I'd buy that for a penny!

November 1, 2015 8:13 AM

The business of selling second-hand books on Amazon for one cent.
posted by fearfulsymmetry (30 comments total)

I'd naively assumed it was all about the $3.99 shipping fee. But as the fine article notes, Amazon keeps a third of that, and after the rest of costs the seller they interviewed says they only make "a couple of cents". OTOH, they do seem to make it up in volume.

The other half of this story is the automatic pricing algorithms that lead to absurdly high random prices on obscure books. I suspect that's a different side of the retailer market.
posted by Nelson at 8:32 AM on November 1, 2015 [7 favorites]

From what I read, they are making their money off the rare books they find, not on the 1 penny books. Or did I read this wrong?
posted by Windopaene at 8:36 AM on November 1, 2015

Good timing, I just ordered two books this last week priced at one cent. This isn't totally new -- some years ago I recall buying used books on various online places (ABE, etc) priced that way, too. I also had figured that the money was in the shipping/handling charge.
posted by Dip Flash at 8:36 AM on November 1, 2015

My uncle has a used book business like this. I think 'a couple of cents' is a low estimate-- bulk shipping is surprisingly cheap if you do enough of it-- but it's still not a whole lot. I think most of the money is in the books that sell for a few dollars, actually, because they don't have a good way to quickly ID the really rare books if they're too old to have an ISBN.

Actually, that reminds me, I have a standing offer to go by the warehouse and pick through the vintage books. I used to go more-- anything worth less than $50 I could buy from them at 50 cents a pound, and for about a year I took the books I got to the flea market every other weekend. I only found a few really valuable ones, though, and I think they were taken to auction, not sold online. As I recall, the best ones were a first edition Sayers mystery (worth $300) a 1904 Midsummer Night's Dream with Beardsley illustrations (about $400) and a totally innocuous little brown book with a vellum wrapper titled 'We Remember Joe,' which turned out to have been privately published by the Kennedy family for Joe Kennedy's funeral and edited by JFK. It was worth $1800, and when I brought it to the warehouse manager and told him the value, he took a hundred dollars out of his wallet right there on the spot and gave it to me as a finder's fee.
posted by nonasuch at 8:42 AM on November 1, 2015 [39 favorites]

Also, I should mention that surprisingly few vintage books have any real monetary value, even the ones that seems really interesting. Most of what I sold at the flea market were older editions of classic novels in good condition, or childrens' books with nice illustrations. I also sold a TON of the 60s Nancy Drew editions with the yellow covers. But the really obscure stuff mostly didn't sell. Sometimes they would if it had a really beautiful cover or interesting illustrations, but even that was rare. The vast majority of the books I sold went for $5-7 dollars.

After a year of flea markets, I had 30 milk crates full of unsellable vintage books in my garage, and I was more than ready to switch to vintage clothing, which is lighter and less likely to be full of spiders.
posted by nonasuch at 8:47 AM on November 1, 2015 [34 favorites]

Each company, seeking an edge, builds and zealously guards its own software. Ward was the lead developer on Thriftbooks’ software before he became president. He has 12 developers, a full-time data scientist and two financial analysts on his staff.

I wonder what kind of non-disclosure and non-compete agreements the employees have to sign. As Nelson said above, one of the things that jumped out at me was that this business strategy is only possible due to the software algorithms the respective companies have developed. If the software is as closely guarded as the article implies, I imagine they would also put safeguards in place for the intellectual property. Whether the non-compete agreements are enforceable is probably an entirely different conversation.
posted by cynical pinnacle at 8:50 AM on November 1, 2015 [1 favorite]

It didn't seem like this article made much of a case for why they sell books for a cent, rather than pulping them.
posted by smackfu at 8:56 AM on November 1, 2015 [3 favorites]

Sigh. For a minute, it felt like the internet was going to be a huge boon to traditional brick-and-mortar used bookstores, but I guess it was incredibly naive to think that would last.
posted by ArbitraryAndCapricious at 8:57 AM on November 1, 2015

cynical pinnacle, I don't think the software thing holds true for most of the online book resellers. Maybe for the really big operations that can afford their own custom software, but I'm pretty sure my uncle just bought some preexisting off-the-shelf software. He's got like eight guys and half a warehouse*, though, so it's entirely possible the bigger operations are different.

smackfu, they're keeping books out of the landfill and turning at least a little bit of profit, so for them it's worth doing.

*He runs two other businesses out of the other half of the warehouse. The one thing I have in common with my uncle is getting bored easily.
posted by nonasuch at 8:58 AM on November 1, 2015 [6 favorites]

They state in the article that they make money off of shipping fees on books. Not much but enough on each book to game the system a bit
posted by Ferreous at 9:03 AM on November 1, 2015 [3 favorites]

I'm surprised it doesn't mention the value of ratings and reviews. Someone getting a 1c book is probably more likely to give a high rating and/or review. The retailer with the most books sold and positive reviews is more likely to be the go to when someone spends a more normal price on a used book. It's an arms race.
posted by Potomac Avenue at 9:19 AM on November 1, 2015 [5 favorites]

Amazon takes a standard cut of every book sold — $1.35 — . . .

damn Aamzon, that's hella rent. I'd think on that you could afford to treat your employees better.
posted by 7segment at 9:27 AM on November 1, 2015 [7 favorites]

There's always an alternative to Amazon marketplace's one penny books, Thriftbooks has lots of books listed under $4 and don't charge shipping for orders over $10. Once you've registered they send you offers/coupons for more discounts. You should always check to see if the seller has a website, buying directly can save you some money.
posted by plokent at 9:44 AM on November 1, 2015 [12 favorites]

I've never bought penny books on Amazon, but I've bought ultra-obscuro music CDs from Amazon for $0.01.

Adding the cost of shipping into the price is absolutely essential. Once you think of these penny books (or CDs) as $4-and-up books (or CDs), their price advantage diminishes spectacularly, and I'll rarely buy used CDs from Amazon for more than $4-plus-shipping unless I'm sure the local used CD stores don't have them. In addition to the good-neighbor ethics of shopping locally, it's as likely as not cheaper in the local store and, whether it is or not, I can check the item before buying to make sure it's playable.
posted by ardgedee at 9:49 AM on November 1, 2015 [1 favorite]

That $1.35 on $4 is roughly Amazon's persistent cut on any third-party seller item up to a given high-dollar sales price that varies by category - so the economics of most third party retail sales on Amazon commit about one-third of the total to Amazon. When Amazon handles the fulfilment too that perecentage goes up (to about 40%, I think, although this varies due to a number of factors).

Brick-and-mortar retail traditionally aims for a 50% markup from wholesale unit cost (a $3 item is initally sold at $6). So Amazon merchants end up with very compressed margins - a $6 sale (including shipping) would incur a $3 wholesale cost and $2 to Amazon, leaving $1 for merchant overhead such as wholesale shipping, returns and spoilage, labor, and so forth.

The actual fees levied by Amazon and the relationship of wholesale to retail markup varies by product area - in consumer electronics and grocery, retail markups are geneally very small, and Amazon has a different fee structure. But in general Amazon's goal is to keep the majority of the retailer's markup over wholesale.

A further ingenius aspect to Amazon outsourcing so much of their product stream is that since independent retailers on Amazon own the goods traveling through the channel, Amazon does not have to pay inventory taxes on those goods. The retailers are supposed to, but it's difficult for the retailer to determine what taxes are owed and to which state. The net effect is that a lot of the inventory is effectively untaxed. This is similar to but distinct from the problem of determining whether or not sales tax is owed on an Amazon item sale and what that rate should be.
posted by mwhybark at 10:11 AM on November 1, 2015 [9 favorites]

Why would they pulp them instead? There are people who want to buy them. The whole thing wouldn't work if there weren't.
posted by Anne Neville at 10:19 AM on November 1, 2015

I haven't bought any one cent books on Amazon, but I have bought some one yen books on Amazon.co.jp, which is roughly the equivalent going rate. (Of course forwarding from Japan cost quite a bit.) Sometimes it's nice to be able to search up old/obscure whatever and arrange to get it delivered to you. Who am I kidding, it's amazing.
posted by Standard Orange at 10:23 AM on November 1, 2015 [2 favorites]

Book sellers and publishers have to pulp, or sell, unsold books because they can't write off their cost as a loss if they don't.

It works like this: you spend $10,000 to acquire 2,000 books at $5 wholesale cost each. As your tax year-end approaches, you realize that you're never going to be able to sell those books in your regular retail channel. At the same time, a different 2,000 books (also bought at $5 wholesale) sold spectacularly, at $15 each on average. If you leave the 2,000 duds in your warehouse, you have a taxable income of $20,000 (your $30,000 in book sale proceeds, less the $10,000 cost of the goods you sold) with a carryover inventory investment of $10,000. If you pulp the books, you have a taxable income of $10,000 (your $30,000 in book sale proceeds, less the $10,000 cost of goods sold less the $10,000 cost of pulped books) AND you free up warehouse space. Much better. But what's best is to sell the duds for 50 cents each, because you get the same deduction AND you get $1,000 of pre-tax income -- or $700 you wouldn't have seen in the pulping scenario.
posted by MattD at 10:26 AM on November 1, 2015 [19 favorites]

For a minute, it felt like the internet was going to be a huge boon to traditional brick-and-mortar used bookstores, but I guess it was incredibly naive to think that would last.

The internet dispelled the illusion of scarcity that kept prices relatively high in used bookshops for many average items. That said, Amazon also make it *much* easier for savvy brick-and-mortars to move the low cost (and mediocre) books and CDs that are always around quickly, and in volume - even with the competition from thriftbooks et al - providing a critical source of revenue for many. The shop that I once worked for in DC would likely have gone under a decade ago if not for this lifeline, for example.

I've said it here before, but I think the real tragedy of the Web's effect on the book business is that it crushed many of the eccentric, cantankerous, and downright-weird-to-antisocial folks who once ran small, dusty, malodorous shops, new and used, all over the country. As the recent growth of independent shops shows, you can make it in the book business if you're willing to hustle hard and have the personality and emotional wherewithal to treat it not as a casual lifestyle support system but as a hard-nosed business. Bookstores will continue to survive, but they're beholden to the same ruthless Web-driven neoliberalism as a every other part of the economy, and there's really no room for eccentricity or a focus on anything other than the bottom line there.
posted by ryanshepard at 12:06 PM on November 1, 2015 [22 favorites]

But what's best is to sell the duds for 50 cents each, because you get the same deduction AND you get $1,000 of pre-tax income -- or $700 you wouldn't have seen in the pulping scenario.

NB, however, that the author doesn't get a cut for remaindered books.
posted by BWA at 2:33 PM on November 1, 2015

“You look at books, and you hope there’s an intrinsic value to the content, you know?”

This was such an interesting statement to me, I'm still working out why.

We use the word "book" to mean both the physical object ("I have an attic full of books") and what's written in them ("Perfume is my favorite book.") This is useful shorthand, but it also obscures the distinction, as in the above quote.

In the end, people don't pay for content, people pay for content delivery. Thinking that people pay for books because they value content is like thinking people pay for meals at restaurants because they value recipes.
posted by lore at 4:08 PM on November 1, 2015 [6 favorites]

I've been loving this lately with nonfiction. Everything in the bibliography that seems remotely interesting, go buy it on Amazon for 1 cent.
posted by Joe Chip at 6:31 PM on November 1, 2015

I've worked for two different companies that provide software for this and the algorithm is NOT where the money is at - that part is actually a series of tiered rules that looks at a number of copies, price and a some other things (thus the single copy of some weird book being priced at $88.00).

The real money is in the mechanism for harvesting Amazon's prices and keeping that going while Amazon plays whack-a-mole with your screen scraping software.
posted by fiercekitten at 7:03 PM on November 1, 2015 [2 favorites]

MattD: "Book sellers and publishers have to pulp, or sell, unsold books because they can't write off their cost as a loss if they don't."

Semi-obligatory to mention the Thor Power Tool decision here.
posted by Chrysostom at 10:37 PM on November 1, 2015 [1 favorite]

I buy around 10-15 used books a month, on Amazon, for my Grandmother, almost all of them for a penny plus 3.99 shipping. She doesn't care that they're used (most are in remarkably good shape all things considered), and she loves being able to read an entire series in the order they were published. That's actually cheaper than Kindle, assuming the title is available, so I don't see the market for cheap paperbacks going away just yet.
posted by Beholder at 1:56 AM on November 2, 2015

The real money is in the mechanism for harvesting Amazon's prices and keeping that going while Amazon plays whack-a-mole with your screen scraping software.

My screen scraping software is still working A-OK but it doesn't make me any real money. :)

What is sad is that Amazon is apparently now charging a $40/month fee for used sellers, so that heavily discourages those that would sell casually. Like the people that might go to the flea markets a few times a month and put the niche books they find online.
posted by Theta States at 7:16 AM on November 2, 2015

My father has been running a small business in rare/antiquarian books specializing in travel, exploration, and archaeology since the mid-80s. Basically, his personal collection got to the point where my mother insisted that he had to sell some, plus he got a discount for being a dealer. He started by writing small photocopied catalogs that were marvels of idiosyncratic self-publishing (I remember one that devoted a surprising amount of space to critiquing the British Museum's various display busts of Queen Puabi's jewelry). He would send them around to all the other small book dealers and the collectors he knew and sometimes they would buy a book or two. The smell of leather conditioner and book mold still makes me nostalgic for my adolescence. He was pretty good about adopting technology as it came along, first by meticulously hunt-and-pecking their information into an early database program and later using ABEBooks and Alibris.

But he's definitely suffered a bit from the changes that the Internet has brought. He told me 15 years ago that prices were dropping for most books as they turned out not really to be particularly rare, but that prices were rising for the books that actually were in short supply. Unfortunately his collection, mostly bought for his personal interest, features a lot more of the former than the latter.

He's now in his late 70s and he is getting increasingly concerned about how to dispose of the collection before he dies and leaves his (non-collector) wife with thousands of books that she doesn't know anything about. They were visiting us this weekend and he told me that his initial plan was to send his most valuable stuff to auction and then to use all the things that weren't salable to write down the profits, but this plan fizzled when the auction company he had been corresponding with was interested in many fewer books than he had expected and eventually stopped reviewing the lists of books he was sending. He used to be an early adopter of technology, but now he finds it confusing and he gets tired easily. I've offered to help him connect his ABEBooks listings to Amazon with the intent of just getting them out of the house, but it may be more of a headache than he's willing to deal with.

Seeing all those $0.01 cent books on Amazon always makes me sad, both because I was raised to love physical books, but also because they sort of encapsulate all my feelings about my dad's transition into true old age and put a price on them.
posted by The Elusive Architeuthis at 9:47 AM on November 2, 2015 [9 favorites]

The Elusive Architeuthis, your story reminds me so much of a couple of collectors in my family. I've been telling them for years to sell things while interest in the topics is high, but they are people who lived through the Depression, so they a) are not inclined to get rid of things, and b) seem to me to be counting on these once-collectibles as a retirement plan or an inheritance for their children. Hurts my heart, really. As in all things, the time to do something is when the time is right. Otherwise you end up selling for a penny, just to not have to pay storage costs.
posted by vignettist at 2:52 PM on November 2, 2015 [1 favorite]

Amazon is about to open their first brick-and-mortar store in Seattle this morning. I doubt any penny books will be on sale there - the cost of running a B&M store would not be covered by selling books for a penny. But is this Amazon's attempt to become a chain store while presenting itself as a "neighborhood" store?

"Amazon will charge the same price for books in the store as it does online.

It had reached out to sales staff at local stores, such as Third Place Books, to work at the new store. It wound up hiring 15 employees, including librarians, retail clerks and even a receptionist from Amazon who loves reading."

posted by cynical pinnacle at 7:31 AM on November 3, 2015 [1 favorite]

I've been telling them for years to sell things while interest in the topics is high

If antique shows have taught me anything, it's that stuff that's not too old (up to 100 years or so?) can have its price fluctuate wildly depending on collector trends.
A decade too late, and the price can crater over 50% on some things.
posted by Theta States at 10:35 AM on November 3, 2015