Notes:
Re the Figures:
      Titles for all Figures appear in the Word file. When you slot the
PowerPoint graphics into th...
[back cover]


[head] The first comprehensive report on used-book sales


How big is the used-book market and how fast is ...
Published by the Book Industry Study Group, Inc., the publishing industry’s trade
association for policy, standards, and r...
[Title Page – Same copy as front cover]
Used-Book Sales
A Study of the Behavior, Structure, Size, and Growth of the U.S. U...
[Copyright Page]
© 2006 by Book Industry Study Group, Inc.
All rights reserved. No part of this report may be used or repr...
[Note to typesetter: Bold and indents indicate heading levels not type spec choices; if
you like, we can redo to your spec...
Online
        Online Marketplaces
        Online Retailers
        Online Specialists
   Other Locations
        Librarie...
Prices of Used Books vs. New Books
        Formal Buy-Back Program
        Sourcing for Used Books
        Impact of Used ...
[new page]

Figures
[need page numbers]
Figure 1. U.S. New- and Used-Book Consumer Expenditures and Units
Figure 2. 2004 U...
Figure 40. Amount Spent on Books in Last 12 Months
Figure 41. Mean Spending per Book
Figure 42. Respondents Who Purchased ...
Figure 84. 2004 U.S. Used-Book Units, Sales, and Average Sales Price Summary
Figure 85. U.S. Used-Book Market by Channel—U...
[Financial Sponsors page]


[head] Sponsors
The following companies contributed financially to this study:
[logo] HarperCo...
the professional interests of independent publishers. To this end, PMA provides
cooperative marketing programs, education,...
[Project Partners Page]


[head] Partners
Seven companies that sell used books online provided valuable data for this stud...
Monument Information Resource. MIR has been a resource for higher education
publishing professionals in need of accurate d...
[Acknowledgments Page]


[head] Acknowledgments


Research and analysis: InfoTrends, a global market research and consulti...
Introduction

Over the past few years, anecdotal reports and studies of parts of the used-book universe
have fueled the be...
Abebooks.com, Alibris.com, Amazon.com, Barnes & Noble.com, Biblio.com, Bowker,
eBay.com, MIR, and Powell’s delivered inval...
Objectives
This study provides detailed insights into the size, structure, and behavior of the used-
book market in the Un...
•   Antiquarian and collectible
            o Antiques and collectibles
•   Education
            o Education
            ...
o Transportation
           o Travel
•   Religion
           o Religion
           o Body, mind, and spirit
•   Profession...
Methodology
Primary Research
InfoTrends used a variety of industry resources and conducted extensive primary research
to c...
To generate data from consumers, InfoTrends designed and managed another structured
survey. The sample for this was drawn ...
Executive Summary
The book industry continues to go through a significant transformation as the Internet
changes the ways ...
•   Consumers express high satisfaction with their used-book experiences. Nearly 75
    percent would recommend to friends...
Conclusions
The used-book market is in the midst of a rapid growth stage and will undergo significant
transformation over ...
Used-Book Distribution Channels
Used books are distributed through thousands of locations, ranging from highly
automated o...
The online marketplaces also give local used-book stores access to a much wider market
than they could otherwise reach. Co...
For most of their Web-based sales of used books, new-book stores use third-party
marketplaces (78.6 percent of their Web-b...
Course packs              $0.22 billion


[Footnote]* Figures are for North America (U.S. and Canada).


Because NACS defi...
National Bookstore Chains
National and large regional bookstore chains (e.g., Barnes & Noble, Borders, Books-A-
Million) g...
•   Professional booksellers and consumers can easily list their books using automated,
    Web-based tools tied to multip...
•   a set of listing tools for the bookseller
•   a search tool for the consumer
•   a shopping basket
•   a transaction e...
Alibris, Emeryville, CA (www.alibris.com); 10,000 booksellers
Amazon, Seattle, WA (www.amazon.com)
Antiqbook, Europe (www....
used-book revenue from the sale of antiquarian and collectible books than used-book
stores or new-book stores.
The number ...
Two recent trends involve having in-library stores with shelves of used books for sale,
and disposing of large quantities ...
their books in the future. However, given the relatively low importance of books in their
overall inventory, we do not exp...
Bookseller Survey Findings
Methodology
To generate insights on used-book sales from local used-book stores and independent...
Although the bookseller survey did not target college stores, five college textbook stores
responded. Based on their profi...
Units
Annual unit sales are consistent with annual revenue. Independent new-book stores have
the highest annual unit sales...
editions, rare books, and signed copies). At independent used-book stores, collectibles
account for nearly 22 percent of u...
By projecting these survey findings to the population of new-book, used-book, and online
booksellers, we came up with a ro...
Inventory
Independent used-book stores had a mean inventory of just over 43,600 new and used
books; the comparable figure ...
Browsing vs. Targeted Purchasing
Many bookstores are designed to give customers a relaxing and satisfying experience
while...
copies. Note that these figures reflect booksellers’ perceptions and not actual transaction
data.


           Figure 27. ...
Impact of Used Books on Booksellers
InfoTrends asked booksellers to assess the impact of used-book sales on numbers of
cus...
In terms of overall revenue, most independent used-book stores (55 percent) and online
specialists (71 percent) indicated ...
Consumer Survey Findings
Methodology
InfoTrends designed and managed a structured survey with consumers and higher-
educat...
Summary of Findings

Annual Book Purchasing
Students reported purchasing an average of 15.1 books during the previous twel...
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  1. 1. Notes: Re the Figures: Titles for all Figures appear in the Word file. When you slot the PowerPoint graphics into their proper places, please use the titles in the Word file and remove the temporary titles in the PowerPoint file. Note that Figures include tables already in the Word file, which is why the Figure numbers in the PowerPoint file are not always sequential. Because the copy editor couldn't find a way to make changes in the in-text tables, she left notes (highlighted) underneath them about what needs fixing. Please make these corrections. Re the text: Boldface, itals, bullets, asterisks, etc. in front matter and elsewhere are there simply to mark different kinds of content. Please spec as you see fit. Because the copy editor couldn't find a way to make changes in the in-text tables, she left notes (highlighted) underneath them about what needs fixing. Ideally, these changes will be made before the material goes to the typesetter. Otherwise, NMSG should make them. *********************************************************************** * [copy for cover, title page and (as abbreviated) half-title page] [front cover] [title] Used-Book Sales [subtitle] A Study of the Behavior, Structure, Size, and Growth of the U.S. Used-Book Market [additional cover lines.] Prepared for the Book Industry Study Group by InfoTrends, with data provided by Abebooks, Alibris, Amazon, Barnes & Noble.com, Biblio, eBay, and Powell’s, as well as data provided by booksellers and consumers through surveys created and conducted for this report. 1
  2. 2. [back cover] [head] The first comprehensive report on used-book sales How big is the used-book market and how fast is it growing? To find answers to questions like these, the Book Industry Study Group, Inc., arranged to collect sales data from the leading online book vendors and to perform extensive primary research with hundreds of independent booksellers and thousands of consumers. This study reveals and analyzes the results of BISG’s wide-ranging research. Used-Book Sales is designed for publishers, booksellers, authors, agents, analysts and media people who focus on publishing, and segments of the public. Its pages provide: • estimates of the total size of the used-book industry • figures on the growth of used-book sales • information about the impact of used-book sales on publishers and traditional booksellers • analyses of used-book distribution channels, including: Used-book stores Independent new-book stores College stores National bookstore chains General retailers Online marketplaces Online retailers Online specialists Libraries Thrift shops and resale stores Book fairs and yard sales In-depth analysis of used-book purchases and used-book sales by students and by other consumers. [bisg logo] 2
  3. 3. Published by the Book Industry Study Group, Inc., the publishing industry’s trade association for policy, standards, and research. 3
  4. 4. [Title Page – Same copy as front cover] Used-Book Sales A Study of the Behavior, Structure, Size, and Growth of the U.S. Used-Book Market Prepared for the Book Industry Study Group by InfoTrends, with data provided by Abebooks.com, Alibris.com, Amazon.com, Barnes & Noble.com, Biblio.com, eBay.com, and Powell’s, as well as data provided by booksellers and consumers through surveys created and conducted for this report. 4
  5. 5. [Copyright Page] © 2006 by Book Industry Study Group, Inc. All rights reserved. No part of this report may be used or reproduced in any manner whatsoever without the express permission of the Book Industry Study Group, Inc (www.bisg.org; 19 West 21st Street, Suite 905, New York, NY 10010). Authorization to photocopy items for internal or personal use of specific clients is granted by the Book Industry Study Group, Inc., provided the appropriate fee is paid directly to Copyright Clearance Center, 222 Rosewood Dr., Danvers, MA 01923. For those organizations that have been granted a photocopy license by CCC, a separate system of payment has been arranged. The fee code for users of Transactional Reporting System is 0-940016-87-7/2005/.$.75+.50. The conclusions and opinions expressed herein are solely those of the authors and not necessarily those of the Book Industry Study Group, Inc., its officers and members. Used-Book Sales Printed in the United States [ISBN 0-940016-87-7] Book Industry Study Group, Inc. www.bisg.org info@bisg.org 5
  6. 6. [Note to typesetter: Bold and indents indicate heading levels not type spec choices; if you like, we can redo to your specs] CONTENTS [need page numbers] Sponsors Partners Acknowledgments Introduction Objectives Definitions Methodology Primary Research Secondary Research Used-Book Market Sizing Executive Summary Used-Book Market Size and Growth Conclusions Used-Book Distribution Channels Bookstores Used-Book Stores Independent New-Book Stores College Stores National Bookstore Chains General Retailers 6
  7. 7. Online Online Marketplaces Online Retailers Online Specialists Other Locations Libraries Thrift Shops and Resale Stores Book Fairs Yard Sales Bookseller Survey Findings Methodology Sample Profile Summary of Findings Size of Company Revenue Units Hardcover vs. Paperback In-Print vs. Out-of-Print Units by Sales Method Inventory Returned Books Browsing vs. Targeted Purchasing Availability of Used Books Impact on Sales of New Books 7
  8. 8. Prices of Used Books vs. New Books Formal Buy-Back Program Sourcing for Used Books Impact of Used Books on Booksellers Impact of the Internet on Booksellers Consumer Survey Findings Methodology Sample Profile Summary of Findings Annual Book Purchasing Profiles of New- and Used-Book Customers Spending by Channel Shopping Frequency and Habits Availability of Used Books Used-Book Spending by Category Spending on Used Books Instead of New Versions Used-Book Spending by Format Book-Shopping Habits and Preferences Price Sensitivity Worst Condition of Used Book Willing to Purchase Overall Value of Used Books Satisfaction with Used-Book Purchases Students and Consumers Selling Used Books Considered Selling Used Books Used-Book Market Size New- and Used-Book Unit and Dollar Sales by Category Used-Book Unit and Dollar Sales by Category Used-Book Unit and Dollar Sales by Channel Used-Book Unit and Dollar Sales via Online Channels Used-Book Unit and Dollar Sales via Bookstores Used-Book Unit and Dollar Sales via Other Locations Average Sales Prices Used-Book Five-Year Growth Estimate Conclusions Used-Book Market Battles Major Data Sources About BISG 8
  9. 9. [new page] Figures [need page numbers] Figure 1. U.S. New- and Used-Book Consumer Expenditures and Units Figure 2. 2004 U.S. Used-Book Market by Category—Units and Sales Figure 3. U.S. Used-Book Market by Channel—Units (million) Figure 4. U.S. Used-Book Market by Channel—Revenue ($ million) Figure 5. U.S. Used-Book Store Population—Physical Stores Figure 6. Independent Used-Book Store Profile Figure 7. Independent New-Book Store Profile Figure 8. Bookseller Respondents by Category Figure 9. Bookseller Respondents by Annual Revenue Figure 10. Bookseller Respondents by Number of Locations Figure 11. Percentage of Bookseller Revenue by Category Figure 12. Annual Book Sales—Units Figure 13. Used-Book Seller vs. New-Book Seller Average Sales Price Comparison Figure 14. Percentage of Bookseller Sales—Units Figure 15. Percentage of New-Book Units by Category Figure 16. Percentage of Used-Book Units by Category Figure 17. Percentage of Units, Hardcover vs. Paperback Figure 18. Percentage of Used Units, In-Print vs. Out-of-Print Figure 19. Percentage of Units by Sales Method Figure 20. Percentage of Used Books Sold via Third-Party Sites by Source Figure 21. New- and Used-Book Inventory Figure 22. Months Book Is Kept in Store or Warehouse Before Removing Figure 23. Percentage of Online Book Orders Returned by Customer Figure 24. Customers Browse Used Books or Have Title in Mind Figure 25. Months from New Book Being Published to Availability of Used Book by Type of Bookseller Figure 26. Months from New Book Being Published to Availability of Used Book by Annual Book Sales Figure 27. Effect of Used Book on Sales of New Book with Same Title Figure 28. Used-Book Price as Percentage of New-Book Price Figure 29. Have Formal Program for Buying Back Used Books from Customers Figure 30. Percentage of Used Books Acquired by Source Figure 31. Impact of Sales of Used Books on Company Figure 32. Impact of Internet on Company Figure 33. Consumers by Age Figure 34. Consumers by Gender Figure 35. Consumers by Level of Education Figure 36. Consumers by Employment Status Figure 37. Consumers by Household Income Figure 38. Consumers by Area in Which They Live Figure 39. Number of Books Purchased in Last 12 Months 9
  10. 10. Figure 40. Amount Spent on Books in Last 12 Months Figure 41. Mean Spending per Book Figure 42. Respondents Who Purchased Used Book in Last 12 Months Figure 43. Profile of Book Customers by Key Demographics Figure 44. Profile of Nonstudent Book Customers by Key Demographics Figure 45. Considered Purchasing Used Book in Last Year Figure 46. Reasons for Not Purchasing Any Used Books Figure 47. Change in Type of Books Purchased Figure 48. Percentage of Spending on Books by Source—Students Figure 49. Percentage of Spending on Books by Source—Nonstudents Figure 50. Number of Times Books Purchased over Last 12 Months Figure 51. Books and Spending per Purchase Figure 52. Number of Times Respondent Has Purchased Books by Category Figure 53. Bought Used Book and Later Bought New Book by Same Author Figure 54. Price Comparisons—Students Figure 55. Price Comparisons—Nonstudents Figure 56. Availability of Used Version of Title Figure 57. Percentage of Spending on Used Books by Category Figure 58. Most Recent Used-Book Purchase—Students Figure 59. Most Recent Used-Book Purchase—Nonstudents Figure 60. Used-Book Purchases Instead of New Version Figure 61. Percentage of Spending on Used Books by Format Figure 62. Reasons to Purchase Hardcover Used Books Figure 63. Book-Shopping Habits and Preferences Figure 64. Influence of Factors in Purchase of Used Book vs. New Book Figure 65. Highest Price Willing to Pay for Used Book in Very Good Condition Figure 66. Percentage of New-Book Price Willing to Pay for Used Book in Very Good Condition Figure 67. Highest Price Willing to Pay for Used Book in Fair-to-Good Condition Figure 68. Percentage of New-Book Price Willing to Pay for Used Book in Fair-to-Good Condition Figure 69. Worst Condition Acceptable for Used Book Figure 70. Percentage of Used Books by Condition Figure 71. Overall Used-Book Value vs. New Books Figure 72. Whether New Books or Used Books Are Better Figure 73. Satisfaction with Used Book-Purchases Figure 74. Would Recommend Purchasing Used Book Figure 75. Have Sold Used Book Figure 76. Number of Used Books Sold over Last 12 Months Figure 77. Percentage of Used Books Sold by Channel Figure 78. Percentage of Sales of Used Books by Category Figure 79. Considered Selling Used Book Figure 80. Reasons for Not Considering Selling Used Book Figure 81. Used-Book Market-Sizing Methodology Figure 82. U.S. New- and Used-Book Consumer Expenditures and Units Figure 83. 2004 U.S. Used-Book Market by Category—Units and Sales 10
  11. 11. Figure 84. 2004 U.S. Used-Book Units, Sales, and Average Sales Price Summary Figure 85. U.S. Used-Book Market by Channel—Units (million) Figure 86. U.S. Used-Book Market by Channel—Revenue ($ million) Figure 87. 2004 U.S. Used-Book Market—Online Channels Figure 88. U.S. Online Used-Book Market by Category—Units (million) Figure 89. U.S. Online Used-Book Market by Category—Revenue ($ million) Figure 90. 2004 U.S. Used-Book Market—Bookstores Figure 91. 2004 U.S. Used-Book Market—Other Locations Figure 92. Used-Book Average Sales Price by Category Figure 93. Used-Book Average Sales Price by Channel and Category Figure 94. Online Used-Book Average Sales Price by Category Figure 95. Five-Year General Trade Used-Book Sales Projection 11
  12. 12. [Financial Sponsors page] [head] Sponsors The following companies contributed financially to this study: [logo] HarperCollins Publishers is one of the world’s leading English-language publishers, with headquarters in New York and operations in Canada, the U.K., Australia/ New Zealand, and India. Its publishing groups include HarperCollins General Books Group, HarperCollins Children’s Books Group, Zondervan, HarperCollins U.K., HarperCollins Canada, HarperCollins Australia/New Zealand, and HarperCollins India. HarperCollins is a broad-based publisher with strengths in literary and commercial fiction, business books, children’s books, cookbooks, mystery and romance books, and religious and spiritual books. Harper was established in 1817, Collins in 1819. Today, the company has 3,000 employees worldwide and revenues that top $1 billion annually. In Fiscal 2005, HarperCollins had 103 titles on the New York Times bestseller list, highlighted by fifteen titles that reached the number-one spot. HarperCollins U.K. had 41 titles on the Sunday Times bestseller list, with seven titles that went to number one. HarperCollins Publishers dominated the July 29, 2005, Wall Street Journal list of bestselling nonfiction, with eight titles making the list, including five in the top ten. [logo] John Wiley & Sons, Inc., which was founded in 1807. provides essential content and services to customers worldwide. Its core businesses include scientific, technical, and medical journals, encyclopedias, books, and online products and services; professional and consumer books and subscription services; and educational materials for undergraduate and graduate students and lifelong learners. Wiley has publishing, marketing, and distribution centers in the United States, Canada, Europe, Asia, and Australia. The company is listed on the New York Stock Exchange under the symbols JWa and JWb. Wiley’s Internet site is www.wiley.com. [logo] Penguin Group (USA) Inc., is the U.S. member of the internationally renowned Penguin Group. A leading U.S. adult and children’s trade-book publisher, it owns a wide range of imprints and trademarks, including Berkley Books, Dutton, Frederick Warne, G. P. Putnam’s Sons, Grosset & Dunlap, New American Library, Penguin Books, The Penguin Press, Philomel, Plume, Puffin, Riverhead Books, and Viking. The Penguin Group (www.penguin.com) is part of Pearson plc, the international media company. [logo] PMA, the Independent Book Publishers Association, is a trade association of independent book publishers. Founded in 1983, it now represents more than 4,200 publishers in the United States, Canada, Europe, and Australia. Its mission is to advance 12
  13. 13. the professional interests of independent publishers. To this end, PMA provides cooperative marketing programs, education, and advocacy within the publishing industry. [logo] VISTA International is the leading worldwide provider of software solutions and services for the publishing industry. VISTA is a committed business partner of publishers, distributors, and booksellers supported by its systems throughout the world, which are designed to fit all aspects of the publishing value chain, from author care through production, rights, and royalties, to warehouse and fulfillment—all integrated in an e-business environment, with full access to the analytical power of Publishing Intelligence. Complementing its comprehensive enterprise solutions, the full range of VISTA services include applications implementation, applications management and hosting services, offshore IT services, and publishing-specific business consulting, together with lifetime customer support. VISTA was founded in 1977 and has offices in Europe, North America, and the Asia- Pacific region. Its Web site is www.vistacomp.com. 13
  14. 14. [Project Partners Page] [head] Partners Seven companies that sell used books online provided valuable data for this study. See page [tk] for profiles of Abebooks.com, Alibris.com, Amazon.com, Barnes & Noble.com, Biblio.com, eBay.com, and Powell’s. The study also relies on data generously provided by: American Booksellers Association. Founded in 1900, ABA is a not-for-profit organization devoted to meeting the needs of its core members—independently owned bookstores with retail storefront locations—through advocacy, education, research, and information dissemination. The association actively supports free speech, literacy, and programs that encourage reading. Each spring, it hosts the annual ABA Convention in conjunction with BookExpo America. It is the sponsor of Book Sense: Independent Bookstores for Independent Minds, a nationally integrated marketing campaign that promotes books recommended by independent booksellers. ABA is headquartered in Tarrytown, NY, and may be found on the Web at www.BookWeb.org. Bowker. This leading source for bibliographic information provides searching, analytical, promotional, and ordering services to publishers, booksellers, libraries, and patrons through national and international brands, including Books In Print®, Global Books In Print®, Books In Print IntelliMarket™, Syndetic Solutions™, Pubnet®, PubEasy®, and Simba Information™. In the United States and Puerto Rico, Bowker is also the ISBN and SAN Agency and a DOI registration agency for the publishing industry. In Australia, Thorpe-Bowker is the ISBN Agency for Australia and New Zealand, and publisher of Australian Bookseller & Publisher Magazine, the gateway to the Australian book trade. Bowker is headquartered in New Providence, New Jersey, with operations in East Grinstead, England, and Port Melbourne, Australia. More information is available at www.Bowker.com. Book Hunter Press. The publisher of the Used Book Lover’s Guide series, Book Hunter has been tracking the used-book market in the United States and Canada since 1992. The company maintains the most comprehensive and up-to-date database of nontextbook brick-and-mortar used and antiquarian bookstores in North America. In 1999, it published The Quiet Revolution: The Expansion of the Used Book Market, the first look at the impact the Internet was having on the used-book market. In 2004, it published A Portrait of the U.S. Used Book Market, an in-depth profile of both the bookstores and online sellers that make up the nontextbook traditional used-book market. For more information, visit www.bookhunterpress.com. 14
  15. 15. Monument Information Resource. MIR has been a resource for higher education publishing professionals in need of accurate discipline and course intelligence for more than ten years. It provides critical information on new and used textbook sales, book-in- use, and market share for college publishing editors, marketing managers, sales teams, and management. The National Association of College Stores. The professional trade association representing the $11 billion collegiate retailing industry, NACS is headquartered in Oberlin, Ohio, and serves as that industry’s leading resource and advocate. NACS works to ensure the health and vitality of higher-education retailers through education and research, critical programs and services, and the development of strategic partnerships that enable members to better serve their customers. 15
  16. 16. [Acknowledgments Page] [head] Acknowledgments Research and analysis: InfoTrends, a global market research and consulting firm specializing in the printing, publishing, and imaging industries. With more than 75 employees in the United States, Europe, Japan, and China, InfoTrends provides information and advice to support business planning, product development, and market strategies for leading technology vendors, paper manufacturers, commercial printers, and publishers. Printing: Quebecor World, an international leader in the manufacture of quality books and directories for the consumer, educational, religious, telecommunications, and specialty markets. One of the largest commercial printers in the world, Quebecor is a market leader in most of its major product categories, which include magazines, inserts and circulars, books, catalogs, direct mail, directories, digital premedia, logistics, mail list technologies, and other value-added services. The company has approximately 34,000 employees working in more than 160 printing and related facilities in the United States, Canada, Argentina, Austria, Belgium, Brazil, Chile, Colombia, Finland, France, India, Mexico, Peru, Spain, Sweden, Switzerland, and the United Kingdom. For more information: www.quebecorworld.com. Production: Richard Elman, a senior production manager at Random House. Copy editing: Judith Stein of West End Editorial Services, Long Branch, N.J. Design and layout: North Market Street Graphics, a prepress and composition house that has served the publishing community for more than twenty years. Proofreading: Michael Psaltis, editor of BISG Bulletin, head of Psaltis Literary, Inc., and co-author of The Seasoning of a Chef (Doubleday Broadway, 2005). 16
  17. 17. Introduction Over the past few years, anecdotal reports and studies of parts of the used-book universe have fueled the belief that the book market’s used-book segment is growing fast. To shed light on used-book sales across the entire industry, the Book Industry Study Group (BISG) launched a large-scale project in the spring of 2005. Because BISG is a trade association that represents all sectors of the book business, we were uniquely qualified to survey, research, and analyze all aspects of used-book sales and generate a comprehensive report. A study of used-book sales has long been on the BISG agenda, and we had reviewed several proposals without finding one that met our stringent requirements. Then the BISG Research Committee took on the challenge. To fulfill its mandate to collect and distribute information about the book industry, the committee continually examines data and pinpoints areas that warrant extensive examination. Exploring existing research on used books, the Research Committee quickly concluded that a comprehensive analysis of the size, structure, and behavior of the used-book market in the United States was needed. Target audiences for this analysis would be publishers and booksellers of all sorts (including but not limited to those who are BISG members); authors, agents, analysts, and media people who focus on publishing; and segments of the general public. Because we believed that the only way to generate a comprehensive understanding of used-book sales was to get data from the consumers, booksellers, and vendors propelling this dynamic market segment, we set an ambitious goal. To create our study, we would partner with and request sales data from the leading online book vendors and perform extensive primary research with hundreds of booksellers and thousands of consumers, including students. Coordinating this effort and obtaining the cooperation and support of all parties became a project of the sort BISG is designed to run. Keys to its success included getting strong backing from financial sponsors, channel-data providers, and project partners, and arranging for thousands of consumers and booksellers to complete detailed surveys on their buying and selling habits. Results were tabulated and analyzed by researchers at InfoTrends and previewed at the 2005 BISG Annual Meeting and Fall Conference, which highlighted such top-line findings as: total used-book revenue exceeded $2.2 billion and 111 million units in 2004, an 11 percent increase over 2003; and the most dramatic growth occurred in the general trade category and the online channel—up 30 percent and 33 percent, respectively. Many contributors helped bring this project to fruition. HarperCollins, John Wiley & Sons, Penguin Group (U.S.A.), PMA: The Independent Publishers Association, and VISTA International generously provided financial sponsorship. 17
  18. 18. Abebooks.com, Alibris.com, Amazon.com, Barnes & Noble.com, Biblio.com, Bowker, eBay.com, MIR, and Powell’s delivered invaluable channel data to InfoTrends for aggregation and analysis. The American Booksellers Association, Book Hunter Press, Bowker, Monument Information Resource, and the National Association of College Stores—our project partners—provided advice, insight, and assistance. We are grateful to all for helping find answers to some of the industry’s most pressing questions. Our thanks also to North Market Street Graphics, which donated the cover design, interior design, and layouts for this study; and to Quebecor World Book Services, which donated the printing and binding. The report that follows is the first detailed analysis of the size and characteristics of the used-book market as a substantial and growing segment of the book business. Its findings on market size, channels, categories, and customers should help people in all segments of the book industry see, describe, and interact with the used-book sector in new and productive ways. Jeff Abraham, Executive Director, Book Industry Study Group, Inc. 18
  19. 19. Objectives This study provides detailed insights into the size, structure, and behavior of the used- book market in the United States. Its target audience includes publishers, booksellers, and other industry players who need to understand and deal with the impact of used books, defensively and/or in terms of opportunities they provide. The overall objectives of the study are to: • size the market for used books in the United States by channel (bookstore, online bookseller, and others) and by category (antiquarian and collectible, educational, children’s, fiction, nonfiction, religious, and professional) • develop a business profile of used-book sellers • profile and assess the behavior of used-book customers (students and other consumers) • identify the impact of used-book sales on book publishers and booksellers. Definitions Used book: A book sold to an end consumer and then sold again by a professional bookseller or an individual. The definition excludes hurt and remainder books, but we recognize that booksellers and consumers may not be sure if a book is used or a hurt or remainder book. In the survey work with booksellers and when obtaining transaction data from the online booksellers, we asked the participants to exclude hurt and remainder books from figures on used books to the best of their ability. Bookseller: A professional or consumer selling directly to an end customer. Professional booksellers, which sell books on a regular basis as a means of generating income, include traditional used-book stores, independent bookstores, college stores, thrift and resale outlets, libraries, online retailers (e.g., Barnes & Noble.com), and online specialists with no physical stores. Many booksellers sell through online marketplaces (e.g., Abebooks, Alibris, Amazon, Biblio) or other locations (e.g., book fairs). Consumers who sell books to other consumers via an online marketplace (e.g., Amazon, eBay) or via a yard sale are considered booksellers. Most consumer booksellers sell only a few books per year to recapture some of the books’ costs. They are not in the business of generating income from used-book sales. Consumers who sell books to a professional bookseller are not considered booksellers. Book categories: InfoTrends sorted the transaction data for this study into BISAC Subject Code groups, which we also used in the bookseller survey . Detailed definitions of the BISAC Subject Codes are available at www.bisg.org. The categories we used are: 19
  20. 20. • Antiquarian and collectible o Antiques and collectibles • Education o Education o Foreign-language study o Language arts and disciplines o Literary criticism o Mathematics o Philosophy o Psychology o Study aids • Children’s o Juvenile fiction o Juvenile nonfiction • Fiction o Comics and graphic novels o Drama o Fiction o True crime • Nonfiction o Art o Biography and autobiography o Cooking o Crafts and hobbies o Family and relationships o Games o Gardening o Health and fitness o History o House and home o Humor o Literary collections o Music o Nature o Performing arts o Pets o Photography o Poetry o Political science o Science o Self-help o Social science o Sports and recreation 20
  21. 21. o Transportation o Travel • Religion o Religion o Body, mind, and spirit • Professional o Architecture o Business and economics o Computers o Law o Medical o Reference o Technology 21
  22. 22. Methodology Primary Research InfoTrends used a variety of industry resources and conducted extensive primary research to complete this study. Under strict nondisclosure and confidentiality agreements, we obtained transaction data on used-book dollar and unit sales in the United States for calendar years 2003 and 2004 from the leading online booksellers. Vendors supplying ISBN-level or BISAC-level dollar and unit sales data included: • Abebooks.com (excluding reseller programs) • Alibris.com (excluding reseller programs) • Amazon.com • Barnes & Noble.com • Biblio.com • eBay.com (including Half.com) • Powell’s (only for its own site, Powells.com) Bowker assigned BISAC codes to the ISBNs . For the college textbook and education market, InfoTrends worked with Bowker’s Monument Information Resource (MIR) division. MIR collects transaction data from approximately 1,400 college stores and managed stores (e.g., Barnes & Noble, Follett, Nebraska), which represent about 55 percent of industry sales. MIR projections include the rest of the college market. InfoTrends also examined data from the National Association of College Stores (NACS), which conducts surveys of its members. To generate insights on used-book sales from offline booksellers (e.g., local used-book stores, independent new-book stores), InfoTrends conducted a Web-based structured survey of booksellers. The booksellers in the sample came from Book Hunter Press and American Booksellers Association (ABA) databases. Book Hunter Press, which tracks sales through out-of-print and antiquarian booksellers in the United States and Canada, sent an email to approximately 3,720 of its members requesting participation. ABA, which represents independent bookstores in the United States, sent an email to approximately 1,800 of its members requesting participation. In both cases the Book Industry Study Group was identified as the sponsor of the study. Respondents were offered a summary of the findings and inclusion in a drawing for an Apple iPOD in exchange for their participation. From these two sources, InfoTrends received 510 usable responses, representing a 9.2 percent response rate. 22
  23. 23. To generate data from consumers, InfoTrends designed and managed another structured survey. The sample for this was drawn from Survey Sampling, which manages large panels of consumers and professionals for online research and which offered a financial incentive to respond. BISG was not identified as the sponsor of this survey. It yielded responses from 1,695 consumers and 337 higher education students. Secondary Research InfoTrends gathered and analyzed a wide range of information from a variety of industry sources, including: • American Booksellers Association • American Library Association • Book Hunter Press • Book Industry Study Group and its Book Industry TRENDS studies • U.S. Census Bureau • Christian Booksellers Association • U.S. Department of Commerce, County Business Patterns • Information Today and its American Book Trade Directory • National Association of College Stores • National Association of Resale and Thrift Stores • National Flea Market Association • bookseller Web sites • industry experts, including leading publishers, booksellers, trade association executives, editors of trade publications, and consultants Used-Book Market Sizing InfoTrends developed a detailed market model and analyzed the primary and secondary research findings to size the used-book market for 2003 and 2004. Transaction data from the online vendors and data from MIR account for approximately 70 percent of the used-book revenue and 50 percent of the used-book units. Projections from the bookseller- and consumer-survey work underlie the other portion. InfoTrends also made top-line projections out to 2010 based on discussions with industry experts and comparisons with other markets (e.g., markets for textbooks, used cars, third- party imaging supplies, rental DVDs). 23
  24. 24. Executive Summary The book industry continues to go through a significant transformation as the Internet changes the ways authors, publishers, booksellers, and end customers interact. The rapid growth of the general trade used-book market is a direct result of the Internet’s ability to eliminate much of the friction in the buying and selling process. The various online marketplaces and e-businesses have: • exposed thousands of used-book inventories and millions of used books in unified marketplaces • organized inventory so that customers can find desired books efficiently • dramatically reduced the cost of selling a used book by eliminating the need for physical retail locations • let additional used books enter the market quickly • provided a market-based bookseller rating system to reduce risk for the customer • manifested multiple business models that appeal to different kinds of booksellers and book customers Used-Book Market Size and Growth E-commerce has brought transparency and efficiency to the used-book market. And the market is exploding. InfoTrends estimates that total used-book revenue exceeded $2.2 billion, and that 111 million used-book units were sold in 2004, up 11 percent over 2003. While educational used books and the college bookstore channel continue to account for the largest segment of used-book revenue ($1.6 billion), the most dramatic growth is in the general trade (noneducation) segment and the online channel. • Sales of general trade used books reached $589 million in 2004, up 30 percent from 2003. • Online used-book sales reached $609 million (excluding shipping fees) in 2004, up 33 percent from 2003. Abebooks, Alibris, and Biblio indicated that sales grew at similar or faster rates in 2005. • Traditional independent used-book stores are generating about 40 percent of their business via the Internet. • Many independent new-book stores are now selling used books. • A new type of bookseller—the online specialist—has emerged and is not constrained by costs associated with traditional physical bookstores. • Consumers can easily resell their used books via Amazon and eBay. 24
  25. 25. • Consumers express high satisfaction with their used-book experiences. Nearly 75 percent would recommend to friends that they consider purchasing a used book. • Used books accounted for approximately 4.6 percent of total units (new plus used) and 5.4 percent of total consumer domestic expenditures on books in 2004. Figure 1. U.S. New- and Used-Book Consumer Expenditures and Units Educational books (textbooks and other course material) are the most important used- book category, accounting for 38.6 million units (34.7 percent of all used-book units) and $1.633 billion in sales (73.5 percent of the total revenue). Noneducational book categories—including fiction, nonfiction, and antiquarian and collectible titles— accounted for 72.6 million units (65.3 percent of all used-book units) and $589 million in sales (26.5 percent). Figure 2. 2004 U.S. Used-Book Market by Category—Units and Sales Nearly 37 percent of used-book units were sold through online channels, including online marketplaces, online specialists, and Web sites for national bookstore chains and independent bookstores. About 45 percent of used-book units were sold at physical bookstores. The remaining 18 percent were sold through other channels, including thrift shops, book fairs, and yard sales. Figure 3. U.S. Used-Book Market by Channel—Units (million) Unit sales of used books through online channels increased 34.2 percent in 2004 as compared with 2003, representing the majority of year-over-year growth in the used-book market. Bookstore used-book units were up only 0.8 percent, and most of that growth was in college stores. Unit sales of used books at independent bookstores (excluding college stores) are declining. The bookstore channel accounted for over 70 percent of used-book revenue, followed by online channels at 27 percent and other channels at a mere 3 percent. The high bookstore share reflects the fact that most used textbooks are sold through bookstores at much higher average sales prices than those of general trade titles. “Other Locations” tend to move many units but often at extremely low prices (under $5). Figure 4. U.S. Used-Book Market by Channel—Revenue ($ million) 25
  26. 26. Conclusions The used-book market is in the midst of a rapid growth stage and will undergo significant transformation over the next few years. We see three major battles in the used-book market. 1. The battle for booksellers to tie into electronic marketplaces. This battle is almost over. The major marketplaces have been rapidly adding used-book sellers over the last three years. We expect that virtually all used-book sellers will participate in one or more of these marketplaces within two or three years. 2. The battle to secure desired inventory. Booksellers and marketplaces need a timely, steady flow of high-demand/high-value titles to grow revenue and meet customer expectations. There will be increasing competition for used copies of new titles soon after initial publication. 3. The battle for consumers. This is the ultimate battle. As the marketplaces become saturated with booksellers and as inventory replenishment models are optimized, booksellers and marketplaces will need to retain and expand their customer bases. Publishers, particularly trade and professional publishers, factoring the growing used- book market into their changing business equations, will focus on several developments, including these: • The global inventory of used books has become much more transparent because of the Internet. • Booksellers are increasing their inventory and marketing of used books. • Used-book prices are dropping, and the delta with new-book prices is increasing. • Consumers are very satisfied with the used-book experience. • Consumers’ book-buying behavior is changing; often, they consider used books as they make buying decisions. • The used-book market is growing rapidly and will continue to grow for the foreseeable future. • Publishers and authors are not participating at significant levels in this market. Booksellers are likely to focus on the fact that virtually all used-book channels are or will be tied to or impacted by the Web. Used-book sellers that are not participating in one or more Internet marketplaces today are clearly late to market and probably losing share to other players. A shift of sales of used educational books to the Internet is likely to happen at a slower rate and be less extensive than the shift in the general trade market. 26
  27. 27. Used-Book Distribution Channels Used books are distributed through thousands of locations, ranging from highly automated online marketplaces to local used-book stores to neighborhood yard sales. Each channel has its own economics and trends that must be examined to develop a complete understanding of used-books distribution. Bookstores Used books have traditionally been sold through a variety of brick and mortar stores, including dedicated used-book stores, independent new-book stores, and college stores. InfoTrends estimates that approximately 11,500 physical bookstores sell used books in the U.S., that about 65 percent of independent new-book stores sell used books, and that about 85 percent of college stores sell them. . Figure 5. U.S. Used-Book Store Population—Physical Stores Used-Book Stores There are approximately 4,200 independent used-book stores throughout the United States, ranging from very small paperback exchanges and sole proprietorships to very large bookstores such as Acres Books, Half Price Books, The Strand, and Powell’s. The vast majority of used-book stores are small businesses with a single location and annual revenue under $200,000. Many traditional used-book stores focus on antiquarian and rare books, specific genres, or categories such as military history. The following figure summarizes some of the findings from survey responses from 304 used-book stores. Figure 6. Independent Used-Book Store Profile The survey of used-book stores also found that most are generating a substantial portion of their revenue from Internet-based sales; 80 percent indicated they are selling used books via the Web. The Internet-enabled used-book stores are generating 40 percent of their used-book revenue via the Web and 60 percent from sales at stores, at other locations, or through mail order. They get 35 percent of their Web-based sales via online marketplaces (e.g., Abebooks, Alibris, Amazon, Biblio, TomFolio) and only 5 percent through sites of their own. Many used-book stores have limited IT and marketing resources for creating a strong online presence. Third-party solutions enable a used-book store to upload its inventory, receive orders, and process transactions efficiently. 27
  28. 28. The online marketplaces also give local used-book stores access to a much wider market than they could otherwise reach. Consumers are far more likely to visit a major online site where they can find a large portion of the industry inventory, get competitive prices, and have their transactions process by a trusted supplier. While some repeat customers may go to the site of a used-book seller listed by a marketplace, InfoTrends believes the vast majority of consumers shop and complete transactions via the online marketplace site. Brick-and-mortar used-book stores will continue to account for a meaningful part of used-book store sales, but we believe that the percentage of Web-based sales will keep rising over the next three to five years. We also anticipate that a significant portion of used-book store owners will decide they can be more profitable by closing their physical stores, eliminating their overhead costs (lease, labor, utilities, taxes, etc.), and becoming online specialists (see below). We also believe that over the next few years the vast majority of used-book stores will be tied in with one or more of the online marketplaces. Owners that avoid the online channel are shutting themselves out of the primary source of growth in the market. Independent New-Book Stores There are approximately 6,100 independent new-book stores, including 3,300 general trade and 2,800 religious bookstores. These figures exclude branches of large bookstore chains (e.g. Barnes & Noble, Borders, Books-A-Million) as well as college stores and general retailers’ stores. New-book stores that sell used books tend to focus on the general trade, religious, and education categories; they have much less interest in antiquarian and collectible titles, as compared with used-book stores. New-book stores are small businesses, but they tend to be larger than bookstores specializing in used books. The sixty-two new-book stores that responded to our survey had mean annual revenue of just over $1 million. After discussing this finding with the sample source (American Bookseller Association), we have concluded that the median revenue figure of $250,000 represents the typical new-book store more accurately. Figure 7 summarizes some of the findings from responses to the survey from sixty-two independent new-book stores. Figure 7. Independent New-Book Store Profile The research suggests that new-book stores leverage store traffic more than used-book stores do; 82.3 percent of the used books they sell are sold at their stores, while only 15.4 percent are sold via the Web (the other 2.3 percent are sold via mail order, book fairs, and the like). Only 40 percent of new-book stores that sell used books indicated they sell via the Internet. InfoTrends believes this percentage will rise substantially over the next few years. 28
  29. 29. For most of their Web-based sales of used books, new-book stores use third-party marketplaces (78.6 percent of their Web-based sales are via third-party sites). However, new-book stores report a higher percentage of Web-based sales from customers who purchase directly from their sites (21.4 percent) than used-book stores that sell via the Web report (only 11.5 percent). Perhaps new-book stores have more resources to apply toward their own sites and more interest in promoting their brands and driving traffic to their physical locations. According to the U.S. Census Bureau, the population of independent new-book stores declined to 11,036 from 12,151 over the last six years. Based on interviews with industry insiders, InfoTrends believes that the causes of the decline include increasing competition from national bookstore chains and mass merchandisers, emergence of the online sales model and major online retailers, and flat-to-declining readership levels. However, the ABA believes that over the past two or three years the decline in new-book stores has stopped and that their numbers may now be increasing slightly. College Stores The National Association of College Stores (NACS) reports there are 4,650 college stores serving 4,168 educational institutions in the United States, and an additional 200 such stores in Canada. These stores include traditional textbook stores and annexes, as well as campus stores and other retail outlets that primarily serve students. Over 75 percent of the college stores (3,536) sell books. Most of these stores, especially the large bookstores, sell used books. NACS reports that approximately 2,400 of the college stores in the U.S. are university owned; 1,375 are contract stores managed by a third party (e.g., Barnes & Noble, Follett, CBA), and 880 are privately owned. The number of contract-managed stores has doubled over the last 15 years. NACS conducts an annual survey with approximately 400 of its members to generate statistics on revenue, business composition, and trends. Highlights from the NACS 2004 College Store Industry Financial Report* include: [typesetter -- please indent sub-sector dollar figures, more or less as indicated below] Total Revenue $10.9 billion Noncourse material $4.0 billion Computer products $1.2 billion Insignia merchandise $1.1 billion Other merchandise $0.65 billion Student supplies $0.62 billion General/trade books $0.44 billion Course material $6.9 billion New textbooks $5.0 billion (63 percent) Used textbooks $1.75 billion 29
  30. 30. Course packs $0.22 billion [Footnote]* Figures are for North America (U.S. and Canada). Because NACS definitions relate to the nature of professors’ requirements for students attending their classes regardless of format or type of publication, publishers’ data on sales of college textbooks may not be directly comparable to college stores’ new- textbook data. Also, NACS notes, many college stores ring up sales of custom publishing materials and course packs (i.e., material compiled from multiple sources and printed on demand) as new textbook sales. NACS indicates the vast majority of college stores’ textbook sales occur at physical stores. A recent survey of NACS members found that only $268 million (2.5 percent) of all college store sales—including sales of clothing and other nonbook products as well as sales of books—are via the Web. However, other NACS research, done as part of its Fall 2004 Student Watch survey, found that 16 percent of students bought textbooks online, and 31 percent of these students bought from college Web site, although their purchases were not necessarily textbooks. InfoTrends believes that student purchasing of books via the Web is rising rapidly and that most of the growth is taking place at non-college-store sites, now that Amazon, Barnes & Noble.com (B&N.com), Buyback, Ecampus, efollett, Half.com, TextbookX, and other online retailers focus on or devote major sections of their sites to college textbooks. NACS indicated to InfoTrends that college stores often pay between 40 and 70 percent of the new-book price for a used textbook in good enough condition to be used in the next semester. However, the price typically drops to less than 5 percent of the new-book price when a new edition is available or the title is not going to be used in the next semester. By studying the prices for used textbooks at B&N.com (which has a dedicated section on its Web site for buying used textbooks from students), we found that it typically pays from 20 to 35 percent of the new-book price for a used textbook. B&N.com covers shipping costs by providing prepaid address labels for selling students to affix to the boxes they use to send their used books. InfoTrends believes that college stores will continue to account for the majority of used textbook sales for the foreseeable future. A physical location and proximity to customers are advantages, allowing students to inspect used books before making purchases. And since college stores tend to pay above-average prices for used books, their inventory for upcoming semesters is good. However, college bookstores are facing increasing competition from Web-based alternatives. They will be competing for inventory with the likes of eBay and Amazon as students make rational decisions, based on price and convenience, about selling used books. We expect that students will turn to the Web to sell books that will not be used in the next semester at their schools. We also expect that more students will compare prices before purchasing at the college store, especially for general trade books used for courses. 30
  31. 31. National Bookstore Chains National and large regional bookstore chains (e.g., Barnes & Noble, Borders, Books-A- Million) generally do not sell used books at their stores, and InfoTrends does not anticipate that this will change fundamentally, although branches in certain locations (such as college towns) may have limited inventories of used books to fit local market conditions. B&N.com and Books-A-Million (BAM) do sell used books through their branded Web sites. However, both companies rely on virtual inventory from a network of resellers managed by Alibris. B&N.com promotes its network of used-book sellers. When a customer places an order via B&N.com, information on shipping, confirmation, and related matters is attributed to the bookseller that is fulfilling the order. BAM does not promote a “network of resellers,” preferring to have the listings, ordering, shipping, confirmation, and related transaction activities be BAM-branded. Although the inventory is also via Alibris, the interface is BAM’s site, and booksellers ship the book to a BAM facility, where BAM inspects it, repackages it, and sends it to the customer. General Retailers Roughly 7,100 general retailers (such as cookware stores, art stores, and department stores) carry books, according to the American Book Trade Directory, but they do not typically sell used books, and books are only a small part of their business. They prefer a traditional distribution model in terms of pricing, margins, stocking, marketing, and returns. InfoTrends believes the vast majority of general retailers that sell books will never get into the used-book business at their stores, but they may get into it through online channels. Conceivably, some of these general retailers could sell used books through their Web sites via online marketplaces. Essentially, this would involve leveraging the customer base and site, but not adding much in the way of fixed costs. Any sales would be incremental and not likely to cannibalize store sales of new books. Possible concerns for general retailers would include negative impact on their brands (if a third-party bookseller mishandled an order, that would reflect poorly on the retailer and its brand) and competition with low-cost/high-volume established booksellers. Online The online channel is where virtually all the growth in the used-book market is taking place. InfoTrends estimates that sales of used books through online channels grew by 33 percent in 2004 vs. 2003. All the major online players reported significant growth in their used-book business, while used-book sales at bookstores and other locations (e.g., libraries and backyards) were relatively flat, especially in the noneducation categories. Online sales of used books have grown dramatically because e-commerce eliminates much of the friction that exists in the traditional used-book business. • Customers can easily search the industry inventory of used books by title, author, book format, book condition, price, and other attributes. 31
  32. 32. • Professional booksellers and consumers can easily list their books using automated, Web-based tools tied to multiple sales venues. • Transactions—including processing of credit cards, confirmation of sale, confirmation of shipping, and in some cases information on shipping status—are secure and automated. • Customers can ask questions about books via email. • Rating information about the bookseller is available. • Fulfillment rates are high and delivery times are consistent with those for new books. Of all these factors, the most important are the first two. While many consumers get pleasure out of visiting a used-book store and browsing the shelves and tables for a hidden treasure, that process tends to be very slow, and often it does not yield results. For consumers who have a specific title in mind, visiting a used-book store is far less efficient than going to a Web-based marketplace or retailer. From the seller’s perspective, the physical used-book store serves only customers within a very limited distance. Except for customers who are looking for rare title or who called the store ahead of time to confirm that a book they want is in stock, the store’s customers are people who live or work within a few miles of it. The Internet eliminates location from the purchasing process and lets sellers reach a much larger market. It comes as no surprise that used-book stores with Web sites report that over 35 percent of their used- book sales are via the Web. The online channel includes marketplaces, retailers, and specialists. • Marketplaces provide a platform other booksellers can use to sell their books via the Web. Examples of marketplaces include Abebooks, Alibris, Amazon, B&N.com, Biblio, eBay, and TomFolio. • Online retailers focus primarily on selling both new and used books to consumers through their branded sites. Examples include Powells.com, BAM, and efollett • Online specialists are professional booksellers that sell through marketplaces. Usually, they are individuals or very small companies, with fewer than five employees and no physical retail stores. It is not uncommon for a marketplace site and a retailer site to work together (e.g., Alibris, B&N.com), and it is also not uncommon for them to compete against each other for used-book sales. Online Marketplaces The platform that online marketplaces provide for other booksellers typically includes tools for listing books and a transaction engine. The marketplace usually does not take possession of physical books and typically receives a flat fee and/or a percentage of the sale for each transaction. The bookseller is responsible for fulfillment and customer service. Responsibilities of the marketplace include: 32
  33. 33. • a set of listing tools for the bookseller • a search tool for the consumer • a shopping basket • a transaction engine (e.g., credit card, PayPal) • a branded site for consumer shopping (with search, shopping cart, reviews, etc.) • bookseller rating tools for consumers • transaction data and reports for the bookseller Responsibilities of the seller include: • uploading inventory information (e.g., ISBN, condition, price) • setting price • setting terms (which often depend on a marketplace’s requirements) • dealing with customer inquiries and service issues • fulfillment Within the marketplace segment, Abebooks, Alibris, Biblio, and TomFolio primarily serve traditional independent used-book and new-book stores, providing tools professional booksellers can use to manage inventory, list books, offer sales data, and automate other business activities. Abebooks, Biblio, and TomFolio all promote their sites directly to end consumers and do not partner with other retailers. Alibris has a consumer site and also provides a service that lets booksellers list once and automatically have their inventory appear at numerous locations (e.g., Amazon, B&N.com). A growing portion of used-book stores and new-book stores belong to at least one online marketplace, and many independent booksellers have accounts with multiple marketplaces. InfoTrends estimates that around 70 percent of used-book stores are working with at least one online marketplace. The number of independent new-book stores working with an online marketplace is less clear, but we estimate that approximately 30 percent have an account. We believe that the vast majority of independent used-book and new-book stores will be part of at least one online marketplace within the next two or three years. The following is a partial list of online book marketplaces in North America and Europe. Abebooks, Victoria, BC (www.abebooks.com); 13,000 booksellers AddAll (www.addall.com) book search engine 33
  34. 34. Alibris, Emeryville, CA (www.alibris.com); 10,000 booksellers Amazon, Seattle, WA (www.amazon.com) Antiqbook, Europe (www.antiqbook.com); 400 booksellers Barnes & Noble.com, New York, NY (www.barnesandnoble.com) Biblio, Asheville, NC (www.biblio.com) ; 4,200 booksellers Bibliology, Europe (www.bibliography.com); 15 booksellers Biblion, London (www.biblion.com); 500 booksellers Bibliophile Bookbase, Zurich (www.bibliophile.net); 250 booksellers Bibliopoly, Europe (www.bibliopoly.com); 70 booksellers Books & Collectibles, Australia (www.booksandcollectibles.com.au); 300 booksellers eCampus, Lexington, KY (www.ecampus.com) Elephantbooks, Gilroy, CA (www.elephantbooks.com) Half.com, San Jose, CA (www.half.com); consumer marketplace International League of Antiquarian Booksellers, Europe (www.ilab-lila.com); 2,000 booksellers. Maremagnum, Italy (www.maremagnum.com); 500 booksellers TomFolio, North Potomac, MD (www.tomfolio.com); 200 booksellers ZVAB/ChooseBooks, Berlin (www.zvab.com) Online Retailers Online retailers focus primarily on selling new and used books to consumers via their branded sites. Some, including Powells.com and efollett, sell mostly their own inventory. Others, including BAM and eCampus, maintain virtual used-book inventories supplied by Alibris. Unlike B&N.com, which promotes its network of booksellers and has consumers purchase from third parties, these online retailers control the entire customer brand experience. The consumer buys from the online retailer, and no mention is made of the source for the books. Online Specialists Online specialists are professional booksellers that do not have physical bookstores and sell primarily through online marketplaces. Our bookseller survey of 144 online specialists indicates that they generate 71.8 percent of their revenue through marketplaces, 14.8 percent through their own Web sites, and 14.4 percent otherwise. The survey also indicates that most online specialists are small businesses or part-time operations with relatively low annual units (1,784 mean, 750 median) and revenue ($36,200 mean, $10,000 median). Online specialists generate a higher portion of their 34
  35. 35. used-book revenue from the sale of antiquarian and collectible books than used-book stores or new-book stores. The number of online specialists is difficult to estimate because they are typically very small businesses with only one or two employees, and they tend not to show up in the Yellow Pages or other directories. Based on survey data and on interviews with Book Hunter Press and the online marketplaces, InfoTrends estimates there are 5,000 to 6,000 online specialists in the United States. We expect the population of online specialists to grow over the next few years as some owners of brick-and-mortar used-book stores close their doors and focus exclusively on Internet-based sales. We also expect to see a growing number of part-time online specialists who resell books they purchased for personal use and books they bought at book fairs, yard sales, and related events. Many book scouts, collectors, and enthusiasts will find it very easy to establish a used-book business by selling exclusively through various online marketplaces. Other Locations Used books are sold at many locations besides physical stores and Web sites. Every week there are thousands of yard sales, library sales, and book events where consumers can find hidden gems like a first-edition Hemingway or really inexpensive copies of fiction and nonfiction titles. These locations do not account for a significant portion of used- book revenue, but they are a source of inventory that could become more important in the future. Their biggest limitations today have to do with their lack of online inventory and an online marketplace, and with the fact that much of the “good stuff” is being sold on eBay and no longer making its way to local events. Libraries According to the American Library Association (ALA), there are approximately 117,000 libraries in the United States, including: • 8,896 central libraries • 7,500 branches • 3,527 academic libraries • 93,861 school libraries • 9,526 special libraries (e.g., corporate, medical, religious) • 1,539 government and armed services libraries BISG estimates that these institutions account for nearly 10 percent of total spending on new books, excluding textbooks. Libraries have a vast inventory of books that they must manage with limited space and limited financial resources. At their book sales events, they offer books culled from inventory and books that local residents have donated. Prices are typically very low, ranging from around 25 cents for paperbacks to $5 for hardcover books in very good condition. 35
  36. 36. Two recent trends involve having in-library stores with shelves of used books for sale, and disposing of large quantities of books through online resellers. While in-library stores typically do not account for a significant volume of used-book sales, InfoTrends believes the use of the Internet to dispose of excess library inventory is likely to grow rapidly. Accordingly, we anticipate that libraries will become a growing source for used books through online marketplaces over the next five years. . Friends of Libraries U.S.A. (FOL; www.folusa.org) indicates that more FOL organizations are selling donated books online to reach a larger audience for specialized items and to increase their income. The organization has a list of about thirty libraries that are now selling used books online through a variety of partners, including Abebooks, Amazon, Biblio, ChoooseBooks, eBay, Half.com, Librarybooksales.org, and their own sites. Libraries also sell online through Librarybooksales.org (and .com), a marketplace whose goal is helping libraries generate funds to continue serving the “better good.” The project, which is not open to commercial booksellers, serves public, private, institutional, special, educational, foreign, and domestic libraries and provides a variety of tools for uploading inventory, pricing, shopping-cart management, and credit card processing. More than 425 libraries and Friends of Libraries organizations participate in the Librarybooksales.org marketplace. Librarybooksales.org notifies the library when one of its books has been ordered. The library ships the book once the check or credit card payment has cleared. Libraries receive a consolidated statement of sales that comes via email. There is no listing fee. The only cost to the library is a 10 percent commission based on the sale price of the book. Typical listing prices range from around $3 to around $75, with most titles in the $7 to $20 range. Much of the inventory consists of books that have been donated to libraries, duplicate copies, monographs, or surplus materials. Librarybooksales.org discourages the sale of books with bookplates because they believe most serious book buyers don’t want to own books that look as if they had been borrowed from a local library. Booksalefinder is another site that promotes library sales and various related events. Its lists of local and regional book events are a resource for book scouts, professional booksellers, and other book enthusiasts. This site is not a marketplace, however, and customers cannot buy books through it. . We would not be surprised if a major online marketplace makes a move to link with existing online markets for libraries or rolls out its own program for library sales. Thrift Shops and Resale Stores About 7,000 thrift shops and resale stores sell books in the United States. Some are run by national organizations such as Goodwill and the Salvation Army; many are local consignment shops. The volume of and revenue from used-book sales in these outlets is quite low. Recently, Goodwill introduced an online auction site that includes a section for used books. InfoTrends anticipates that some resale stores will utilize online markets to sell 36
  37. 37. their books in the future. However, given the relatively low importance of books in their overall inventory, we do not expect this channel to account for a significant portion of used-book sales. Book Fairs Every week, local bookstores, libraries, and consumers bring books for sale to book fairs around the country. These events often boast tens to hundreds of thousands of books, and make claims about the percentage of books that are hardcover or in a specific category (e.g., history, professional, children’s). Prices are relatively low and vary according to a book’s condition and whether or not it has value for collectors. These events are often attended by professional book scouts, online specialists, and local used-book store proprietors who know the value of specific titles, as well as by local residents and avid readers looking for a good deal. However, because potential book buyers have to search manually through a physical inventory, the market size and potential of this channel are limited. Yard Sales Although yard sales are another popular venue for used-book sales, they do not account for a meaningful share of used-book revenue. Prices at yard sales are typically very low, ranging from 10 cents to a few dollars. Inventory consists primarily of adult trade and children’s books. Book scouts may come to some yard or estate sales looking for collectibles, and InfoTrends expects that such sales will continue to be a source for used books because of the convenience to the seller, who can simply put copies out on a table at a fixed price and throw out whatever doesn’t sell. 37
  38. 38. Bookseller Survey Findings Methodology To generate insights on used-book sales from local used-book stores and independent new-book stores, InfoTrends conducted a Web-based structured survey. Book Hunter Press and the ABA provided the sample. InfoTrends received comments on its draft questionnaire from publishers, booksellers, and trade association executives, among others. Book Hunter emailed an invitation to participate in the survey to approximately 3,720 of its members; ABA emailed approximately 1,800 to request participation. In both cases the Book Industry Study Group was identified as the sponsor of the study. Respondents were offered a summary of the findings and inclusion in a drawing for an Apple iPOD in exchange for their participation. From these two sources, InfoTrends received 510 usable responses, representing a 9.2 percent response rate. Sample Profile The bookseller survey respondents fell into three general categories: • Independent bookstores that primarily sell used books (60.3 percent). These companies have physical stores that derive most of their revenue from the sale of used books. They may also generate revenue from sales of new books or through online sales. • Independent bookstores that primarily sell new books (11.2 percent). These companies have physical stores that derive most of their revenue from the sale of new books. They may also generate revenue from sales of used books or through online sales. • Online specialists (28.5 percent). These companies do not have physical stores. They generate revenue through online marketplaces and their own Web sites. Some online specialists generate revenue from clients who visit them in their homes or offices by appointment. Figure 8. Bookseller Respondents by Category Large national bookstore chains (e.g., Barnes & Noble, Borders), large online retailers and marketplaces (e.g., Abebooks, Alibris, Amazon, Biblio, eBay), and large used-book sellers (e.g., Powell’s, The Strand) did not participate in the bookseller survey. Information from these companies came from transaction data and in-depth interviews. The bookseller survey also did not include any general merchandisers (e.g., Wal-Mart) that sell books. These companies typically do not sell used books. 38
  39. 39. Although the bookseller survey did not target college stores, five college textbook stores responded. Based on their profile (size, percentage of sales of new vs. used books), InfoTrends categorized them with independent booksellers that primarily sell new books. Summary of Findings Size of Company The vast majority of independent booksellers are small businesses (under $500,000 in annual sales) with a single location. Fewer than 10 percent reported having more than one location. Independent new-book stores are generally significantly larger than used-book stores and typically sell more books per year at higher average sales prices. Figure 9. Bookseller Respondents by Annual Revenue Online specialists are very small businesses with mean annual sales of only $36,200 (median of $10,000). The online specialist is typically an individual who sells used books as a source of supplemental income. Online specialists have very low fixed costs because they do not have physical stores or staff. Their primary costs are their used-book inventory (which can be stored at their homes or in low-cost offsite storage facilities), any transaction fees associated with the online marketplace(s) they use, and shipping. Figure 10. Bookseller Respondents by Number of Locations Revenue Used-book stores and online specialists are similar in terms of their revenue mix. Both generate approximately 90 percent of their revenue from the sale of used books, 5 percent from new books, 2.5 percent from remainders, and the balance from ephemera and sundry articles (e.g., posters, broadsides, collectibles). InfoTrends suspects that many online specialists may have been proprietors of independent used-book stores who decided it would be more profitable to eliminate the physical store and sell used books only through online channels. Figure 11. Percentage of Bookseller Revenue by Category Independent new-book stores generate most of their revenue (66 percent) from the sale of new books. Used books account for 14.1 percent of sales, while remainders account for 3.1 percent. Note that other miscellaneous products and services constitute the second- largest source of their revenue, accounting for 16.6 percent of sales. We believe that owners of some independent new-book stores may be selling used books to serve their customers better and to differentiate themselves from the large national bookstore chains that typically do not sell used books at their stores. 39
  40. 40. Units Annual unit sales are consistent with annual revenue. Independent new-book stores have the highest annual unit sales (mean = 48,113, median = 14,502). Used-book stores have the next highest (mean = 16,481, median = 5,000), and online specialists have the lowest (mean = 1,784, median = 750). Figure 12. Annual Book Sales—Units By dividing mean annual revenue by mean annual unit sales, we were able to generate an estimate of average selling price per unit (excluding shipping fees) by type of book and bookseller. Figure 13. Used-Book Seller vs. New-Book Seller Average Sales Price Comparison Used New Mean-based ASP Booksellers Booksellers New books $9.07 $19.02 Remainder or hurt books $7.83 $16.56 Used books $8.06 $15.73 The research indicates that new booksellers have significantly higher average selling prices than used booksellers for new, remainder, and used books. The difference in average selling prices may be a reflection of the type and mix of books the booksellers primarily sell, their cost structure, and their overall marketing and positioning. Figure 14. Percentage of Bookseller Sales—Units InfoTrends asked booksellers participating in the survey to split their units for new books and for used books by category. Independent new-book stores report a higher percentage of new books in the education category than used-book stores and online specialists. InfoTrends believes this higher percentage is primarily a function of the five responses from college bookstores. Used-book stores and online specialists report a higher percentage of new-book sales in the nonfiction category than do new-book stores. Figure 15. Percentage of New-Book Units by Category Examining the distribution of used-book units by type of bookseller reveals some important differences. The used-book stores and online specialists report a much higher portion of used-book unit sales from collectibles (defined in the survey to include first 40
  41. 41. editions, rare books, and signed copies). At independent used-book stores, collectibles account for nearly 22 percent of used-book unit sales. The comparable figure for online specialists is nearly 34 percent, but for independent new-book stores it is only 3.1 percent. Figure 16. Percentage of Used-Book Units by Category Independent new-book stores report a much higher portion of used-book unit sales in the fiction and education categories. InfoTrends believes this distribution is consistent with their new-book sales and reflects the impact of the five college bookstores that are included in this category. Hardcover vs. Paperback Each type of bookseller reported that hardcover books account for a higher percentage of used-book unit sales than of new-book unit sales. Used hardcovers command higher prices than used paperbacks, which relates partly to the higher prices of new hardcovers, but also to the fact that used hardcovers tend to be in better condition than used paperbacks. Figure 17. Percentage of Units, Hardcover vs. Paperback Our consumer survey findings show that consumers clearly prefer hardcover used books, like getting them at “new softcover prices,” and expect that used hardcovers will often be in better condition (which is an especially relevant factor when people are buying online). In-Print vs. Out-of-Print A critical issue for publishers is the extent to which sales of used books are substituting for sales of new books. The industry consensus is that the vast majority (more than 80 percent) of used-textbook sales are of books that are still in print. Since used textbooks account for approximately 33 percent of total textbook sales, used textbooks may substitute for roughly 25 percent of new textbook sales. This projection assumes that all end customers would have purchased a new copy if a used copy had not been available. Some insights about the impact of used-book sales on trade books emerged from our bookseller survey data . Independent new-book stores estimated that 48.3 percent of their used-book sales are of titles in print. The comparable figure for used-book stores was 29.9 percent, and the figure for online specialists was 18.5 percent. Figure 18. Percentage of Used Units, In-Print vs. Out-of-Print 41
  42. 42. By projecting these survey findings to the population of new-book, used-book, and online booksellers, we came up with a rough estimate: approximately 35 percent of used-book sales are of titles in print. However, we do not yet have sufficient data to estimate what portion of these used-book sales substituted for new-book sales. The lower in-print/out-of-print ratio for independent used-book stores and online specialists may relate to their focus on the collectibles segment. Units by Sales Method The booksellers surveyed sell a higher percentage of used books than of new books via online channels. Independent used-book stores report selling nearly 34 percent of their used-book units via their own Web sites (3.9 percent) or third-party Web sites (30 percent). These percentages confirm the importance of the Web in the used-book market, as well as the impact of third-party marketplaces. Figure 19. Percentage of Units by Sales Method Independent new-book stores report selling a much lower portion of used books through online channels, especially third-party marketplaces. Perhaps they do not want to compete with low-cost/low-margin Web-based sellers, preferring to channel resources into growing store traffic. However, we expect that most independent new-book stores will align themselves with one or more online markets to maintain their sales volumes, satisfy customer demand, and participate in the growing used-book market. Online specialists generate the largest portion of their unit sales via the Web (over 85 percent), and also generate a higher percentage of sales via their own Web sites (14.8 percent) and via third-party sites (71.8 percent), than booksellers with physical stores. Note that online specialists report a very small percentage of sales from customers “visiting my store.” Since we defined online specialists as booksellers without physical stores, this may reflect clients’ visits to online specialists’ offices. When asked to indicate what percentage of their used-book units sold via third-party sites came from specific marketplace sites, booksellers said that around 45 percent came from Abebooks, 15 percent from Alibris, 15 percent from Amazon, 10 percent from eBay or Half.com, 5 percent from B&N.com, and the balance from other sites (these figures relate only to used books sold via a third-party site, not total used-book sales by these booksellers). Figure 20. Percentage of Used Books Sold via Third-Party Sites by Source As noted in our discussion of book channels, Abebooks and Alibris have the strongest focus on working with independent booksellers; B&N.com has a network of used-book sellers that is powered by Alibris; Amazon and eBay have a stronger focus on consumers. InfoTrends did not use bookseller lists from any third-party marketplace provider when conducting the bookseller survey. 42
  43. 43. Inventory Independent used-book stores had a mean inventory of just over 43,600 new and used books; the comparable figure was just over 75,800 for independent new-book stores and nearly 9,500 for online specialists. Figure 21. New- and Used-Book Inventory InfoTrends divided the inventory by annual unit sales to develop an inventory-to-unit- sales ratio for each type of bookseller. The ratios are: * Independent used-book sellers -- 2.6 used books in inventory for every one used book sold * Independent new-book sellers -- 1.6 used books in inventory for every one used book sold * Online specialists -- 5.3 used books in inventory for every one used book sold. As might be expected, used-book stores have a higher inventory-to-unit-sales ratio than new-book sellers. But the online specialists have the highest ratio; probably they are under less pressure to remove a book from inventory because they do not have to cover the costs of retail space. When asked to indicate how long they keep an unsold book in inventory before removing it, online specialists indicated that they tend to keep books (especially new books) significantly longer than the period booksellers with physical stores reported. Independent new-book stores tend to remove books (especially new books) most quickly. Eventually, the booksellers in the survey destroy or discard around 4 percent of their used books. Figure 22. Months Book Is Kept in Store or Warehouse Before Removing Returned Books Returns from booksellers to publishers and distributors are essentially a nonissue in the used-book market. For both new and used books across all channels, the booksellers indicated that the percentage of returns from customers who purchased books online is 1 percent or less. InfoTrends sees this as a strong indicator of satisfied customers. While some booksellers have a no-returns policy for used-book sales, most are willing to accept used-book returns to keep good ratings and good customer relations. Figure 23. Percentage of Online Book Orders Returned by Customer 43
  44. 44. Browsing vs. Targeted Purchasing Many bookstores are designed to give customers a relaxing and satisfying experience while they look for interesting books. When asked whether they believe their customers are typically browsing their shelves or Web sites to find interesting books, or shopping for specific titles, most independent new-book stores indicated that their customers are typically browsing, while most independent used-book stores and the vast majority of online specialists indicated that their customers are typically shopping for specific titles. Figure 24. Customers Browse Used Books or Have Title in Mind Availability of Used Books Figure 25. Months from New Book Being Published to Availability of Used Book by Type of Bookseller Independent used-books stores generally reported the shortest period between release of a new title and availability of a used copy. Times ranged from 6.9 months for fiction titles to 14.4 months for education titles. Independent new-book stores reported periods two months longer. Online specialists cited the longest time span, probably because they generate a larger portion of their sales from collectibles. These time periods represent the averages in the categories. The more books a bookseller sells per year, the faster it makes used copies of a new book available. For example, high- volume booksellers (at least 25,000 units per year) indicated that they typically offer a used copy of a new fiction book within two months, but low-volume booksellers (under 1,000 units) indicated they offer a used copy of a new fiction title within 17.9 months. Figure 26. Months from New Book Being Published to Availability of Used Book by Annual Book Sales InfoTrends believes three factors drive this relationship: high-volume booksellers have more customers and therefore more opportunities to secure used books; they may have more resources they can use to obtain used books; and they rely less on collectibles and more on general trade titles. Impact on Sales of New Books Between 60 and 70 percent of booksellers indicated that used copies of a book do not affect their pricing or sales of new copies. Roughly 20 percent indicated they sell fewer new copies at the original price once used copies are available. A small percentage either drop the price of the new copies and maintain sales or reduce the price and sell fewer 44
  45. 45. copies. Note that these figures reflect booksellers’ perceptions and not actual transaction data. Figure 27. Effect of Used Book on Sales of New Book with Same Title Prices of Used Books vs. New Books Booksellers indicated that used-book prices are roughly half of new-book prices. Interestingly, when asked how much they would pay for a used book in very good condition, students indicated approximately 52 percent and consumers (nonstudents) indicated around 36 percent. Figure 28. Used-Book Price as a Percentage of New-Book Price Formal Buy-Back Program Booksellers realize that having timely access to used-book inventory is critical to sales of used books. Sixty-one percent of the independent used-book stores, 91 percent of the online specialists, and more than half the independent new-book stores that sell used books indicated they have formal programs for buying books back from customers. We did not ask about the elements of the formal programs in the survey, but several industry experts reported that these programs can include special pricing for books sold back by a certain date and rebates toward purchases of other books. Figure 29. Have Formal Program for Buying Back Used Books from Customers Sourcing for Used Books Booksellers obtain used books from a variety of sources. Independent new-book stores and used-book stores get roughly half their used books from consumers; we assume they have walk-in traffic and are recognized in their localities as places to buy and sell used books. Online specialists obtain very few used books directly from consumers; their primary sources are libraries, other booksellers, and events. InfoTrends believes that sourcing of used-book inventory will become more competitive and sophisticated as booksellers strive to obtain desirable titles quickly. Figure 30. Percentage of Used Books Acquired by Source 45
  46. 46. Impact of Used Books on Booksellers InfoTrends asked booksellers to assess the impact of used-book sales on numbers of customers, unit sales, revenue, and profit margins. Respondents indicated whether used- book sales increased, decreased, or had no effect on figures in each category. Generally, they felt that used-book sales had a positive impact or no impact. Only a very small percentage indicated that numbers of customers, unit sales, or profit margins were lower because of used books. Figure 31. Impact of Sales of Used Books on Company Independent new-book sellers cited positive impact from used books on numbers of customers (50 percent indicated they have more customers because they sell used books), on revenue (69 percent indicated they have more revenue because of used books), and on profit margins (69 percent indicated better profit margins from selling used books). Clearly, these booksellers believe that used books have improved their business. Impact of the Internet on Booksellers We asked a similar question to assess the impact of the Internet on booksellers. Here, the findings are more complicated and significantly different for different types of bookseller. In general, independent used-book stores and online specialists believe the Internet has had a positive impact on most aspects of their business, while independent new-book stores believe the Internet has had a negative impact. Essentially, the Internet has been a positive tool for the used-book stores and online specialists, and a major competitor for the new-book stores. In terms of numbers of customers, most used-book stores (56 percent) and online specialists (76 percent) indicated the Internet has had a positive impact. However, most independent new-book stores (53 percent) indicated the Internet had a negative impact, and many feel they are losing some of their customers to Internet-based booksellers. Figure 32. Impact of Internet on Company In terms of new books, some independent used-book stores (26 percent) and many independent new-book stores (63 percent) believe the Internet has had a negative impact on sales. Many of these booksellers are likely losing sales of new books to Amazon, B&N.com, and other online specialists. Only online specialists indicated the Internet has had a positive impact on their sale of new books (42 percent). In terms of used books, most independent used-book stores (54 percent) and online specialists (55 percent) indicated the Internet has had a positive impact. Interestingly, the independent new-book stores were effectively neutral on the impact of the Internet on their used-book sales; 26 percent indicated lower sales, 26 percent indicated higher sales, and 48 percent indicated no impact. 46
  47. 47. In terms of overall revenue, most independent used-book stores (55 percent) and online specialists (71 percent) indicated the Internet has had a positive impact, while most independent new-book stores (53 percent) believe the impact has been negative. In terms of profit margins, independent used-book stores are generally split; 27 percent believe the Internet has led to lower margins; 39 percent believe it has led to higher margins; and the remaining 34 percent believe it has had no impact on margins. Most online specialists (53 percent) believe the Internet has helped increase their margins, likely from higher sales and lower overhead. Most independent new-book stores (56 percent) indicated the Internet has had no impact, while 31 percent believe it has resulted in lower margins. Only 13 percent of these bookstores report higher margins as a result of the Internet. 47
  48. 48. Consumer Survey Findings Methodology InfoTrends designed and managed a structured survey with consumers and higher- education students. We received comments on the draft questionnaire from a variety of publishers, booksellers, trade association executives, and others. The sample was drawn from Survey Sampling, a company that manages large panels of consumers and professionals for online research. It offered a financial incentive for responding. BISG was not identified as the sponsor of the survey. Responses came from 1,695 consumers and 337 higher-education students. Sample Profile Respondents to this survey represented a wide range of demographic and economic segments. Representation was excellent from all ages, income levels, and geographic regions, as well as from both sexes. Compared with the overall U.S. population, the survey population is skewed toward people with higher education and income levels, probably because of the methodology (Web-based survey) and subject (books). In general, Internet penetration is much lower among lower-income households than among higher-income households, and book readers may be more likely to have higher education and income levels than non–book readers. Figure 33. Consumers by Age Figure 34. Consumers by Gender Figure 35. Consumers by Level of Education Figure 36. Consumers by Employment Status Figure 37. Consumers by Household Income Figure 38. Consumers by Area in Which They Live The survey included a brief set of screening questions. People who had not purchased any books (new or used) in the previous twelve months were excluded. 48
  49. 49. Summary of Findings Annual Book Purchasing Students reported purchasing an average of 15.1 books during the previous twelve months and a median of 10.0 books. Roughly 40 percent of the purchases were used books. Nonstudents (i.e., other consumers) reported purchasing an average of 14.8 books and a median of 8.0 books. Roughly 25 percent of the purchases were used books. Although InfoTrends believes these figures are higher than the overall national average because of the sample composition, we also believe this sample represents the customers who account for the vast majority of book sales and are the core market for book publishers and book retailers. Figure 39. Number of Books Purchased in Last 12 Months The National Association of College Stores (NACS) and Bowker’s MIR division estimate that used books represent around 33 percent of total textbook units. InfoTrends estimates that used books account for around 4.3 percent of noneducation units. The ratio of used-book purchases to new-book purchases derived from survey data was higher than the ratio derived from related industry data, especially for nonstudents. We believe the difference in ratios is related to the sample composition. The survey data indicate that more avid readers tend to buy a larger number and percentage of used books than consumers who purchase only a few books a year. The sample for this survey is weighted toward more avid readers. Students had mean annual spending on books of $419. The median was $250. For consumers, the mean was $174 and the median was $100. Used books accounted for roughly 25 percent of student spending and 15 percent of consumer spending, which are smaller portions than for units. Figure 40. Amount Spent on Books in Last 12 Months To estimate the average price students and consumers paid for books, we divided their annual spending by the number of books purchased. The survey data indicate that students paid $31.33 per new book and $21.82 per used book, on average. These figures are significantly lower than what NACS and MIR report (around $54 for new and $42 for used). InfoTrends did not ask students to break out book spending for courses and book spending for other purposes. It is likely that their average noncourse purchases pulled the overall average down. Figure 41. Mean Spending per Book 49

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