Amazon’s Fulfillment by Amazon (FBA) service was launched in 2006 and helped create a steady stream of new book suppliers. The service lets people store their products in Amazon’s fulfillment centers, and the company picks, packs, ships, and provides customer service for them. In recent years, FBA, along with the ubiquity of smartphones and high-speed data, has created a new type of online bookseller—one with no bricks-and-mortar location, no online store, no accounts with publishers or wholesalers, and sometimes no interest in books at all. It is a breed of bookseller interested in one thing: price arbitrage.
This community, which is active online and has dedicated forums, YouTube channels, and social media streams, typically buys books from thrift stores, library sales, and, less often, used bookstores and then resells them on Amazon. Caleb Roth, aka popular YouTuber the Book Flipper, has built a business out of advising people on how to run a book arbitrage business; at one point, he had 17,000 titles listed for sale on Amazon.
The community has been empowered by smartphone apps that are connected to Amazon’s database and, once a book’s ISBN is entered, quickly return data about the potential profitability of reselling that book through Amazon. Popular apps include Amazon Seller, Profit Bandit, Scoutify, and Scoutly. The apps, each of which charges a monthly subscription fee, are preloaded with fixed costs, such as Amazon’s fees for fulfillment, and return pertinent information, such as the book’s current sales rank online and an average sale price. Savvy booksellers use tiny handheld scanners connected to their phones by Bluetooth to quickly scan bookshelves and determine which titles are most profitable.
Houston resident Gabriel Lopez, 28, has been buying from thrift stores and selling through Amazon on and off for two years. “I got into it after reading Marie Kondo’s Life Changing Magic of Tidying Up,” he said. “I had 500 items up for sale on eBay and saw that the books were selling the best. Then I heard about book arbitrage and FBA and got into it big-time.” Lopez said that over the past two years, he’s generated more than $75,000 in sales on Amazon, noting that he would have sold more had it not been for a half-year he dedicated to mining Bitcoin instead.
Lopez said he buys nearly all of his books from Houston-area Goodwill stores, typically priced at 99¢ each. “Goodwill has me registered as a reseller, so I don’t pay tax on the purchases,” he explained. “I will usually buy between 50 or 60 books per store. Unlike a lot of buyers, I am not so picky and will buy a book if it makes me 50¢ or $1. Others will focus only on books with a higher profit margin. But for me, its a matter of volume.”
Numerous Goodwill stores, which operate as regional franchises, also sell used books directly on Amazon. On a recent afternoon in Houston, Lopez was scanning books at a Goodwill alongside several other booksellers. He had his cart piled high with titles, ranging from religious works to dog-eared textbooks and a paperback copy of Jon Krakauer’s Into Thin Air. His phone was the sole determinant of what went into the cart. Once he gets the books home, he packs them up and ships them to Amazon.
“The shipping is subsidized, so it’s not that expensive—I estimate it costs me about 30¢ per book to get them to their fulfillment center,” he said. He pointed to the Krakauer book and added, “I will buy that for 99¢. I’ll spend 30¢ shipping it. I will sell it on Amazon for $9 or $9.50, for which Amazon will charge fees of $6–$7. So I’ll clear 50¢ or a buck.”
Another bookseller at the Goodwill that day, who identified himself as Patches (he declined to give his last name), was also filling a cart with books, albeit more slowly than Lopez. “What you want are the unicorns—the books you buy for 99¢ but sell for $25, and you get paid out $5 or much more,” he said. Patches was working as part of a team that was hitting all the thrift stores in the area. “I go out a couple of times a week and do this. I get paid a commission on whatever profit my boss makes. The team pools the profits, and, if there are enough people, it can be decent money.”
The scanning community itself, at least in Houston, is well organized, with numerous teams on any given day scouring the city’s book outlets for bargains. In several cases, the people buying the books appeared to be recent immigrants. PW spoke with a man and his son who were scanning books at a Half Price Books outlet who had recently arrived from Turkey, as well as another man who was a Syrian refugee.
“There are a lot of immigrants to Houston who are doing this,” Lopez confirmed. “It’s not that hard to figure out, and it’s something you can pretty much do without speaking much English, or, to be honest, knowing anything about books at all.”
Kathy Doyle Thomas, executive v-p and chief strategy officer of Half Price Books, said the chain was well aware of the buyers using scanners in its stores. “We have been in business since 1972 and people have been buying books and re-selling them elsewhere all along. Of course, technology and Amazon make this much easier. We don’t have a problem with them, so long as they are not disruptive to other customers.”