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Making the Math Work


So we've been open here in Tracy a couple of months. There have been some growing pains for sure. We're probably going to change the store hours to better fit the commuter community that calls this part of the Valley home.

I've been kind of surprised at the number of request to buy books. It's been a while since there's been a used book store in town and we had both assumed that folks wouldn't really be interested in selling books. Well you know what they say about assuming...

The fact of the matter is that the "buying books from the general public" business model has changed rather dramatically in the last decade. Lots of used book stores closed because of the big box retailers it's true, but many collapsed under the weight of their trade credit balances as well.

You see, buying books in the store is costly. If you use the community standard of 20% of cover price for cash or 30% for trade credit, the math doesn't work anymore. A hardcover book that retails for 30$ costs 6$ in cash or 9$ in trade.

If it's a hot title we can price it at 15$-16$. More often than not though, it's a common title that we'll price at 10$. That 1$-$4 profit margin just doesn't pay the rent any longer.

Another disadvantage to buying in the store is that you become a captive audience. Your stock begins to reflect what your customers are reading, since those are the books you have access to. Pretty soon, you're carrying titles that everyone who shops your store has read.

You stock loses it's diversity, which leads to the last big drawback to buying in the store. Dissatisfaction. Folks who sell you books become dissatisfied because you begin rejecting titles for the sake of keeping your selection diverse. Customers become dissatisfied when they come in and see the same titles in their favorite section. Pretty soon, lots of folks stop coming to the store to shop or sell books.

So how did Mark and I go from one store to two? How did we manage to stay in business 5 years? How are we able to grow when so many used book stores are closing?

Scouting.

Scouting solves all of the issues with buying in the store creates. Where Mark and I source books, we're paying on average 1$-2$ for that same $30 hardcover mentioned above. So if it's a common title our profit margin jumps to 8$-$9.

Scouting allows us to curate the store's inventory. We can focus on areas that are thin and maintain a diverse selection of titles. Since we each have our specialties, the stores' stock remains balanced between Fiction and Non Fiction, so no more captive audience.

With higher profits, we can scout more which improves book stock diversity. Greater stock diversity leads to more choice which tends to mean greater customer satisfaction. The result is an increase in sales.

Scouting is also the part of owning bookstores that we both love the most. There's a lot of satisfaction on both of our parts when folks dig the stuff we have on the shelves. There's also the treasure hunt aspect of scouting. You never know what you're going to come back with.

Scouting affords us the revenue to support institutions we believe in. We source our books at thrift stores and friends of the library sales. Not only do we support the community of book readers by providing inexpensive books, we support the larger community by putting our dollars where they count.

Hospice care, animal welfare, women's shelters, the library system all benefit when we buy books from their thrift stores and sales. Scouting allows us to make a living off of and to support what we're passionate about. It's a great deal harder than buying in the store. Yet, to us, scouting is the best way to ensure our stores remain open while keeping it all enjoyable.

So there it is. Our rather long-winded, complicated reasoning for not buying books in the store. We hope that our little "inside baseball" discussion helps clarify for folks how we make the math work.

G&M

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