The Psychology of Acquisition: Turnover and the Maximization of Profits


Maria Bustillos

Maria Bustillos

“The behavior of hoarding”, according to the Los Angeles County Department of Mental Health Hoarding Fact Sheet, “is seen in various illnesses.” Online mental-health resources class hoarding variously as a subset of Obsessive-Compulsive Disorder (OCD), of General Anxiety Disorder (GAD), and as a Social Phobia. The latter is the most convincing, if you ask me. I and the many other victims I have met are not so much anxious to keep stuff, as they are to avoid dealing with it .

Just as an aside, there is a twelve-step program for “clutterers” (Clutterers Anonymous) with a truly terrifying quiz to help you identify the disorder:

  • Do you have more possessions or items in your life than you can handle comfortably?
  • Do you find it difficult to dispose of many things, even those you haven’t used in years?
  • Do you rent storage space to house items you never use?
  • Do you spend time looking for things that are hard to find because of all the clutter?
  • Do you find it easier to drop something than to put it away, or to wedge an object into an overcrowded drawer or closet rather than find space for it?
  • Do you bring things into your house without establishing a place for them?
  • Is your clutter causing problems in your relationships?
  • Are you embarrassed to have visitors because your home is never presentable?
  • Do you hesitate sharing about this problem because you are ashamed of your cluttering?
  • Are you constantly doing for others while your own home is out of order?
  • Do you miss deadlines or abandon projects because you can’t find the paperwork or material to finish the work?
  • Do you sometimes get buried in details, making projects take much longer than is really necessary?
  • Do you procrastinate about cleaning up because you believe you must do it perfectly or you won’t do it at all?
  • Are you easily side-tracked, moving from one project to another without finishing any of them?
  • Do you have problems with time management and estimating how long it takes to do things?
  • Do you believe there is all the time in the world to clean your house, finish those projects, and read all those piles of old magazines?
  • Do you use distractions to escape from your clutter?
  • Have you tried to clean up from time to time but find yourself unable to stick with it?
  • Does the problem appear to be growing?

Oddly enough, though there is a specific name for the fear of fog (Homichlophobia), I have been unable to find a particular name for the quite common disinclination to part with valuable objects. I would venture to say that this fear is present in most book dealers to some degree, however small. Which would go a certain distance towards explaining the fact that, while nearly every book dealer finds it easy and pleasurable to acquire books, most find it less easy, and even somewhat painful and unpleasant, to sell them.

This is where peniaphobia, the fear of poverty, sensibly and nobly leaps into the breach and saves the day. Additionally, the average book dealer is also provided with an ample number of equally worthy and useful phobias, such as agateophobia (fear of insanity), clithrophobia (fear of enclosure) and atephobia (fear of ruin).

This long preamble is by way of introducing the subject of turnover. The dealer in out-of-print books is in a somewhat different position from that of other retailers, for he does not simply buy his wares from a wholesale supplier and pop them onto the shelves of his shop. The acquisition of his inventory is an arcane process, full of mystery and personal drama; of knowledge painstakingly gathered and stored; of passion, intelligence and daring. Another element which makes the plight of a rare book dealer different from that of other retailers is the fact that much (though not all) of his stock is in fact silently appreciating in value.

The psychological moment of such nuances in the context of operating a retail business can scarcely be overstated. And yet, a dealer in rare books is a retailer like any other; and turnover is still what retail is all about.

Inventory Turnover = Sanity 
The book dealer is faced with limits on many resources, but the ones he really needs to watch are two: space and time. If these two are husbanded with order and method, the rest, including money, will take care of themselves.

Given that the amount of shelf space is limited, book dealers can and should arrange their affairs so that every inch of shelf space produces the maximum profit. Briefly stated, any book that won’t sell should be removed with dispatch and according to a set schedule, and another more productive book should take its place. In classic retail terms, this means putting stuff on sale after it’s been sitting around for period. Book dealers tend not to follow this practice, but it is a doozy for maximizing profits, because profits for an out-of-print book dealer are currently limited mainly by the number of books available for purchase—a figure which has suddenly become almost without limits. Indeed, the Internet, by perfecting the rare book markets, has made it possible for book dealers to take advantage of what ordinary retailers have known all along: it’s better to make a sale now and reinvest the profits and the free space than to invest in a lot of inventory that doesn’t make a profit until much later, or that doesn’t sell at all.

If you already have all your books available, either online or in an open shop, our congratulations. We venture to wager that your business is profitable, your bank account pleasantly swollen, and your evenings long, relaxed, and finished off with Valrhona chocolates and maybe a little port.

Inventory Turnover = Profit 
A handy way to consider your investment in inventory is to gauge dollars spent on inventory against dollars spent on an ordinary investment, like a T-bill. Say you invest $10,000 at 6% for two years. At the end of year one, you have $10,600; at the end of year two, $11,236. Compounding is an easy illustration of the time value of your return on inventory investment. In other words, if you can sell a book faster, you can reinvest the upside in more inventory, more T-bills and so on, and take advantage of even more upside, faster, etc.

Book dealers who can learn to minimize monthly carrying costs, improve turnover rates and lessen the ratio of dead stock will be more profitable book dealers. Here are a few easy steps to take to help increase turnover ratios (adapted, somewhat, from my previous life as a designer of overpriced tchotchke):

Get more stock online 
The larger the proportion of your stock that is “live” and available for purchase online, the better your business will be. Consider skipping that next library sale in favor of an extra day or two of cataloguing per month. Tedious? Bah! Tell me that from the beach at Wailea, where you’ll soon be sipping something frothy from a coconut, and being fanned by a few love slaves.

Reduce prices on dead stock 
Again, the Internet has changed the way book dealers do business. Your results may vary, but I think it is reasonable to say that, except for very high-end material, no book should last above three years on your shelves in the online environment (remembering, again, the T-bill factor). Spend some time researching the going rates on your oldest stock, and prune accordingly. Every inch of shelf space is there to create profits for you!! Consequently, every bit of chaff should be removed.

Create a sale catalogue 
A printed Sale Catalogue with attractive prices, and emailed or snail-mailed to your customer list, will help free up cash and precious shelf space.

Sell on alternative venues

Study alternative venues such as Tomfolio, Used Book Central, Half.com, eBay and, of course, Popula. Many of these growing sites have a unique customer base and can provide a valuable supplement to your regular sales venues. Try them out by uploading your oldest inventory … you might be surprised at the results.

Design for Selling 
Analyze your previous results, so you can plan for the future. Make sure you take current trends into account. What has changed? Have you new competitors? More or less storage space to pay for? How much more do you need to produce in order to help pay the wages of a new employee? Try to develop a plan based on previous years’ results. That way you’ll be less likely to overspend, and more likely to achieve target levels.

In closing, any book dealer could do worse than study a few basic retail books for ideas on how to increase profits.

Salud, amor y pesetas, y tiempo para gozarlos, everybody.

The Standard: The Journal of the Independent Online Booksellers Association

Check out the Independent Online Booksellers Association Website