Trade Discounts: Good for One and All

Hey, booksellers….c’mere. Yeah, you….and you….and especially you. Sit down here for a minute. I want to have a word with you all, about trade (dealer-to-dealer) discounts: why you should all be giving them, and why doing so should make you nothin’ but hap-hap-happy. There are three simple reasons for this:

(1) It’s good for your business.

(2) It’s good for our business.

(3) It’s good for the soul.

I come before you today, brethren, to testify to these, my articles of faith. So gather ‘round, and hear the story of how I came to see the light….

Internet-spawned booksellers like me, who (for any number of reasons) haven’t had the opportunity to serve a true apprenticeship in the trade, have had to find other ways of learning about its long-standing practices and traditions….traditions that IOBA, as part of its mission, has pledged to honor and perpetuate in the evolving bookselling landscape. Many (again including me) have turned to online discussion groups like the ABE Booksellers Forum, available to all registered sellers on AbeBooks, in search of education and community. There’s a lot of “noise” in such places, to be sure, but if you let the noise keep you away you’re missing out, because just beneath the distracting (sometimes even intimidating) surface layer of discussion and debate lies an incredibly rich knowledge-base about the ways and means of modern-day bookselling. Many participants are fresh to the trade and still learning, but there are also many seasoned veterans in the room, most of them remarkably generous in sharing their accumulated wisdom and expertise.

I refer to the ABE Forum because it’s an excellent place in which to observe the perpetual psychic struggle regarding the topic at hand. The questions surrounding the issue of trade discounts are particularly difficult for many “newbie” sellers to come to grips with, but it’s not just them I’m writing this for. It’s an issue that affects us all — right in the pocketbook — and I”m trying to do my bit to get everybody “on the same page” about it. So even if you’re a veteran (grizzled or otherwise), and have had your discount policy set in stone for a long time, I urge you to keep reading….and, just maybe, to take another look at the matter.

The questions about trade discounts that I most often see asked range from the fundamental (“Do you give discounts to other sellers?” “Is the whole concept obsolete?”) to the practical (“How much is ‘standard’?” “How do you decide who qualifies?”). And I’m sad to say that the ensuing discussions inevitably bring out sentiments along the lines of the following:

“I don’t like selling to other dealers, because they only want to cherry-pick my stock, and take my best books — the very ones that I’ve got the best chance of selling myself, at full price.”

“Dealers who buy from my stock are already taking advantage of me, and I resent being expected to also give them a discount!”

“I can’t afford to give discounts, because my profit margins are too low.”

“There are 20,000 ‘book dealers’ on the Internet, and why should I give a discount to a complete stranger who I’ll probably never buy a book from myself?” (The short version: “What’s in it for me?” Shorter yet: “Reciprocal, phooey!”)

All of the above, I believe, are simply wrong-headed, knee-jerk responses to the whole issue, put forth by those who either lack the perspective that comes with experience, or just haven’t given the matter the careful thought I think it deserves. Those who think about discounts in such negative, defensive and self-interested ways are missing something quite fundamental…and, I would also contend, poisoning their own wells in the process.

My frontal assault on this mindset begins with a single basic assertion: Other booksellers are not The Enemy. In a narrow-minded sense, yes, they’re your competitors, but in most important ways they are your professional colleagues, and the majority of them are facing pretty much the same challenges that you are. Therefore, I submit that our “default mode” towards one another should be empathy, not antipathy.

Consider the following scenario, which I think fairly represents the way in which too many booksellers think about discounts: Some Other Bookseller (SOB, for short) finds a book in your inventory that you’ve priced at $25. He buys it (discounted or not, it hardly matters), and turns around and lists it for $250. You conclude that you had “made a mistake” (by not pricing the book higher), and that the SOB has “taken advantage of you” (or, less charitably, “ripped you off”). But consider:

“I made a mistake.” Well, probably so. It’s certainly possible, through laziness or carelessness or ignorance (or some combination thereof), to put the “wrong” price on a book — and I’d be very surprised if we hadn’t all done this, at one time or another. (I sure have.) But here’s the good news: laziness, carelessness and (especially) ignorance can all be corrected! It’s a cliché, but that’s because it’s true: we learn from our mistakes. So the real issue here is not whether you’ve made a mistake, but rather what you’re able to learn from it.

“I’ve been taken advantage of.” Also true enough, but it’s not much more than a technicality, really — and you make a grave error if you characterize it as any sort of “bad conduct” on the part of the other dealer. It really boils down to one of two things: (1) the other dealer knows more than you do about that book, or (2) the other dealer has a business model and/or an established clientele that permits him to get (or at least ask) a higher price for that book than you can. How you react to these facts of life is up to you. You can be bitter and resentful about being “ripped off,” or you can admit that you’ve simply had an encounter with a more knowledgeable and/or experienced bookseller than yourself, someone who’s a little bit better at the game than you are…so far. Unless you truly think you’re the Smartest and Bestest Bookseller in the Whole Wide World, this shouldn’t be too bitter a pill to swallow — and it still leaves you in complete control over what you do about it.

I am not talking through my hat here, by the way. I’ve gone through this process myself, and have struggled with the same negativity I’m now trying to warn you against. Some years ago, I had a pretty nice copy of an uncommon book listed for $125, and a genuine Big Shot Book Dealer bought it (at a discount). It was his first-ever purchase from me, and I felt pretty darn good about it — until a couple of months later, when Mr. BSBD’s lovely printed catalog arrived in my mailbox, and right there on page 13 was “my” book…..now marked up to $600! (And worse yet, the book was in a subject area in which I’d imagined I had some specialist knowledge. Ouch, baby!) “Holy crap,” I thought, “what did I miss about this book?” It took a little contemplation before the little light-bulb went on, and I realized that I hadn’t “missed” anything, so much as I had just lacked the vision, if you will, to recognize the book’s full profit potential. And then I considered this: I had bought that book (yes, from another dealer, online) for $15, and thus hadn’t made out so badly by selling it for $100. (In other words, I was kinda smart, but the guy who bought it from me was a little smarter.) And ultimately, what I took away from the transaction was worth far more than even the $85 profit:

(1) Another reminder (you can’t have too many) that knowledge is a powerful thing, that can even occasionally be leveraged to make money.

(2) A cautionary note to not get complacent about what I think I know (i.e., my presumed “expertise” in this subject area).

(3) An enhancement of my knowledge in that important-to-me subject area. (We learn one book at a time, right?)

(4) The idea that an attractive presentation in a printed catalog can trump the Almighty Internet as a selling methodology. (I should mention that Mr. BSBD did in fact sell that book at his price, in less time than I’d had it listed at my price.)

(5) The start of a professional relationship with Mr. BSBD, who, when my own first printed catalog landed in his hands, made a substantial purchase therefrom, and has subsequently done more business with me, and has spoken well of me to others. (And if you don’t think that last thing ultimately turns into dollars, you are really missing something.)

Stack all that up against the $25 I supposedly “lost” by discounting the book, and I’d say I came out just dandy. But (you might think) couldn’t it also be said that I’d “lost” $500 by not figuring out, myself, that this was “really” a $600 book? Well, no. That sort of calculation is pure fantasy, to be avoided at all cost; as Johnny Mercer wrote, you’ve got to ac-cen-tu-ate the positive. Any perceived “loss” in such a situation is just an illusion — but the gains, as enumerated above, are very real.

Now let’s consider this shocking idea, afoot in the land, that dealers are constantly scanning other dealers’ stock, looking for stuff they can buy and re-sell at a profit. Well, guess what? It’s true! Such intramural commerce, often on naked display at your better book fairs, is and always has been a large part of what makes this business go — a fact of life (and commerce) that might not be so readily apparent from the somewhat isolated perspective of the online-only seller. There is a “food chain” in the used/rare book trade, and like it or not, you’re part of it. Or, if I can mix my metaphors, think of the business as a big lake: a few dealers float along on the surface (or levitate above it!), some troll in the muck at the very bottom, but most of us paddle along somewhere in the vast middle, trying to keep our heads above water (i.e., to not drown). But there’s a lot of room in the middle of that lake to position yourself, and although there’s nothing wrong with being ambitious and wanting to move up, it’s also important to understand just where you are at the moment, and how to make it work for you.

And in my opinion, one of the very best places to be is within the field of vision of the people above you in the aforementioned food chain. Don’t get hung up on whether or not they’re “better” than you; try, instead, to understand that other dealers — especially those who are more successful than you — can be among your very best customers. This is a total no-brainer: these people buy lots of books, all the time, and they’re the very ones you want to be scanning your online listings, frequenting your shop (if you have one), heading to your booth early in the book fair, and just generally paying attention to you and your stock. And when they want to buy something from you, it’s in your interest to treat them well, with a decent discount as an element of that. This is ever-so-much-more-so when it’s their first purchase from you, because it presents your best chance to make it the foundation stone for something bigger and better: a mutually respectful and mutually beneficial business relationship. The best traffic-flow in Bookselling City is on the two-way streets.

(By the way, if anyone has any lingering thoughts in the “being taken advantage of” line, consider this: when that dealer buys that book from you, it doesn’t necessarily follow that the markup/hefty profit scenario is a “sure thing” for him. In fact, in many cases his purchase is a gamble — or, if you prefer, a quantified expression of his confidence in his ability to turn that book for a profit. I’ve also made sales, for instance, where the dealer has subsequently jacked up the book’s price considerably — and has not, to date, re-sold it. So who’s ahead of the game? Me, who bought the book for $20, marked it up to $150, and sold it in a month for $120? Or Dealer Z, who bought it for $120, re-priced it at $800…and still has it, a couple of years later? I don’t mean to imply that Dealer Z was dumb, or made a bad deal — he just had more confidence in the book than I had, and possibly more cash in his pocket at the time he bought it. More power to him, I say — but from my p.o.v., it makes no sense to be anything other than 100% happy about that sale. To look at it another way: my gamble (albeit at smaller stakes) has paid off, and if Z wants to tie up his cash and double-down on the book, who am I to be upset about that, in any way?)

OK, enough with the philosophizing and hypothesizing. To bring the focus back to more practical matters, I’ll now take a crack at actually answering some of those “newbie” questions I referenced earlier:

“How much is ‘standard’?”

Opinions and practices vary, of course — U.K. dealers seem to think somewhat differently than American dealers, for instance — but as far as I’m concerned anything less than 20% is just weak sauce. I would respectfully suggest that those who say that 10% is “good enough” or is “all I can afford” just haven’t done the math. If you sell a book through a listing service like ABE or Amazon or Alibris, you are already giving them about 15%-20% percent of your take on each book, in the form of commissions and monthly fees — so how on earth can you justify doing less for a colleague? (And, sorry, I don’t give much weight to the “too-small profit margin” argument, either. If that’s your primary objection to giving a discount, it suggests to me that you’re paying too much for your stock — but that’s another article.)

“How do you decide who qualifies?”

I highly recommend against any sort of “litmus test” and, especially, that you not discriminate in any way against one “class” of bookseller. This comment is directed mostly to any open-shop owners out there who might still be harboring some ill-will towards online-only dealers. (You know who you are.) Here’s the thing, though: there is virtually no upside to making any visitor to your shop feel like a second-class citizen. Believe me: you will lose more than you gain, by a long shot. I am also not a big fan of the “reciprocal” requirement; it’s not that I think it’s unreasonable, only that I’d like to promote a world in which it’s unnecessary, in which all booksellers give unbidden and unencumbered discounts to all other booksellers. (As John Lennon had it: you may say I’m a dreamer, but I’m not the only one.)

“Is the whole concept obsolete?”

Absolutely not! (Well, come on, what did you expect me to say?) Selling books at a discount to your colleagues in the trade is a good thing, all around. Let’s not forget that dealer-to-dealer sales are direct sales — which, in addition to being commission-free, are the building blocks for a network of trusted colleagues and friends. And anything we can do to encourage direct commerce amongst ourselves contributes to the important goal of keeping our businesses out of the clutches of Amazon, et al. This is exactly what the “I” in IOBA is all about.

At the top of this article, I made the point that trade discounts were good for three things: your business, our business, and the soul. I’ve covered the first two points, but that third one…..well, I don’t want to get all mystical on you, but I do believe that whatever you put out into the world will eventually come back to you, in some form or another, and that it can also benefit a lot of other people while on its journey. Call it what you will — goodwill, positive energy, karma, good vibrations, even Love — but I guarantee that you’ll feel better knowing that it flows from you. And one of the very best ways to put that kind of energy out into the bookselling world is with a generous and open-handed trade discount policy. I like to think of it as The Twenty-Per-Cent Solution.

I will leave you, then, with the Secret Word, which I lobbed at you in the very first paragraph. That word is “happy.” When you make a discounted sale to another bookseller, you can be happy to sell the book, happy to make a little profit, happy for the opportunity to make a new customer (or make life a bit better for an established one), and happy to help out a colleague who’s trying to make a buck, just like you are.

Think of it….all that happiness, just flying around. And it’s so simple for you to claim your fair share of it….at a discount!

[Editor's note: For more on trade discounts, see our related article How to Get a Trade Discount, in Six Easy Lessons.]