseller to the warehouse isn't going to cut it. It's not the fault of the seller and it's not the fault of Alibris, and we're both dependent on the system. Some booksellers say they've never had a problem. It's usually a local issue and varies from post office to post office.

BOOKTHINK: You said that there are a lot of sellers who would rather not have the responsibility of shipping internationally. Don't you think, once again, that sellers who are committed to the book selling business will be willing to learn and become knowledgeable and are probably not going to be bothered by it?

KOHN: I agree with you to some extent. Clearly, there's a point in time where maybe it could be optional. It's a possibility, but I would say it's a long way out. There are customs issues where we can expedite things in customs, whereas a sole bookseller might not have the leverage or the dialogue or the right contact to expedite shipments through customs. Because we have the ear of somebody much higher and we have such volume, we are able to say, "You've got to get this through."

BOOKTHINK: One of the questions I hear from booksellers is this: Are seller inventories "rotated" - that is, are some books not actually accessible online some of the time, and given exposure on a rotating basis? Is this true, or is it a myth?

KOHN: Cycling? Doesn't happen on Alibris - no way. There are other quirks in the search system. I could get into it, but it's very detailed, and we are working on it. Sometimes, if you put something different in your upload, your part of the inventory won't get sucked into the aggregation table. It can still be found on Alibris, but you have to do it in a different way. That is something that we are attacking in two ways: matching algorithms, which is something that we continue to tweak; and then, I think we need to be better at providing our sellers with tips and guides on how to best format your files and descriptions to ensure they are provided to the widest amount of buyers possible.

BOOKTHINK: One of the things I find irritating as a bookseller is this: If I do a search for a customer and I'm looking for a first edition in a dust jacket and I put that into the advanced search area, what comes up is a bunch of "stuff" - book club editions, later printings, a lot of junk to wade through. This happens on many sites, not just Alibris.

KOHN: It's difficult. We've had some discussion on this. We're aware. We have some things in place. The Advanced Search is something we are working on. When the Rare Book tab comes out, the Advanced Search will work far more specifically. When we work on the collectible area, those are issues that we are going to look at. The easier way to find first editions unfortunately, right now, is to use our narrow function. So, if you are looking for a first edition with a dust jacket, you would actually do a general search, then say only show me first editions, then only show me dust jackets. Of course, the feedback I get from sellers, they say that's great, but I want to do it all at one time; I don't want to go through this maze.

BOOKTHINK: And a customer is not going to know enough to do this.

KOHN: Definitely. We've heard this, and it's on our road map.

BOOKTHINK: As a site for booksellers to offer their inventory, what do you think Alibris does best?

KOHN: Our sales channels and distribution. Because of our website, which is usually the #4 trafficked website in the US for books, and our relationship with our business partners. Essentially when you list with Alibris, you can opt into Barnes & Noble as well (the #2 site). And then we have relationships with Chapters Indigo (the largest Canadian chain), Books A Million, Borders, and clearly we have the most developed relationship with libraries as well.

So that is the biggest thing we provide; in one place we drive the best sales distribution for you. And it's the marketing - we get better and better at that over time. We are going to bring buyers for your books. Service is the other one. When I market Alibris, I usually talk about sales, services and simplicity. Clearly our customer service and seller service support is good. We may not be the quickest to respond, but we are going to respond with something that makes sense. We offer pricing tools, and we think our inventory management tools are some of the best out there. Can it get better? Yes. But if you are a novice seller coming in, it really allows you to easily catalog your books; and if you are a savvy bookseller, we have things which allow you to manage your inventory quite well. And then it is simplicity - we want to keep our sellers focused on their profession. We handle the credit card transactions at no additional cost, we protect you from fraud, and you aren't dealing with people who are trying to get you to mail books to Nigeria.

BOOKTHINK: What about marketing? Any new ideas in the works on reaching more libraries, readers and collectors?

KOHN: I think the new owners do allow us to do a little bit more than we have, but we have learned from our prior experiences not to spend in areas that are low return. We have some beautiful old ads from the old days where we were doing a full page ad in Harpers or the New Yorker - wildly expensive. Ads like that might raise awareness a little bit, but it doesn't move the needle for sales tremendously.

At one time, we sponsored a mystery series on PBS. In fact, if you rent a particular DVD, you will see an Alibris ad on it. I don't think we're going to go there again. We'll rely on direct marketing principles and be a little bit more aggressive in that arena.

BOOKTHINK: Is the partnership with Barnes and Noble likely to continue?

KOHN: Ah, yes, in spite of rumors to the contrary. The partnership is absolutely going to continue. We are very close with them. They have a little program they are doing. The mandate is that they don't want to be reliant on one supplier. They have a very small beta program, invitation only. We were aware this was going to happen, but they are committed to staying with us and the relationship is going to continue.

BOOKTHINK: And what do you think your site does best with respect to the customer who comes online to buy books?

KOHN: I think we do a very good job in getting them to the product that they want quickly. I think that the way our search works by presenting works instead of a laundry list is a benefit for our customers. And also we bring people into Alibris using ways that get them deeper into the site. You get right in; you find exactly what you are looking for. It's delivering relevance to the customer. If you want to find a book, you come to Alibris, and you find that book.

BOOKTHINK: Are you optimistic about the business of selling of used & rare books on the internet for the foreseeable future? Any changes you foresee?

KOHN: I definitely am optimistic. We better be; it's our business. Is it going to change - will it always change? YES. Change is a constant in many ways. I think, more and more, booksellers understand that the Internet can be a powerful ally and not an enemy in their business. And it's been in the last couple of years that that paradigm has changed for some booksellers.

We are bringing more and more readers and customers to these books. Basically what we provide is this gigantic footprint. If you sell in a brick and mortar store or even if you don't, you have your little neighborhood that you can sell to, but if you get on the Internet, that neighborhood becomes the world.

Does it mean that you have to get better in terms of identifying the books that are in high demand? Yes, you are probably going to have to get a little more savvy about not buying "The Bridges of Madison County." For the folks who are willing to adapt, and say maybe this seller is good at selling the Danielle Steele novel market, great, good for them. But you know, I'm going to focus on what I can focus on, and I'm going to learn what I can and be smart about it. I think there's a place for so many people to do that, and do it well.

I think there's still a lot of room out there. But it's going to take adapting to the market, using the tools at your disposal and being smart about it.

BOOKTHINK: Anything else you would like to add?

KOHN: The clear goal for us is: We succeed when sellers succeed. I don't think that's always been communicated well to the seller community, but it is certainly true and certainly what we hold true here at Alibris. That is our mission, and we understand that we are in this together. If we help sellers succeed, we succeed. If we are not doing that, all of us are going to have a tough time.

We are actively going to work to get better distribution channels. Whether or not that's an eBay program, which we are investigating - we are in talks with them and working with them - or if it's going to another off-line retailer who has an online presence who wants to have a used book vertical and integrating with them, it's one of our strengths, and it's something that we are committed to doing so that we can help booksellers thrive.

I mentioned it before, but I want this to come through. Our goal is to be as direct and forthright and honest as we can with sellers. At one point, we had a reputation for trying to spin things. We really try very hard now to say there are some positions that everybody might not like, but there are decisions we make that we believe are good things for all in our long range vision.

BOOKTHINK: A.J., thank you for taking the time to respond to our questions-you've been very helpful and it's been great talking to you.

KOHN: It's been my pleasure.

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