Used Books: For Booksellers, New Attitudes Equal New Opportunity

by John Mutter, PW Daily for Booksellers -- Publishers Weekly, 9/27/2004

Editor's Note: This is Day 2 of a multi-part series on how the used books market is affecting the book industry. Today, we explore how booksellers are trying to cash in on the growing popularity of used books. On Monday, we look at the online middlemen behind the trend. For more coverage of the subject, see the September 27 issue of PW, which appears this coming Monday. Click here to read the first part of this series.

For booksellers, including those who have made their careers in new books, the growing popularity of used books promises to transform their business--and, for those who are smart enough to take advantage of it--open up a vast new area of sales.

Miriam Sontz of Powell's Books in Portland, Ore., calls the trend, "one of the biggest shifts in the book business that's ever occurred." The reason: while once decisions about "the selling and pricing of books were made by people in conference rooms in New York," she says, now "the future of bookselling and book pricing is being decided in dorm rooms around the country, where kids are on the Net learning about prices and setting price guidelines. The value of the book is much more open to discussion." Sontz is a longtime manager of Powell's, which sells new and used titles together on its shelves, and CEO of Powells.com.

Ed Morrow of Northshire Bookstore, Manchester Center, Vt., a former American Booksellers Association president whose store sells some used books, calls the new dynamic "a more perfect market in the classical economic sense, where every buyer is exposed to every seller and vice versa. It makes sense that sales of used books are affecting the sales of new books."

Morrow has observed a shift in attitudes among customers, saying, "A new generation is coming along without certain hang-ups and with tightened pocketbooks. As they trade stories about finding deals, people are beginning to think they're foolish" for paying full price or buying at a modest discount. "It's no longer a question of having to go two blocks out of the way to a dusty used bookstore. Now it's in your face." He notes that even customers who have never bought a used book in their lives are impressed by the good condition of many used books.

In response, more and more, retailers of new books are adding making room for used books. Once a rarity except in parts of the West, the model of a new-book bookstore with a sizable selection of used books has several attractions to indies. They can differentiate themselves from chains and other nontraditional book retailers; offer lower-priced books to increasingly cost-conscious customers; achieve better margins; and regain some control over pricing.

But as used books have become ever more popular, some of the advantages of used books have eroded. Price pressures have slimmed margins and led to confusion about books' value. Several booksellers noted that because many of the relatively new used-book sellers don't know books and the market well, they are pricing many titles so low that few people can make money on them. Still, many traditional bookstores are forging ahead, adding and expanding used book sections.

Harry W. Schwartz Bookshops carries used books in two of its four stores in the Milwaukee, Wisc., area. Although the bookseller has sold used books to varying degrees for years, it began to do so "more aggressively" only in the past three years, according to used books manager Bishop Hadley. Most of the used books have been sold by category in discrete sections next to new books in the same categories, although Schwartz is now experimenting with shelving new and used titles together in a few categories. "We're taking a slow approach to gauge how mixing new and used books will be received by customers," Hadley comments. Between the two stores, Hadley stocks anywhere from 12,000 to 15,000 used book titles at any time. The most popular category is fiction. Other important categories are mysteries, world and general history, biography, cookbooks and children's books.

Northshire Bookstore, Manchester Center, Vt., has been selling used books since 1996, when it opened the Next Chapter, which for a time was a separate store with some 700 square feet of display space. After a recent renovation and expansion, Northshire now sells used books mainly in its event space and online. In some sections, such as literature, the new and used selections are next to each other (in literature, new books outnumber used by a 5-1 ratio). Distracted by the move, the company will begin paying more attention to used book sales to see which sections have strong crossover sales and whether the store should develop used books further. Co-owner Ed Morrow notes that what Northshire can do with used books is constrained by the store's size. In addition, he says, if the store adds too much, "used books could push out the new."

Northshire had experimented with mixing new and used titles together on the shelves, but judged it a failure. Morrow explains: "A few people liked it, but existing customers were confused. New book customers would bring up a book and say, 'It looks awfully ratty.' Used book people like to browse used and don't want to cull through new and used books." Full integration of used and new titles would require a "huge store" and needs to be done completely, in the Powell's manner, Morrow says.

Morrow notes that as price points for used books continue to drop, the amount of margin available to pay for data-entry costs (particularly to sell online) and to stock heavily becomes thinner. "After a certain price point, a used book is not worth it," he notes. While the store initially had pegged that cutoff price at $3.50, Morrow estimates that it is "probably higher now."

At Book Passage in Corte Madera, Calif., owner Elaine Petrocelli notes that the changed marketplace has led to some unfortunate situations. For one, people intending to sell signed books online, including first editions, come to author events "with cartons of books. In one case, the person wanted the books pre-dated!" She observes that some of these new booksellers "have a sense of entitlement and real nerve." In addition, some of the new dealers behave like penny stock promoters, she says--for example, buying out small printings of a mystery, then writing reviews online and otherwise promoting a title that no one else has.

Even the bricks-and-mortar Barnes & Noble, which in the 1990s closed its Manhattan Sale Annex, has dipped its collective toe back into used books. Last year, the company began experimenting with selling used books in selected stores. The used and rare books (usually numbering fewer than 300 books in each store) have been displayed on tables rather than in shelving units. Each location's used books are genre-specific (for instance, B&N's Astor Place store in New York City has sold only poetry books). "The areas you have seen in some of our stores are just one of the small product line tests we do from time to time," says B&N spokesperson Carolyn Brown, who adds that the company had no results based on the sales of used books and that the company "has no national plans for expanding the test."

For its part, Borders Books & Music has no plans to stock used books in its store. However, spokesperson Anne Roman says shoppers on the Borders and Walden Web sites, which are run by Amazon.com, "have access to an active used book channel." In addition, through the company's connection with Alibris, customers using Title Sleuth kiosks in Borders stores "are able to identify titles that are out of print and may be available used, which can be shipped to our store for later pickup by the customer."

In which case--and a sign of the times--a book would come full circle in a most roundabout way.