Opening a Bricks-and-Clicks Used Bookstore

Part I The Bricks

I recently opened a 1600-square foot used bookstore in Greenville, SC called Fiction Addiction. Per our name, we specialize in fiction hardcovers, paperbacks, audiobooks, adult, children’s and a small selection of new books, with a few biographies and memoirs thrown in. We opened our doors on May 7, 2001 and started selling online a few days later. I was asked to write this article to share my experience of opening a bricks-and-clicks store with IOBA members.jfstorefront

Funding is a key issue when starting a business. The amount you need to start a used bookstore can vary drastically depending on the area you choose, your personal living expenses, and your vision for your business. To date, I’ve invested approximately $50,000 cash in Fiction Addiction and have another $10,000 available for emergencies. We’re now at the point where the shop is paying for itself and supporting me, slightly ahead of my business plan.

I strongly recommend going through the exercise of writing up a business plan to help you address key issues in advance or at least map out your priorities and concerns. If you’re asking for financing, you’ll definitely need one and I had to have one as part of my lease application. One of the most important parts of the plan is identifying and detailing your store concept. Having a firm idea of your store concept (mine is that of a used bookstore with an upscale, new-bookstore feel and the customer service that independents are known for) will make your startup decision-making easier.

Your store name is crucial. My name — Fiction Addiction — combined with the tag line “Used paperbacks and more” tells customers exactly what we carry and yet the name is catchy and generic enough to work for a multi-store chain. Beware names that tie you to a physical location like Main Street Books; what do you do if you end up moving your shop? Your logo is not quite as important, but should also reflect your store concept. Using a book in our logo seemed self-evident, but we went with a stylized, elegant design to reflect our more upscale approach.

In thinking about my store concept, I wanted to have a couple of selling points that I could use to differentiate myself from the other used bookstores in the area. None of the other stores were open on Sundays, so I decided to make that a differentiation and to use “Open 7 days a week” in all our advertising. Sundays are our slowest day but I consider the payroll expense to be a loss leader that brings in new customers.

For my second differentiation, I wanted to have the best science fiction and fantasy section in the area (we currently have over 5500 SF/fantasy books). SF is an interest of mine and historically is hard to find at used bookstores since many SF fans are rabid collectors who never part with their books. So when searching for opening inventory, I bought nearly ever SF/fantasy book I saw.

Inventory turned out to be one of the easiest startup issues to deal with. I had a library of about 5000 books that I decided to give up for the store and then my mom and I simply made a tour of library sales (http://www.booksalefinder.com is a big help for this), thrift stores, and garage sales. We easily accumulated an additional 9,000 books (primarily mass-market and trade paperbacks) in 3-4 months at an average cost of $.35.

To get away from the image of the musty used bookstore, I decided that book condition was very important to my concept and that I couldn’t let category romances overrun my store. I thus made the decision from the get-go not to deal in “category” romances at all unless written by an author who had gone on to bigger things (i.e., Nora Roberts, Iris Johansen, Janet Evanovich). Since I read romance, this was a fairly easy distinction for me to make. Now that our inventory is in the computer, my part-timer is instructed not to take any category romances unless the author is already in the computer. (I’ve since made an exception for Regencies and do have one shelf of them.)

When buying books I avoided ex-library books, moldy books, books with loose pages, books with clipped corners, books with shredding spines or tattered covers, or adult hardcovers without their dust jackets (we take children’s pictorial hardbacks without jackets). If two copies of the same book were available, I took the one in better condition. I was looking for a broad selection (both as part of my store concept and because I wasn’t sure what would appeal to my customers) and so I bought many books I was unfamiliar with but in such cases I tried for Very Good condition or better. For SF/fantasy I did take books with water staining, heavy wear, etc. since I knew how hard it was to find at all.

If you are planning to take trades from customers or use the line “We buy books” in your advertising then I suggest planning to open with little more than half the inventory that your space can support and budget for further buying over the course of your first year. This allows you to add sections and authors as you get a feel for your customer base. For example, we did not start with any Westerns or children’s picture books but added both over time. We’ve grown from 14,000 books to 25,000 in a year and a half and our now working on maintaining this level.

Because I was envisioning a more upscale used bookstore, I knew I wanted to be on Greenville’s East Side as this is an affluent, expanding part of town whose only other bookstore is a Barnes & Noble on a congested road that many people like to avoid. I grew up in Greenville and my parents still live here, which made location hunting easier. If you’re unsure about an area, key indicators to look for are whether the community is growing or not, the average education & affluence, and general interest in books & reading (number of bookstores around, use & funding of local libraries).

I ended up in a small upscale shopping strip with several sit-down restaurants, a drugstore, a take-out pizza place, a kitchen specialty shop, and a children’s hair salon. The strip is easy to get into and out of (avoid locations without a turning lane) and is visible as it is on a main 4-lane commuter artery. Our rent is $11.25 per square foot per year (plus CAM) and I consider it money well spent as we’ve gotten a ton of walk-in customers from the center — people waiting to sit down for dinner, waiting on pizza, waiting on prescriptions, waiting on kid’s haircuts. One of the shops in the center is moving and has found a sweet deal nearby with rent of only $8.00 per square foot but the strip is tucked away and hard to turn into. I might consider something like this in 4-5 years after we’ve built up our customer base, but for the time being I think the higher rent is the best advertising money I could spend.

Our next best advertising source, besides word-of-mouth, has been the Yellow Pages. Greenville has two competing phone books and I advertised in both with slightly different wording and we seem to get calls about equally from the two. We ran a buy one, get one free coupon in a 4-color direct mail piece called The Clipper Magazine that targets upscale residents and has good restaurant coupons and had a great response. Radio was effective but way too expensive for my price points. If I were doing it over again, I would take the money I frittered away on random advertising and put it into an extended newspaper campaign. For our second year, I’m keeping the phone book advertising but transferring the rest of our budget to online advertising (see Part II for more about online advertising).

bookshelvesmore bookshelvesStore concept was an important factor in designing our store layout and fixtures. I knew I would be carrying hardcovers and trade paperbacks and so the shelving had to deal with this. We decided to go with L-footprint wall cases with adjustable shelving (7 hardcover shelves or 9 mass-market ones or any combination you want) and A-frame floor cases with 4 mass-market shelves at the bottom and 2 hardcover shelves at the top. The L-footprint and the a-frame design allow the bottom shelves to angle out, making the books easier to see. The trade-off is that this uses up more of your floor space. I capped the a-frames at 6 shelves because I wanted the store to have an open feel. The shelving is all wood and was built by my father (but you could hire a professional carpenter). Except in the Nonfiction section, our books are shelved alphabetically by author (strict alphabetic order, not just all A’s together). On the wall cases, hardcovers are interleaved with paperbacks, but on the floor cases they run along the top row or two. For the most part all books are shelved upright, but on the wall cases some of our hardcovers are stacked sideways so as to fit more shelves in. A pet peeve of mine is walking into a bookstore and not immediately being able to find what you’re looking for, so we have prominent hanging & wall signage pointing out our various categories. To encourage browsing and keep away from that cramped, musty bookstore look we have a sofa and armchair at the front of the store and benches and two other chairs throughout.

As you see, the majority of our startup decisions we’re easily answered by looking to our store concept and going from there. If you’re having trouble defining your store concept, make a list of all the things that irritate you about other bookstores you’ve been in and see if you can pull together a theme from that.

Part II – Selling Online

Selling online was a major component of my business plan. Building traffic to a bricks-and-mortar store requires time and/or advertising money. The online services — such as ABE, Amazon, Alibris, and Half.com — have already invested that time and money for you and thus listing with them can be a source of immediate income for a new business.

Some bricks-and-mortar stores list only a portion of their inventory online, usually because they started out non-computerized and are only listing their newly purchased stock. I planned to have my entire stock listed in my inventory system so that I could easily answer customer requests (“Do you have a copy of x in stock?”), know whether or not to take another copy of y book on trade, and to track sales trends. Going one step further and listing my entire inventory online gives me two benefits. 1) My local customers are able to browse my website and check inventory levels before coming into the store. 2) My stock is exposed to a much broader customer base and thus turns more quickly than it would otherwise.

I wanted one computer system that would function as both a POS (point-of-sale) and an inventory management system. The choices I investigated were the traditional online book-listing software (such as HomeBase), software specifically designed for used bookstores (such as UBIC), and new bookstore software (such as Anthology). I quickly ruled out the online book-listing software since it was not primarily designed to function as a POS. The used bookstore software UBIC was tempting since it could track customer credit, but it did not have a data export feature. (At the time, a UBIC module to interface with Half.com had been developed, but other exports would have to be individually written by the programmer and would cost extra). I decided to go with the new bookstore software, Anthology, because it offered me a very flexible export feature and the support and reliability of an established, large company. I’ve been very happy with my decision to date.

I hoped in-store sales would account for rapid turnover of many of my mass-market paperbacks, so it seemed impractical to describe the condition of each book of my 10,000+ starting inventory or to create a separate inventory record for each individual book that came through my doors. Instead, I listed my inventory by ISBN number and then indicated how many quantity of each ISBN I had. Some books have been published at different price points using the same ISBN and so I did create a different inventory record for each price point. For older books, I set my SKU to the SBN number, publisher’s book number, etc.

So how to list my books online considering that I had multiple copies in varying conditions listed under a single SKU and no condition notes for even those SKUs with only one copy? I took Powell’s Books for my example. They listed on Amazon and I noticed that all their listings were simply as “Good” with no further description. Since I had been reasonably picky about condition, the majority of my starting inventory was in “Good” or better condition. For the ones that weren’t I set a flag in the record that prevented it from being uploaded to the online listing services (these books do show up on my website, listed as being in “Poor” condition).

Many people are simply looking for a reading copy of a book and are more concerned about price than condition. This is the online market that Powell’s and I are catering to. Obviously, I am missing out on some sales but probably not enough to overcome the sheer cost of entering and maintaining condition information for thousands of books. There are other advantages to this system. First, in many cases I am underpromising and overdelivering, which can lead to some ecstatic online feedback. Secondly, since my in-store customers can handle (and abuse) the majority of my stock, this leaves me some leeway for faults introduced in the time between a book being listed and being sold.

Anthology does have a limited-size field that can be used for condition details. From the beginning I used this to indicate Bookclub editions and the presence or absence of a dust jacket (many of our children’s hardcovers have only pictorial covers). In the last few months I’ve developed an expanded system for listing condition more accurately and including specific condition notes for my rarer and more expensive books.

I started my online sales by listing with Half.com since they only charge commission fees and thus I wouldn’t owe anything unless a book actually sold. Likewise, one could also start with Alibris (but Half.com has a lower commission). I started slowly, listing only a portion of my inventory with Half.com until I’d gotten our packing and shipping procedures down. After I’d been listing my entire inventory with Half.com for a month or two I was better able to judge whether it was feasible to pay the fees to list on ABE, Amazon, etc. Over time, I’ve added online sites one at a time. I now list on 8: ABE, Alibris, Amazon, BookAvenue, BookCellar, ChooseBooks, Half.com, and my own website.

I set prices for my initial inventory using a percentage system: paperbacks were 40% off the original cover price with a minimum of $2.50 for adults and $1.50 for children. My online sales did quite well because unbeknownst to me I had quite a few collectible and hard-to-find books. It wasn’t until I was listing with several sites and would get multiple orders within minutes for a new listing that I decided that I needed to take the time to do price research on new inventory items. Currently if an item comes that I do not have in stock, I do a price check (usually on Amazon). The prices for the majority of my paperbacks are still set by the original cover price, but the rarer ones are priced individually according to the online market. My hardcovers have always been priced individually; our current hardcover minimum is $6.00.

When the store is quiet, I can often pull orders and wrap by myself. Luckily, those days are getting fewer and farther between so I have a part-timer who comes in and helps and then takes the packages to the post office. We ship six days a week and average 20 shipments per day of 30 or so books. We ship both domestically and internationally. We use the Simply Postage postage meter and the USPS shipping assistant. We send most orders for single paperbacks via first-class mail with the book wrapped in a layer of bubble-wrap, then brown Kraft paper. If shipping overseas or a more valuable paperback, I may first waterproof the book by enclosing it in a bag I buy from a local comic book store. For hardcovers we’ve experimented with various size boxes purchased from a local packaging company. We’re currently thinking of going to 10 x 7 1/4 x 5″ h boxes scored to fold down to varying heights as they will hold a single-stack of bubble-wrapped hardcovers or two stacks of mass-markets.

It is easier to build an ongoing customer relationship in person than online. In-store customers have a limited geographic area that they can feasibly shop in and that geographic area will contain a limited number of used bookstores. If your store has good customer service, a decent selection, and fair pricing then most initial in-store customers will return at some point – whether twice a month or twice a year. Online customers, however, have few geographic limitations and thus your online store is faced with nearly unlimited competition. Occasionally I feel like I get an online order because I’m the closest store to the customer and they hope that will result in a faster delivery time, but usually location (except as it impacts S&H costs) plays little or no role in online buying. What little online customer loyalty exists is usually to the larger brand name of Amazon, ABE, Alibris, etc. Some online customers don’t even realize that your store is a separate entity from the listing site.

In-store customers also tend to purchase more books at a time than online customers. In-store customers will often walk in and say, “I just discovered author x, give me everything you have by him” and walk out with 15 books. Whereas an online customer is only looking for the 2-3 books by the author that they haven’t been able to find in their local used bookstore.

Some online customers can be developed into loyal, repeat customers. For instance, many avid readers live in small towns without a local bookstore. Or perhaps you have a great specialty selection that is going to bring customers back to you over and over. But first your store needs to have its own independent website so as to enforce your brand identity and to eliminate commission fees on those sales and thus boost your profit margin. My site is hosted by Chrislands, which offers a very economical, customizable, easy-to-use solution. Your site should also allow customers to sign up for your mailing list.

I use the online listing services as customer lead generators. When I ship an ABE, Amazon, BookAvenue, etc. order I email the customer to let them know that the book has shipped and give them their tracking number if applicable. At the end of the email I encourage the customer to visit my website and sign up for my mailing list so as to receive coupons and sale notices. Unless prohibited by the listing site, I also wrap a bookmark containing my website URL in with the customer’s order. Once a month or so, I send a coupon (i.e., 20% off if you order 5 books or more) out to my mailing list. To send my coupon email, I use GroupMail Pro software. Make sure to always include unsubscribe instructions on any email you send out.

I also spend $100-200/month on online advertising of my site via OvertureAh-ha and MyPhrases. I’m going through the setup to list on Froogle — Google’s new product search engine.

Over the fiscal year 2002, Fiction Addiction did approximately $123,000 in top-line (i.e., before deducting commissions) sales including shipping & handling reimbursements. Excluding S&H, online sales accounted for approximately 32%. In 2001, online sales were 37% of the total, so our ratios have stayed pretty steady. In terms of dollar amounts, our June-December 2002 online sales saw an 8% increase over June-December 2001.

Our in-store and online sales channels complement each other in many ways. The wider reach of the web allows me to turn my inventory more quickly, sell collectible books at higher price points, and sell a wider range of titles than I would otherwise. In turn, this means that I can offer local customers a wider selection and accept more trade-ins which encourages them to spend more money in my shop and to give me first dibs on any books that they are looking to sell. Being an online-only shop would take away the customer contact that I enjoy and my online sales are not currently profitable enough to completely support me. By combining the two channels, however, I’ve reached profitability in only a year and a half.

Jill McFarlane

 fictionaddiction@juno.com

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