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  • 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. [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. Published by the Book Industry Study Group, Inc., the publishing industry’s trade association for policy, standards, and research. 3
  • 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. [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. [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. 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. 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. [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. 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. 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. [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. 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. [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. 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. [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. 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. 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. 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. • 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. 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. 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. 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. 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. • 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. 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. 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. 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. 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. 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. 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. • 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. • 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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
  • 50. Consumer figures from the survey are much closer to industry data. Our findings indicate that consumers are spending $14.10 for a new book and $6.81 for a used book, on average, and we estimate that the average price consumers paid for a noneducation used book in 2004 was $8.12. Profiles of New and Used Book Customers Among survey respondents—all of whom had purchased at least one book during the previous twelve months—76 percent of students and 63 percent of nonstudents indicated that they had purchased a used book. Figure 42. Respondents Who Purchased Used Book in Last 12 Months Further examination of the demographic data indicates that used-book customers are very similar to the overall population of book customers. The table below compares respondents based on their book-purchasing activities. The Total column includes all respondents. The “New Only” column includes respondents who purchased only new books in the last twelve months. The “Used Only” column includes respondents who purchased only used books in the last twelve months. The “New and Used” column includes respondents who purchased both new and used books in the last twelve months. The final column, “Used,” combines the “Used Only” and “New and Used” columns. Figure 43. Profile of Book Customers by Key Demographics All Respondents Book Purchases Used New and Total New Only Only Used Used Base 2032 704 49 1279 1328 Percentage of respondents 34.6% 2.4% 62.9% 65.4% Age Mean 41.4 44.3 44.4 39.8 40.0 Gender Female 54.2% 51.3% 61.2% 55.6% 55.8% Male 45.8% 48.7% 38.8% 44.4% 44.2% Income Mean $61,380 $62,276 $47,296 $61,427 $60,905 Education Some high school, but no degree 1.4% 2.0% 2.0% 1.0% 1.1% High school graduate or equivalent 12.8% 14.6% 18.4% 11.6% 11.9% Some college, but no degree 30.1% 30.1% 40.8% 29.7% 30.1% 2-year or 4-year college degree 32.3% 30.7% 30.6% 33.2% 33.1% Some post-graduate work 8.9% 8.2% 2.0% 9.5% 9.2% Post graduate or doctorate degree 14.5% 14.3% 6.1% 14.9% 14.6% Books New 10.0 9.3 0.0 10.7 10.3 Used 4.9 0.0 6.8 7.5 7.5 Total 14.9 9.3 6.8 18.2 17.8 Spending New $168 $144 $0 $187 $180 Used $47 $0 $63 $73 $72 Total $215 $144 $63 $260 $253 50
  • 51. [TYPESETTER: Please change “post-graduate” to “postgraduate” and “Post graduate” to “Postgraduate” in second column of chart above. Also please change “doctorate” to “doctoral” in second column. If you like, we can send you the Excel files] Note that the “Used Only” customers represent a small portion of the market (only 2.4 percent) and tend to be older, female, lower income, and less educated than the overall market or other segments. These customers also tend to purchase many fewer books and spend much less per year on books than other customers. However, because of the small sample size, readers should be careful about making projections of this category to the overall population. The “Used” customers represent 65.4 percent of the sample and tend to be younger than the overall sample, partly because students, who represented around 16.6 percent of the sample, are more likely to buy used books than nonstudents (the figures for the previous twelve months were 76 percent and 63 percent, respectively). . Perhaps the most important observation is that “New and Used” customers typically buy the most books and spend more on books than any other customer segment. These customers, who represent 62.9 percent of the market, purchase nearly twice as many books as customers who buy only new books. The “New Only” customers are slightly weighted toward women, but not otherwise significantly different from the overall population or the “Used” customer group. Many “New Only” customers purchase a small number of books per year (fewer than five) in relation to purchases by “New and Used” customers. In the table below, which presents the same information, but for nonstudents only, the overall trends appear very similar. Notice that the forty-one “Used Only” nonstudent customers reported spending $30 on books in the last twelve months. InfoTrends believes many of the “Used Only” customers are purchasing paperbacks. Figure 44. Profile of Nonstudent Book Customers by Key Demographics 51
  • 52. Non-Students Book Purchases Used New and Total New Only Only Used Used Base 1695 622 41 1032 1073 Percentage of respondents 30.6% 2.0% 50.8% 52.8% Age Mean 44.1 46.3 46.4 42.7 42.9 Gender Female 54.6% 51.0% 63.4% 56.4% 56.7% Male 45.4% 49.0% 36.6% 43.6% 43.3% Income Mean $66,204 $65,438 $48,841 $67,355 $66,647 Education Some high school, but no degree 1.1% 1.6% - 0.9% 0.8% High school graduate or equivalent 14.4% 15.3% 22.0% 13.6% 13.9% Some college, but no degree 27.1% 28.1% 34.1% 26.2% 26.5% 2-year or 4-year college degree 33.4% 31.4% 34.1% 34.6% 34.6% Some post-graduate work 8.2% 8.0% 2.4% 8.5% 8.3% Post graduate or doctorate degree 15.8% 15.6% 7.3% 16.3% 15.9% Books New 10.1 9.6 0.0 10.8 10.3 Used 4.7 0.0 7.1 7.5 7.4 Total 14.8 9.6 7.1 18.3 17.8 Spending New $142 $128 $0 $157 $151 Used $32 $0 $30 $51 $51 Total $174 $128 $30 $208 $201 [TYPESETTER: Please change “Non-Students” at top to “Nonstudents”; change “post-graduate” to “postgraduate” and “Post graduate” to “Postgraduate” in second column; and change “doctorate” to “doctoral” in second column. As above, we can send the Excel files if they would be useful.] As noted earlier, 76 percent of students and 63 percent of nonstudents purchased a used book in the last twelve months. Of the people who had not purchased a used book in that period, 63.4 percent of students and 41.3 percent of nonstudents indicated they had considered purchasing one. The implication is that 91 percent of students and 78 percent of nonstudents who purchased any book in the last twelve months either purchased or considered purchasing a used book. Figure 45. Considered Purchasing Used Book in Last Year The most common reason for not buying or not thinking about buying a used book is a simple preference for new books (held by 32.9 percent of students and 42.4 percent of nonstudents). However, 32.9 percent of students and 26.1 percent of nonstudents also mentioned that titles they were looking for were not available as used books, suggesting that many would have purchased used copies if they had been available. The data suggest that only a very small percentage of customers will not buy a used book. We estimate that approximately 8 percent of students and 15 percent of nonstudents will not purchase or consider purchasing used books. 52
  • 53. Figure 46. Reasons for Not Purchasing Any Used Books InfoTrends believe that factors such as availability, finding interesting titles, price, and condition will become less-significant issues as the used-book market and inventory continue to grow. Consumers who have purchased used books are generally very satisfied, and we believe awareness levels and ability to find desired titles will improve as the major online channels actively promote used books and provide tools for reselling. Consumers and students indicated they purchased about the same mix of new and used books in 2004 as in 2003. The percentage of respondents who indicated they are buying more new books is roughly the same as the percentage who indicated they are buying more used books. These figures represent their perceptions, however, and may not reflect overall market trends or actual spending. Figure 47. Change in Type of Books Purchased Spending by Channel InfoTrends asked respondents to estimate their spending on new books and on used books in various channels, to the best of their recollections, which means that these figures do not necessarily reflect actual market shares either. Because this survey was conducted via the Web, the figures for spending at online channels are probably higher than the overall national average. However, as mentioned earlier, non-Internet households also probably represent a smaller portion of the overall book market. Students indicated that nearly 39 percent of their spending on new books of all types is at their college bookstores. Nearly 25 percent of their new-book spending is with online channels, followed by 22 percent with national bookstore chains (e.g., Barnes & Noble, Borders). Collectively, these three channels account for nearly 85 percent of students’ spending for new books. Figure 48. Percentage of Spending on Books by Source—Students The same three channels account for the majority of student spending on used books, but the online channel takes a bigger portion at the expense of the national bookstore chains. College stores account for 38.5 percent of student spending on used books (almost the same percentage as for spending on new books), and online channels account for 33.4 percent. The percentage for national bookstore chains, which typically do not carry used books at their stores, drops to 2.2 percent, while spending with independent bookstores is 13.5 percent. Students also buy used books at thrift stores, yard sales, book fairs, libraries, and so on. Nonstudents indicated that 36 percent of their spending for new books was with online channels, followed by 30.4 percent with national bookstore chains, 14 percent with general retailers (e.g., Wal-Mart, Target), and 9.4 percent with independent bookstores. 53
  • 54. The top four channels accounted for 90 percent of nonstudents’ spending on new books, and, predictably, college stores accounted for only a small portion. Figure 49. Percentage of Spending on Books by Source—Nonstudents Nonstudents display very different shopping patterns for used books. Almost 40 percent of their spending for used books was with online channels; 21.5 percent (more than double the comparable percentage for new books) was with independent booksellers, and 27.5 percent was with “other locations.” Shopping Frequency and Habits Students purchased books an average of 7.5 times in the last twelve months, while nonstudents purchased books an average of 8.8 times. Dividing the number of books by the number of times the respondent made a purchase, we find that students purchase an average of 2.0 books per visit to a store or Web site and nonstudents purchase an average of 1.7 books per visit. Students spend an average of $56 per visit and nonstudents spend an average of $20. Figure 50. Number of Times Books Purchased over Last 12 months Figure 51. Books and Spending per Purchase In most situations, customers purchase only new books or only used books. Less than 15 percent of student purchases and 6 percent of nonstudent purchases are for simultaneous purchases of new and used books, perhaps partly because, in many cases, the customer is at a location where both kinds of books are sold. Figure 52. Number of Times Respondent Has Purchased Books by Category An important issue for publishers and authors is the extent to which a customer buys a used book and then later purchases a new book from the same author. In a sense, the used book may be a promotional device, introducing the reader to an author for whose new book the reader may then pay full price. Figure 53. Bought Used Book and Later Bought New Book by Same Author The research suggests that sales of used books provide some impetus for sales of new books, but it is not clear whether or to what extent this might compensate for substitutions of used books for new books. 54
  • 55. Among nonstudents who purchased a used book, 72.8 percent later purchased a new book by the same author at least once, although not necessarily in the last twelve months. The mean number of times nonstudents have purchased a new book by an author whose work they originally read after purchasing a used book is 2.3 . However, we do not know how many new books they purchased or when they made their purchases. Some 17.4 percent of nonstudents who purchased used books purchased new books by the same authors on five or more occasions. . Students are less likely to purchase a new book by the author of a book they bought as used. Nearly half (47.5 percent) indicated they have never purchased a new book by an author they had originally read after purchasing a used book, which may relate to the fact that students’ purchases are often textbooks. Students indicated they frequently shop for new books and compare prices of new and used copies; 36 percent of them said they usually or almost always compare prices at multiple stores or Web sites when shopping for a new book. Nearly 50 percent said they compare prices for new and used copies of specific titles; and 43 percent said they usually or almost always compare prices at multiple stores or sites when shopping for a used book. Figure 54. Price Comparisons—Students Nonstudents also indicated they do a significant amount of comparison shopping when buying books. Thirty-three percent said they usually or almost always compare prices at multiple stores or sites when shopping for a new book; 39 percent said they compare prices for new and used copies of specific titles; 33 percent said they usually or almost always compare prices at multiple stores or sites when shopping for a used book. Figure 55. Price Comparisons—Nonstudents Undoubtedly, the Web has made it easy to compare book prices before making a purchase. However, we sense that people may be overstating the extent to which they compare prices, partly because survey research in general reveals a tendency for respondents to overstate some activities and partly because most people probably do not shop prices for books at physical bookstores since the potential price savings are not enough to justify the extra time required to go from one store to another. Respondents may be projecting some of their Web-based book purchasing behavior onto their overall book purchasing activities. Availability of Used Books Availability is a critical issue for the used-book market. To the extent that customers have timely access to desired titles at competitive prices, the used-book market will continue to 55
  • 56. grow. Some 65 percent of respondents indicated that a used copy of a title was available when they recently purchased a book online. The other 35 percent indicated either that a used copy was not available or that they did not recall. Although we do not have any transaction data about the percentage of titles that are available online in both new and used copies, a quick scan of Amazon, B&N.com, and eBay suggests that most titles are available as used copies. Figure 56. Availability of Used Version of Title Among respondents who purchased a book from a college bookstore, 57 percent indicated that a used copy was available there, and 39 percent noted that their local independent bookstore had a used copy. Less than 10 percent of respondents purchasing from national or general bookstore chains indicated that a used copy was available. Since most of these retailers do not sell used books at their stores, we believe that many people confused remainders or other deep-discount books with used books. Used-Book Spending by Category Students indicated nearly 60 percent of their spending on used books is for educational material. The remaining 40 percent is distributed across a variety of general trade categories. Nonstudents primarily purchase fiction, nonfiction, and educational titles. Figure 57. Percentage of Spending on Used Books by Category Spending estimates by consumer and student respondents differ significantly from estimates by offline booksellers, who attribute a much higher percentage of sales to collectibles and nonfiction. Perhaps this is because consumers and students buy many of their used books from online sources and college bookstores, or because these buyers do not differentiate between collectibles and used books in other categories the way booksellers do. Spending on Used Books Instead of New Versions Most students indicated they purchased a used book even though a new copy was available, suggesting that used books are hurting new-book sales. This decision was especially common with regard to educational books (77 percent of students), but also very common with regard to general trade titles. A fairly small percentage of students (generally under 10 percent) indicated they purchased a used book because a new hardcover copy was not available, suggesting that they did not want a paperback or that they could get a used hardcover at paperback prices. Figure 58. Most Recent Used-Book Purchase—Students 56
  • 57. The behavior pattern of nonstudents was similar to that of students, but not quite as strong in terms of educational books. In general, 60 to 65 percent of nonstudents who purchased a used book did so even though a new copy was available. Figure 59. Most Recent Used-Book Purchase—Nonstudents From the publishers’ perspective, this trend is not encouraging, because it implies that nearly two of every three used books are being purchased instead of new books. Retailers are more likely to focus on the implication that at least three out of every ten used-book purchases are sales that would not have happened if used books had not been available. Students indicated nearly 75 percent of their used-book spending was for books that were available new; the comparable figure for nonstudents was nearly 64 percent. From the customers’ perspective, a significant amount of substitution is taking place. Figure 60. Used-Book Purchases Instead of New Version Used-Book Spending by Format Students and nonstudents estimated that around 45 percent of their used-book spending is for hardcover books, while the figure from the bookseller survey was around 65 percent. InfoTrends believes the customer estimates may be lower because many customers purchase used books at “other locations,” where paperbacks are common. Figure 61. Percentage of Spending on Used Books by Format Consumers purchase used hardcover books primarily because used hardcovers tend to be in better condition than used paperbacks, and also because people like getting a hardcover book at paperback prices, which suggests that used-book sales may also impact the new- paperback market. Figure 62. Reasons to Purchase Hardcover Used Books Book-Shopping Habits and Preferences InfoTrends asked respondents to describe their shopping behavior by choosing among the phrases listed in Figure 63. For most categories, 70 percent or more of the respondents will purchase only a new book or prefer a new book. The exception is educational books; around half the respondents will purchase only new educational titles, or prefer to purchase them new. Less than 10 percent of respondents indicated they will consider only used books. 57
  • 58. Figure 63. Book-Shopping Habits and Preferences Price is the most important factor in determining whether a consumer selects a new or used copy of a book; about two-thirds of respondents rate it as a significant or critical influence. Close behind was the condition of the book. Just over 40 percent of respondents cited “new book is not available” as an important factor. Other factors, such as the availability of a hardcover new copy and the reputation of the bookseller, are relatively unimportant. Figure 64. Influence of Factors in Purchase of Used Book vs. New Book In short, the research indicates that, as in many other markets, price, quality, and availability are key factors in determining purchases. Judging from discussions with used-book sellers, InfoTrends believes that used-book prices will continue to drop, and that quality and availability will improve. Price Sensitivity To get a sense of price sensitivity in the absence of hard data on transactions, we presented a series of new-book prices and asked respondents to indicate the highest price they would be willing to pay for used copies in very good condition (excluding collectibles); we defined “very good” to mean “a book that shows some small signs of wear (but no tears) on either the binding or paper.” Figure 65 shows the average price students and nonstudents would be willing to pay for a used book in very good condition at various new-book prices. For example, students indicated they would be willing to pay an average of $4.70 for a used book in very good condition that had a new-book price of $10. Moving out along the X-axis, note that students would be willing to pay an average of $14.60 for a used book in very good condition that had a new-book price of $29, and an average of $64 for a used book in very good condition that had a new-book price of $149. Figure 65. Highest Price Willing to Pay for Used Book in Very Good Condition Note that students typically are willing to pay a higher price for a used book at any given new-book price than are nonstudents. InfoTrends suspects that students may be conditioned to pay higher prices by their experience with college textbooks. To determine the relative price students are willing to pay for a used book at various new- book prices, we divided the willing-to-pay price for a used book by the corresponding new-book price. The data indicate that students are willing to pay around 50 percent of the price of a new book for a used book in very good condition. However, for new books 58
  • 59. priced over $49 (like many new textbooks), the percentage drops, suggesting that students become more price sensitive in the higher price range. Figure 66. Percentage of New-Book Price Willing to Pay for Used Book in Very Good Condition Nonstudents follow a similar pattern but are generally willing to pay between 10 and 15 percentage points less than students at each new-book price. Repeating the exercise for books in fair-to-good condition, we stated, “Assume FAIR TO GOOD means a worn used book that has all pages present, but may have some scuffs, stains, or spots.” Respondents indicated they were willing to pay approximately 10 to 15 percentage points less for a used book in fair-to-good condition than for one in very good condition. Again, students are willing to pay slightly higher prices than nonstudents. 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 Worst Condition of Used Book Willing to Purchase Most respondents indicated they are willing to buy a used book that is in good condition or better, although respondents generally want a “like new” condition for books intended as gifts. A significant percentage (31.3 percent) are willing to buy used books in only fair or acceptable condition. Obviously, they expect to pay much less for them than for books in better shape. Figure 69. Worst Condition Acceptable for Used Book While the respondents indicated that they are willing to purchase books in good or fair condition, it appears that most of the used books they did purchase were in very good or like-new condition. Figure 70. Percentage of Used Books by Condition As with booksellers, we asked consumers to segregate the hurt and remainder books from used books to the extent possible, but consumers are not likely to distinguish between a book in “like new” condition that is truly used (i.e., previously purchased by another customer and then resold) and a new book that is deeply discounted or hurt. 59
  • 60. Overall Value of Used Books Asked to indicate the overall value of used books in relation to new books—taking condition, availability, and price into account—most students (70 percent) and nonstudents (73 percent) indicated that used books have either a slightly or a significantly lower value than new books. We anticipated that a larger percentage of respondents would cite used books as providing better value and believe that people feel new books are worth more because they are in better condition. Figure 71. Overall Used-Book Value vs. New Books Respondents indicated they believe new books are better than used books in terms of quality or condition, availability, and delivery time, and that used books are better in terms of price. They were nearly evenly split in terms of overall value. Figure 72. Whether New Books or Used Books Are Better Satisfaction with Used-Book Purchases Most respondents (around 65 percent) have generally had very good or excellent experiences when purchasing used books. Another 31 percent indicated they have had a few “surprises” but generally had good experiences. Less than 5 percent indicated they have had fair or poor experiences. Figure 73. Satisfaction with Used-Book Purchases Another method for determining satisfaction is asking whether people would recommend to friends that they consider purchasing a used book the next time they are shopping for a book. Approximately 74 percent of respondents stated that they would, while only about 7 percent indicated they would not. Overall, these satisfaction ratings are high and suggest a high level of repeat business. Figure 74. Would Recommend Purchasing Used Book Students and Consumers Selling Used Books Nearly 57 percent of students and 44 percent of nonstudents indicated that they had sold a used book at some point. Within these groups, students indicated they have sold an average of 6.4 books (median of 5) and nonstudents indicated they have sold an average of 9.2 books (median of 3) over the last twelve months. InfoTrends suspects that many people are including used books they have sold during a longer periods of time, perhaps 60
  • 61. because they are still thinking in terms of the previous question. In any case, it is significant that such a large percentage of book buyers are also book sellers. Figure 75. Have Sold Used Book Figure 76. Number of Used Books Sold over Last 12 Months Students indicated that nearly 75 percent of their book sales have been through college stores or online channels. This percentage correlates closely with the percentage of their used-book buys from the education category. It is likely that students rely primarily on these two channels to dispose of unwanted textbooks. Figure 77. Percentage of Used Books Sold by Channel Figure 78. Percentage of Sales of Used Books by Category As might be expected students have primarily sold used textbooks while non-students have primarily sold used fiction and nonfiction books. However, note that nonstudents reported that over 21 percent of their used-book sales were textbooks. Nonstudents rely on more channels to sell their used books. The newest channel, online, accounts for the highest portion (35 percent), followed by the oldest channel, yard sales (25 percent). Our sense is that online channels are best for selling higher-priced or more valuable books, while the yard sale is an easy way to dispose of larger numbers of books at rock-bottom prices. Considered Selling Used Books Among respondents who have never sold a used book, nearly 53 percent of students and 65 percent of nonstudents never considered selling one, usually because of a desire to keep their books. Other common reasons include not wanting to bother with the process, not being familiar with the process, and preferring to donate books to libraries or other not-for-profit organizations. Figure 79. Considered Selling Used Book Figure 80. Reasons for Not Considering Selling Used Book 61
  • 62. Used-Book Market Size To size the U.S. used-book market, InfoTrends worked with twenty different companies and organizations. As explained above, the three primary information sources were transaction data from the leading online marketplaces and retailers; structured surveys with online booksellers, consumers, and students; and secondary information from a variety of trade associations, industry vendors, and government agencies. Using this information, InfoTrends developed an extensive market model to quantify units and revenue by book category. Figure 81. Used-Book Market-Sizing Methodology New- and Used-Book Unit and Dollar Sales by Category Approximately 111.2 million used books were sold at a retail value of $2.2 billion in the U.S. market in 2004. Unit sales grew by 11.0 percent, and revenue grew by 11.1 percent in 2004 over 2003. 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. Figure 82. U.S. New- and Used-Book Consumer Expenditures and Units Used-Book Unit and Dollar Sales by Category Educational books (textbooks, other course material) is 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 total revenue). The average sales price of a used textbook in 2004 was $42.31. Noneducation books—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). The average sales price was $8.12. All prices exclude any applicable shipping fees. Figure 83. 2004 U.S. Used-Book Market by Category—Units and Sales Figure 84. 2004 U.S. Used-Book Units, Sales, and Average Sales Price Summary Units (million) Revenue ($($ million) Revenue million) Average Sales Price On-line Stores Other Total On-line Stores Other Total On-line Stores Other Total Education 6.8 31.8 0.0 38.6 $181 $1,453 $0 $1,633 $26.68 $45.63 $42.31 Non-fiction 22.3 7.2 13.5 43.1 $313 $40 $36 $389 $14.03 $5.54 $2.64 $9.02 Fiction 10.7 8.8 6.0 25.6 $69 $37 $10 $117 $6.44 $4.21 $1.73 $4.56 Antiquarian & Collectible 1.3 2.6 0.0 4.0 $47 $37 $0 $84 $34.95 $14.09 $21.10 Total 41.1 50.6 19.5 111.2 $609 $1,567 $46 $2,223 $14.81 $30.99 $2.36 $19.98 Non-Education 34.4 18.7 19.5 72.6 $429 $115 $46 $589 $12.47 $6.12 $2.36 $8.12 [Footnote]* Excludes shipping fees. 62
  • 63. [TYPESETTER: Please insert asterisk in chart above following “Average Sales Price” column heading.—JS] Used-Book Unit and Dollar Sales by Channel Online channels -- including online marketplaces, online specialists, and the Web sites of bookstore chains and independent bookstores – accounted for 41.1 million used-book unit sales (37 percent). Another 50.6 million (45 percent) of used-book units were sold at physical bookstores, and 19.5 million (the remaining 18 percent) were sold at other locations, including thrift shops, book fairs, and yard sales. Figure 85. U.S. Used-Book Market by Channel—Units (million) Unit sales of used books through online channels increased 34.2 percent in 2004 over 2003, representing the majority of year-over-year growth in the used-book market. Bookstore used-book units were up only 0.8 percent, and most of that growth came in college stores. Sales of used-book units at independent bookstores (excluding college stores) are declining. Growth of used-book units in other channels is essentially at the rate of population growth (about 1 percent). The bookstore channel accounted for over 70 percent of used-book revenue, followed by online channels at 27 percent and other channels at a mere 3 percent. The bookstores’ high share reflects the facts that most used textbooks are sold through bookstores and that average textbook prices are much higher than average prices of general trade titles. Figure 86. U.S. Used-Book Market by Channel—Revenue ($ million) Used-Book Unit and Dollar Sales via Online Channels Over 41 million used books with a retail value of $609 million were sold in 2004 through online channels, including online marketplaces, online specialists, and Web sites of bookstore chains and independent bookstores. Unit sales in this channel grew by 34 percent, while dollar sales grew by 33 percent, in 2004 vs. 2003. The online channel accounted for nearly 95 percent of the unit growth and 70 percent of the sales growth in the used-book market in 2004. Sales through online channels are weighted toward noneducation titles, which represent approximately 83.5 percent of online used-book unit sales and over 70 percent of online used-book revenue Figure 87. 2004 U.S. Used-Book Market—Online Channels 63
  • 64. The online channel accounts for only about 17.5 percent of used-book unit sales and 11 percent of used-book dollar sales in the education segment, which is dominated by physical bookstores, especially college bookstores, and accounts for more than 80 percent of market share. However, the research suggests that online channels are gaining share in the education market. InfoTrends estimates that sales of education category units through online channels grew by nearly 52 percent in 2004 and that revenue grew by nearly 59 percent. Some of this growth was from sales via traditional college bookstores’ Web sites, but most came from non–college store sales. All the major marketplaces indicated that the education segment is one of their fastest-growing segments. Figure 88. U.S. Online Used-Book Market by Category—Units (million) Figure 89. U.S. Online Used-Book Market by Category—Revenue ($ million) Used-Books Unit and Dollar Sales via Bookstores Over 50 million used books with a retail value of $1.57 billion were sold in 2004 through bookstores, including sales at physical college stores, independent bookstores, and branches of bookstore chains (sales through chains’ sites are included in the online channel). Unit sales grew by only 0.8 percent, and dollar sales grew by 4.6 percent, in 2004 vs. 2003. The revenue increase derived primarily from higher prices of used textbooks. Figure 90. 2004 U.S. Used-Book Market—Bookstores Approximately 63 percent of used-book unit sales and 93 percent of used-book dollar sales through bookstores were of textbooks and related educational material. However, data from the bookseller survey indicates that less than 5 percent of these unit sales at non–college bookstores are of educational materials. The size of the used-book educational book market and the dominance of the college stores are very evident. InfoTrends believes sales of used books at bookstores will be flat at best over the next few years. Most used-book stores are seeing a growing portion of their business come via the Web. We also believe that many college stores will expand their Web-based sales activities over the next few years to avoid the risk of losing business to other online players. However, the campus and near-campus bookstore will continue to account for the majority of sales for the foreseeable future because of convenience and large local markets. 64
  • 65. Used-Books Unit and Dollar Sales via Other Locations Nearly 20 million used books with a retail value of $46 million were sold through channels other than the Internet and bookstores in 2004, including yard sales, library sales, book fairs, flea markets, and other nontraditional sales locations. This segment is the most difficult to estimate because there are no good sources for transaction data and no direct surveys. The market could be significantly larger than these figures indicate, but we believe that it is not likely to grow very fast and that many books bought at “other locations” are then resold by professional booksellers. Figure 91. 2004 U.S. Used-Book Market—Other Locations Unit sales in other locations grew by only 0.9 percent, and dollar sales grew by 1.5 percent in 2004 vs. 2003. Essentially, this channel is growing at around the same rate as population and households. InfoTrends believes that it is being affected by the online channel, as many consumers sell their more valuable titles there. Average Sales Prices To estimate the average sales price per unit for used-book sales in all channels, we divided revenue by units for each category. As might be expected, at $42.31 per used book, educational titles command the highest average sales price. Antiquarian and collectible books were next, at $21.10, reflecting a range from rare books priced in the thousands of dollars to first editions or signed copies in the $15 to $50 price range. Figure 92. Used-Book Average Sales Price by Category Nonfiction used books—a segment including many paperbacks and many units sold at “other locations” for very low prices—had an average sales price of $9.02 in 2004. The nonfiction category includes various subject subcategories as well as professional and religious books. Professional books tend to have the highest average selling price. Fiction—also a segment with many paperbacks and many units sold at low prices via “other locations”—had an average sales price of only $4.56. Average prices at online channels are typically higher, except for used books in the education category, since college bookstores can charge top price for titles being used the following semester. Several antiquarian and collectible book dealers indicated that many of the best titles are “going to eBay,” where a national or international market may bid up the price. InfoTrends believes the access to these markets via the online channel is essential in getting better prices than local bookstores can charge. Figure 93. Used-Book Average Sales Price by Channel and Category 65
  • 66. Average sales prices in the online channel increased for education and antiquarian and collectible titles, but declined for fiction and nonfiction titles. InfoTrends believes the online channels are gaining share within the education market and getting more of the better titles than they have in the past. We also believe that more and more sellers are looking to the Web for the best price when selling rare books. With respect to general trade titles, our sense is that the growing number of online specialists and individual consumers selling online are driving down average sales prices. Figure 94. Online Used-Book Average Sales Price by Category Used-Book Five-Year Growth Estimate This project did not have long-term forecasting as an objective. However, we looked at the ratio of used-book to new-book sales, spoke with a variety of industry players, and made some assumptions to develop a high-level forecast. The numbers are directional. We believe several more years of detailed market sizing (through studies similar to this one) are necessary to develop a more accurate forecast by channel, category, and other critical metrics. Judging from conversations with executives of NACS and MIR and conversations with publishers, the consensus is that the used-textbook market has been relatively stable at approximately 33 percent of industry sales over the last ten years. InfoTrends believes that a portion of its sales will shift to online channels. We also believe that sales of used nontextbook titles in the education market (other general trade and professional books used in courses) may increase its size. College stores have not focused on these titles as much because they are often not used in successive semesters, the price points are relatively low, and there is competition from other suppliers While the Internet could contribute to growth of used-textbook sales, InfoTrends anticipates that they will grow only a few more percentage points relative to the overall education book market, perhaps reaching 35 to 37 percent over the next five to ten years. The bigger question involves the noneducation market, particularly the trade fiction and nonfiction segments. Used-book revenue from noneducation titles grew by around 30 percent in 2004. At this writing, independent bookstores are continuing to bring their inventory online, online marketplaces are increasingly aggressive in marketing used books, and more consumers are selling books online. We anticipate that libraries will start using the Internet more effectively to dispose of older books and to round out their collections, and we note that consumers express a high level of satisfaction with their used-book purchases. In other words, there will likely be growing inventory and growing demand for used books. We assume that the antiquarian and collectible market, which is increasingly dominated by Web-based auctions and sales, will remain a relatively minor part of the noneducation market. If the consumer trade market for used books (excluding books in the education category and books purchased by institutions such as libraries and schools) grows at 25 percent per 66
  • 67. year through 2010, InfoTrends projects total used-book revenue will reach nearly $2.25 billion. We did not estimate unit growth, but since we believe that average sales prices will continue to decline over the next few years, we expect an even higher percentage of unit growth. Figure 95. Five-Year General Trade Used-Book Sales Projection Assuming that sales of new books grow at 1 percent per year (slightly below the historical average over the last five years), the used-book market will account for 9.4 percent of total consumer expenditures on general trade books in 2010. To put this figure in perspective, recall that the used education market is approximately 33 percent of the total value of education books. It is important to emphasize that these estimates are very rough and require additional data and analysis. However, they do give a sense of direction. 67
  • 68. Conclusions From this study, it is clear that used books are one of the fastest-growing segments of the book publishing industry, and that the industry is continuing to go through a significant transformation. As the Internet eliminates much of the friction in book-buying and bookselling processes, it changes the ways authors, publishers, booksellers, and end customers interact. The various online marketplaces and e-businesses have: • exposed thousands of 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 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. • 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. • 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. 68
  • 69. Consumers express high satisfaction with their used-book experiences. Nearly 75 percent would recommend to friends that they consider purchasing a used book, and consumers generally express high satisfaction in their ability to find titles, the condition of the used books, the delivery time, and the price. Perhaps even more important, consumers are realizing they can usually find a used copy of a desired new title very soon after publication. The turnover of used books is much faster now that consumers can quickly resell new books they do not want to keep, recouping much of their initial payment for books that are only a few weeks or months old and in good condition. Professional booksellers are increasingly aggressive in obtaining desired titles through various channels and buy-back programs. Large used-book sellers report they typically have a used copy of a new fiction book within two months after the title is published. And since the national used-book inventory is always accessible to any individual consumer, the probability of a market (buyer and seller meeting at a price) for a specific book is much greater now than ever before. InfoTrends believes that consumer book-buying behavior will evolve as many customers decide to wait until a used book becomes available instead of paying top price for a new book. A rough analogy exists in the market for movies. Depending on the movie (the stars, the subject, the reviews, the market hype), a consumer may choose to see it at a theater, wait for it to come out on DVD, or wait for it to run on cable or broadcast television. Depending on the book (the author, the subject, the reviews, the hype), consumers may choose to buy the book new, wait for a used copy, or wait for the book to be available at a local library. We also expect that the education used-book market will evolve. This market did not need the Internet to reach (and plateau at) 33 percent of total sales, because there was relatively little friction in it. The college bookstore was the marketplace. Virtually all students came to buy and sell their books there because of convenience and prices. Usually, they could find the books they needed to buy, choose between new and used copies, and get the best price when they sold books scheduled for class use in the subsequent semester. While students grumbled about the high prices they had to pay and the low prices they could charge, the college store was effectively the only show in town. This model is changing because students can easily visit a variety of marketplaces from their rooms and shop for better prices when buying and selling their books. College bookstores still enjoy the advantage of having their inventory near their customers, enabling them to eliminate the costs of shipping to end users. However, we anticipate that they will soon face much more competition from local independent bookstores and online marketplaces for inventory and sales of titles that will not be used the next semester. Used-Book Market Battles 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 this market. 1. The booksellers’ battle to tie into electronic marketplaces. That battle is almost over. The major marketplaces have been rapidly adding used-book sellers over the last 69
  • 70. three years. We expect that virtually all professional used-book sellers will participate in one or more marketplaces within the next two or three years. We also expect that most independent new-book stores will come online, and many will add used books to their stock to compete, or keep up, with the bookstore chains and major online marketplaces. We do not expect booksellers to shift out of a marketplace once they have established a presence and steady revenue flow, but a bookseller may establish a presence on multiple sites to increase exposure. International markets will be the next front in this battle, as online marketplaces establish partnerships or their own brands overseas, particularly in Europe, Asia, Australia, and South and Central America. The European market is already well developed. Look for sites to support multiple languages and enhance local customer support abroad to attract foreign booksellers and appeal to wider consumer markets. We expect some consolidation among the online marketplaces through buyouts and mergers designed strengthen brands, expand inventory, increase listing and transaction fees, and decrease operating costs. An obvious play is for larger marketplaces to buy out smaller ones. Alternatively or in addition, major publishers or retailers may reposition themselves by taking over online marketplaces. 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. Competition for used copies of new titles soon after publication will intensify. Marketplaces increase inventory primarily by signing up more booksellers and by enabling sales of used books by consumers. Some marketplaces (e.g., Abebooks, Alibris) are focusing on professional booksellers by establishing monthly listing fees that deter individual consumers. Other marketplaces (e.g., Amazon, eBay) encourage consumers to sell used books through their systems. InfoTrends expects that there will continue to be both professional bookseller-based marketplaces and consumer-based marketplaces for inventory. However, we also believe that most marketplaces will eventually enable sales of used books by consumers to professional booksellers or directly to other consumers. The exception will be marketplaces that focus on rare books, a very small portion of the market. InfoTrends believes most marketplaces will enable consumers to resell books so that the marketplace (and by extension its professional booksellers) can quickly assemble an inventory of desired titles. The marketplaces and the professional booksellers need to maintain relationships with end customers to insure that the customers come back to their sites on a regular basis and buy most of their books there. Knowing that the most-avid book readers tend to buy the most used books and are very good candidates for reselling some books, the marketplaces and their booksellers cannot risk letting consumers bring that aspect of the business to other locations. Look for Web- based buyback programs and consumer-oriented reselling tools to become much more common. InfoTrends also expects that libraries will transform the way they manage and dispose of their excess inventory. Libraries are among the biggest book buyers, have limited shelf 70
  • 71. space, and must increasingly fight for budget in many cash-strapped cities, towns, schools, educational institutions, and business organizations. We anticipate that many Friends of Libraries sales will be supplemented, or even replaced, because specialized services will buy large quantities of inventory for resale through various marketplaces. Given automated pricing, listing, and payment processes, we anticipate that many libraries will sign up for fixed programs or auction off inventory at regular intervals. There may be some local concern that public property is being sold to benefit private interests, but our sense is the financial benefits (e.g., reducing the library’s disposal costs, generating incremental revenue for the library) will become evident and accepted as desirable. InfoTrends can also envision automation of used-book sales at “other locations.”. Conceivably, the professional booksellers and scouts who frequent yard sales, book fairs, estate sales, and the like in search of underpriced used books might use some type of handheld wireless device to scan in a book’s barcode or ISBN and look up the price by querying a marketplace database The net result of all these inventory battles will be more used-book titles available faster. 3. The battle for consumers. This is the ultimate battle for online specialists, independent bookstores, national bookstore chains, and online marketplaces alike. 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. Some booksellers will focus on niche markets (e.g., rare books, military history, foreign language) while others focus on mass markets by emphasizing availability, price, and volume. In general, we expect that marketplaces will shift their resources from developing infrastructure and obtaining more booksellers to marketing and customer service. Look for used-book tools and services that help customers find books, answer questions quickly, get reviews and ratings, link to sites dealing with related topics, sell back used books, and generally have better customer experiences. Publishers, particularly publishers in the general trade and professional segments, are, of course, factoring the growing used-book market into their changing business equations, recognizing that: • The Internet has made the global inventory of used books much more transparent. • Booksellers are increasing their inventory of used books and marketing them more vigorously. • 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; used books are often a factor in a consumer’s buying decision. 71
  • 72. • When unit sales of new books are flat or declining, revenue growth depends mostly on price increases, and price increases stimulate demand for used books. • The used-book market is growing rapidly and will continue to grow for the foreseeable future. • Publishers and authors are not participating in this market to any significant extent. Over the next five years, we expect, the vast majority of general trade used books will be sold via the Internet. Used-book sellers that are not already participating in one or more marketplaces are clearly late to market and probably losing share to other players. We also expect a shift in sales of education books to the Internet, but that will happen more slowly and be less extensive than the shift in sales of general trade titles. Over the next few years, we believe there will be fewer independent used-book stores and more used-book sellers. Some traditional used-book stores will close their retail locations and become online sellers. More independent new-book stores will sell used books to serve their customers better and compete with the national bookstore chains. The result could be more competition for inventory (potentially driving up costs) and more competition for sales (potentially driving down prices). Online, booksellers are likely to focus on niches or become more volume- and price- oriented. General used-book stores without steady customer followings or efficient operations will be marginalized. InfoTrends expects that the bookstore chains will become more active in the used-book market, particularly through their online stores. National players with large customer bases need to maximize their share of wallet and minimize the times a customer cannot find a book at their sites in the desired price range and condition. We do not anticipate that the bookstore chains will stock large numbers of used books at their local stores, given the costs of space and transportation and the risk of being stuck with unsold inventory. Although they may stock selected used-book titles (e.g., textbooks, hardcover versions of titles with strong sales records), they will continue to rely mostly on third-party booksellers that sell through their main Web sites. The big question will be whether to control the brand experience (like Books-A-Million) or to partner with a network of independent booksellers (like Barnes & Noble). We would not be surprised to see some large general merchandisers (e.g., Wal-Mart or Target) enter the used-book business. Such companies have very high traffic and many repeat customers who are motivated by a good deal. Mass merchandisers could easily tap into the online marketplaces and begin selling new and used books via their Web sites, and their marginal costs would be very low once a system was in place. Their primary concerns would probably be quality control, in terms of impact on their brands resulting from reliance on third-party booksellers, and the likelihood of generating sufficient sales in competition with established competitors. In any event, two broad conclusions seem inescapable: 72
  • 73. Today’s used-book market is a technology-enabled marketplace that is behaving rationally. Booksellers are trying to maximize profits, and end customers are seeking to maximize utility. Like the music, movie, and television industries, the book publishing industry is facing new business models, and all players have to confront the reality of the new market and adapt quickly. 73
  • 74. [note to typesetter – here, too, itals, bf, type size etc. are meant simply to indicate levels of content. Please spec – or ask us to spec – as you see fit.] [HEAD] Major Data Sources Abebooks.com Founded: 1996 Headquarters: Victoria, B.C., Canada Key executives: Hannes Blum, CEO; Boris Wertz, COO Bookseller focus: Independent booksellers and consumers Number of booksellers: 13,000 in 50 countries (as of November 2005); 9,000 in North America; 4,000 in Europe Inventory of books: Over 70 million (as of November 2005) Employees: 110 Web sites: 6 global Web sites (Abebooks.com, Abebooks.co.uk, Abebooks.de, Abebooks.fr, Iberlibro.com, and Bookfinder.com) Abebooks is an online marketplace for new, used, rare, and out-of-print books. The company serves professional booksellers through its Web sites and bookseller tools. The tools include HomeBase, desktop inventory-management software for small to midsized booksellers (under 50,000 units). HomeBase lets booksellers easily upload their books to Abebooks‘ database and features ISBN lookup for faster cataloging. The company estimates that 75 percent of its listing sellers, and many nonlisting booksellers as well, use HomeBase. The Abebooks Web sites are designed to help book buyers find and purchase new and used books from the network of independent booksellers. The firm has published these metrics about its business: • Abebooks facilitates approximately 20,000 book sales each day. • Booksellers load more than 200,000 books per day into the Abebooks virtual inventory. • The average bookseller lists approximately 5,000 books. • Over 4 million people visit Abebooks’ sites each month. • Customers perform nearly 2 million book searches on the Abebooks Web sites per day. • The value of books (“annual gross merchandise volume“) sold in 2004 on Abebooks was over $130 million. • More than 10 million books have been added to the Abebooks inventory since its official announcement in June 2004 that new books would be listed. 74
  • 75. • Textbooks have become a major source of revenue, with sales in February 2005 up 400 percent over February 2004. As at other online marketplaces, customers can search and browse the virtual inventory at Abebooks. When searching for specific titles or browsing subjects, customers see the book, price, description, and the bookseller’s name. The interface (search, review, shopping cart, etc.) is all Abebooks.com, but the buyer knows fulfillment will be handled by an independent bookseller. Abebooks features areas for rare books, textbooks, new books, book clubs, and foreign books. It also regularly profiles and interviews authors and offers monthly newsletters and contests to consumers. In 2005, Abebooks increased its marketing to college students through on-campus activities to build awareness and a strong customer base in this lucrative market. The company generates revenue through a monthly subscription fee, sales commissions, and credit-card processing fees. The monthly subscription fee is based on the number of books listed. After a successful sale via the Abebooks shopping basket, a sales commission on the book price only is incurred. Abebooks will process credit-card transactions for a percentage of the order-item value, charged per item. Abebooks no longer enables booksellers to list their books automatically at other sites (e.g., Amazon, Barnes & Noble.com) using Abebooks tools. The company is focusing its resources on building up customer visits to the Abebooks sites. Booksellers are free to list books with other marketplaces, but must work directly with them. Recently, Abebooks purchased BookFinder, a price-comparison shopping service dedicated to books. Based in California, BookFinder will continue to operate as an independent business but will have access to Abebooks’ resources. Alibris.com Founded: 1998 Headquarters: Emeryville, CA Key executives: Martin Manley, CEO; Brian Elliott, COO Focus: Independent booksellers, business partners, libraries Number of booksellers: 10,000 (as of October 2005) across 60 countries, but mostly in the United States Inventory of books: Over 55 million (as of October 2005) Alibris provides an exchange that enables booksellers to “list once, sell everywhere“ and helps buyers find essentially any book ever printed. The company lets professional booksellers sell their books through the Alibris consumer Web site and through a large number of business partners. Its business partnerships now include retailers such as Amazon, Barnes & Noble.com, Books-A-Million, Borders, Chapters/Indigo, and eBay/Half.com, and it has built 75
  • 76. distribution partnerships with Ingram, Ambassador Books and Media, Baker & Taylor, Blackwell‘s Book Services, Bowker, Chapitre, Coutts Information Services, Dawson Books, Eastern Book Company, Ebsco Books, Franklin Book Co., Gardners, Kinokuniya, OCLC, The Book House, and Yankee Book Peddler. Alibris generates roughly half its sales from its business partners and half from consumers who buy through its site. The company has a spectrum of business-management tools and services for professional booksellers that are designed to automate key aspects of their operations, including: • inventory listing: rapid cataloging from its database of 10 million ISBN and pre-ISBN equivalents • inventory management: efficient and simple inventory uploading and updating • pricing management: quick pricing and repricing of books to reflect current market conditions • order fulfillment: managing orders from multiple buyers through an integrated interface • customer service: building a reputation with customers directly and quickly • payments: managing payments, fees, and returns through a single, simple interface • business reports: quickly understanding what is selling and which books may need repricing Professional booksellers working with Alibris can list their inventory once and have it appear on the sites of all the Alibris business partners. Alibris works with each partner to ensure that data are properly formatted and uploaded to their systems. Alibris generates revenue from booksellers through monthly listing fees and flat commission fees on product sales. The monthly listing fee is based on the on the number of titles. Commissions vary according to a number of factors. This company enables libraries to build collections quickly through one-stop shopping and special services. The company works with thousands of libraries and supports most major academic research libraries in North America. Its warehouse and shipping center consolidate library orders from a variety of suppliers around the world. Alibris accepts both credit cards and purchase orders from institutional purchasers. It also offers online account-management tools for managing large-scale collection-development projects and coordinating selection, acquisition, and administrative functions. It does not buy books back from libraries directly, but it supports sellers who do so. Amazon.com Founded: 1995 Headquarters: Seattle, WA Key executive: Jeff Bezos, president and CEO 76
  • 77. Focus: Consumers, professional booksellers Number of booksellers: Undisclosed Inventory of books: Undisclosed Amazon leverages its brand, customer base, and search engine, as well as the transaction infrastructure that it established for the sale of new books with a virtual used-book inventory from thousands of third-party booksellers and individual consumers. On the buy side, consumers can search for titles and see listings of new books stocked by Amazon as well as links to new and used versions from its marketplace sellers. The used books are typically listed by price in ascending order with a section for “collectible“ items such as first editions or signed copies. The consumer purchasing process (i.e., interface, shopping cart, confirmation) is managed by Amazon. Consumers receive notification from Amazon that a transaction has been processed. Additional communication about order fulfillment typically comes from the third-party marketplace bookseller. On the sell side, consumers and professional booksellers can list and sell new or used books through Amazon’s Marketplace. Amazon also has an auction site and zShops, which are online storefronts for retailers under the Amazon umbrella. Using Amazon’s Marketplace, a consumer or professional bookseller lists a book, provides a description, specifies the condition, and sets the price. The Amazon interface is intuitive and geared to individual consumers or “nonprofessional“ booksellers who want to sell their used books. The sellers go through a series of pages, providing information about the books they wish to sell (ISBN, condition, comments) and their accounts. The tools are easy to use and good for one-off sales that are typical of consumers. As part of the listing process, Amazon provides information about the current Amazon new-book price for the title as well as the current low price of used copies from other suppliers. Essentially, Amazon is showing customers what the current market ceilings and floors are for their titles. In addition to the “Sell an Item“ interface, Amazon offers Pro Merchants volume-listing tools, which allow sellers with databases to upload and manage their inventory in bulk. These tools accept standard text upload files as well as database exports from applications supporting the UIEE (Universal Information Exchange Environment) catalog format, such as BookTrakker Pro, HomeBase, and Record Manager, among others. In addition to bulk upload tools, Pro Merchant sellers can request and receive open listings and order reports through their seller account pages. Amazon collects fees only when an item sells. At the time of the sale, it collects the sales price and shipping costs from the buyer, and deducts a commission, a per-transaction fee, and a variable closing fee. Individual sellers pay nothing if an item does not sell within 60 days, at which point the listing is closed. 77
  • 78. Amazon also has a Pro Merchant Subscribers offering designed for high-volume sellers (e.g., professional booksellers). The bookseller pays a flat subscription fee. Amazon waives the per-transaction fee, and listings remain on the site indefinitely unless the books sell, the seller removes them, or the seller cancels the Pro Merchant subscription. Booksellers can also list on Amazon via Alibris and its terms, pricing, and suite of tools. When an item sells at Amazon Marketplace, Amazon gives the seller a shipping credit to help cover shipping costs. Sellers are paid through Amazon Payments, which automatically transfers net earnings to the seller’s checking account every fourteen days. No separate Amazon Payments fees are assessed on Amazon Marketplace sales. With zShops, a professional bookseller can have a storefront within the Amazon site. As is the case for Marketplace, the bookseller can list books using Amazon’s bulk uploading tool, which supports spreadsheets or database exports from applications supporting the UIEE catalog format. The primary difference between zShops and Marketplace is that Marketplace items are listed directly on the detail pages of the Amazon catalog, whereas zShops items are listed as standalone offers in the zShops store. Because zShops items are not required to match the Amazon catalog, Amazon provided sellers with a way to list items that could not be included in the Amazon catalog when it launched zShops in 1999. Now, booksellers can create detail pages directly in the Amazon catalog, including pages for pre-ISBN and out-of-print titles, making it possible for them to sell more of their inventory on Marketplace. zShops is available to Pro Merchant subscribers (for the $39.99 monthly subscription fee). Amazon also charges a closing fee based on the sales price of an item. Barnes & Noble.com Founded: 1997 Headquarters: New York, NY Key executive: Marie Toulantis, CEO Focus: Consumers, professional booksellers Number of booksellers: 5,715 (as of November 2005) Inventory of books: 35 million (as of November 2005) Barnes & Noble.com (www.bn.com) is a wholly owned subsidiary of Barnes & Noble, Inc. (NYSE: BKS), “the world’s largest bookseller.“ It sells new books, music, movies, and other items. Through a network of book dealers, it also makes used and out-of-print books available for sale. Barnes & Noble.com’s proprietary search engine lets customers search by title, author, keyword, or ISBN. The site presents full bibliographic information and images on each title, along with third-party and customer reviews, excerpts such as first chapters and tables of contents, author-led reading group content, and other proprietary content written exclusively for Barnes & Noble.com. 78
  • 79. Customers searching for a particular title can either purchase the book new from Barnes & Noble.com or purchase it used through a link that will take them to a listing of authorized book dealers that have the book in stock. The dealers list the condition and price of the book along with other information, such as whether it is a first edition and/or signed. Profiles and seller comments about the thousands of dealers authorized to sell on Barnes & Noble.com are displayed. Customers can also search specifically for used and out-of-print titles by going directly to the Used and Out-of-Print storefront, reached by a tab on the main navigation bar. Shipping and customer service for used and out-of-print books are handled by the authorized booksellers, which have agreed to provide the high level of service Barnes & Noble.com customers expect. Barnes & Noble.com has a special section on its Web site for customers who want to purchase new and used textbooks or to sell their used textbooks and other course material back to Barnes & Noble.com. An application on the site produces a price quote after input of an ISBN. Costs for shipping a book to Barnes & Noble.com are included in the price quote. The price does not include any reference to the condition of the book, although Barnes & Noble.com indicates in its FAQ section that books must be in good condition and states in the confirmation e-mail that it will destroy any books it deems in unsatisfactory condition. An email confirmation is sent to each customer, detailing necessary information and including a link to a prepaid shipping label. Payment is generally made within two weeks after receipt and satisfactory inspection of the book. Biblio.com Founded: 2000 Headquarters: Asheville, NC Key executives: Brendan Sherar, CEO; Allen Singleton, COO; Kevin Donaldson, director of sales and marketing Bookseller focus: Independent booksellers Number of booksellers: Approximately 4,200 in 31 countries (as of November 2005) Inventory of books: Approximately 30 million (as of November 2005) Biblio started in 2000 as a meta–search engine called SearchBiblio.com for new, used, rare, and out-of-print books that was designed to help people locate hard-to-find items and compare prices among books from about fifteen major Internet retailers. The company acquired the established online book marketplace Bookopoly in February of that year. Then it repositioned itself to develop database tools and software that would allow it to manage a large network of independent retail businesses, and to provide a unified e-commerce system to support that network for buying and selling used, rare, and out-of-print books. Biblio launched its new offerings in February 2003. The Biblio site lets book buyers (e.g., consumers, students, collectors) search for specific titles, browse subjects, and go to the listing area of specific bookstores. When searching 79
  • 80. for specific titles or browsing subjects, customers see the book, price, description, and the name of the bookseller. The interface is all Biblio, but the buyer knows that an independent bookseller will handle fulfillment. Like other marketplaces, Biblio does not carry any inventory. The company generates revenue through commissions on books sold via its site and does not require booksellers to pay any fixed fees for listing books or minimums based on the size of the transaction. The commission structure depends on the number of books listed and the monthly sales volume, as well as on the number of orders actually fulfilled by the bookseller. Various discounts on commissions apply at various fulfillment rates. Biblio can provide credit-card processing services for booksellers and processes payments for a fee. The company is focusing its efforts on attracting additional quality booksellers and building up a loyal following of book customers around the world. It is developing partners in other regions that can link in with it. In 2005, Biblio founded the nonprofit organization BiblioWorks to provide communities in need with tools and resources for developing sustainable literacy and education programs, through funding and book and material donations for schools, libraries, and cultural institutions. The organization’s initial efforts have been in Bolivia, where it helped fund the construction of a rural library—La Biblioteca Villa Zamora. eBay Founded: 1995 Headquarters: San Jose Key executive: Meg Whitman, CEO Bookseller focus: Consumers Number of booksellers: NA Inventory of books: NA eBay has a unique used-book business model based on an online auction. Consumers and professional booksellers can set up accounts and list books for auction sales. The seller can establish a minimum price and/or a “buy it now“ price. Typically, the seller provides a description of the condition of the book and shipping terms. eBay has seller ratings and comments, but usually does not provide general information on the book from the publisher, professional reviewers, or consumers. When listing an item on eBay, the seller is charged an Insertion Fee. If the item sells, the seller is also charged a Final Value Fee. There are various options for enhancing a listing (e.g., bolding, additional photos, borders). eBay does very well in the Antiquarian and Collectible segment, where it enables people to sell rare books to the highest bidder. The company has also done well with students who want better prices for their textbooks than their college bookstores quote, especially 80
  • 81. textbooks that have become available in new editions or are not going to be used at the students’ universities during the upcoming semester. eBay also operates Half.com—a consumer marketplace specializing in books, music, movies, and games—where individual sellers or companies can list products on a traditional price listing and purchase model. There are no listing fees. Sellers pay a commission to Half.com on items that are sold. Commissions for items sold in the media categories are calculated as a percentage of the selling price of the item only. All sellers listing in Half.com‘s media product categories must use U.S. Postal Service Media Mail, at a minimum, to ship orders, and they have the option of offering Expedited Shipping as an upgrade. The buyer agrees to pay the shipping and Half.com handling costs for items purchased on the Half.com site according a fixed schedule. Powell’s Books Founded: 1971 Headquarters: Portland, OR Key executives: Michael Powell, owner; Miriam Sontz, CEO Focus: Consumers, students, professionals Number of bookstores: 7 Inventory of books: 4 million (as of December 2005) Powell’s Books is a privately owned bookstore chain that has always focused on selling new and used books side by side. The company has seven retail stores in the Portland area, including its 68,000-square-foot flagship store in downtown Portland. It designed and manages its own inventory database and search engine. It started selling books online in 1994 through its own Web site with two full-time employees.. Powell’s reports that steady growth from its online business has not decreased sales at its retail stores; its online sales accounted for roughly 3 percent of its business in 1998, 10 percent in 1999, 30 percent in 2001, and 40 percent in 2003. Powell’s also reports that over 90 percent of its sales are shipped outside the Pacific Northwest. The company estimates that its site draws more than 70,000 unique visitors a day, with over 4 million books in inventory, including more than 1 million used books. When customers shop online at Powells.com, they have access to the inventory at Powell’s seven retail stores as well as in five warehouses. Powell’s sells its own inventory of books and does not list books for other booksellers, but it does sell through several online marketplaces, such as Abebooks, Alibris, and Amazon, including Amazon sites in Europe. Also, it has a partners program. Partners include comparison-shopping engines, local garden clubs, national magazines, nonprofit public broadcasting sites, and personal Web pages. Partners receive a commission on sales of any Powell’s products that originate from their sites, and can link directly to specific titles, sections, or other customized combinations of Powell’s products. 81
  • 82. The company offers a variety of resources, templates, and reporting tools to help partners monitor sales and track commissions. It is responsible for all aspects of order processing, including order entry, payment processing, shipping, cancellations, returns, and related customer service. Powell’s recently introduced a used-textbook buyback program via its Web site. Students who enter a book’s ISBN automatically receive a price quote that includes shipping costs. After entering an ISBN, the student is transferred to Bookbyte, an online bookseller that specializes in the college textbook market. The seller enters contact information at the Bookbyte site and receives shipping instructions. When Bookbyte has received and approved the textbook, it sends the seller a check or credit. [Last Page] [head] About BISG The Book Industry Study Group (BISG) is the industry’s leading trade association for policy, standards, and research. Membership consists of publishers, manufacturers, suppliers, wholesalers, retailers, librarians, and others engaged in the business of print and electronic media. For over twenty-five years, BISG has provided a forum for all industry professionals to come together and efficiently address issues and concerns to advance the book community. Our member-driven organization uniquely represents all segments of our industry, from publishers and e-publishers to paper manufacturers, libraries, authors, printers, wholesalers, retailers, and e-tailers, as well as organizations concerned with the book community as a whole. BISG members receive free or low-cost copies of Used-Book Sales, Book Industry TRENDS, and other BISG reports, as well as special access to programs and information about emerging issues and opportunities to help shape new industry standards and structure their implementation. To learn more about BISG or to become a member, visit our website at www.bisg.org. [box] To order additional copies of Used-Book Sales or learn more about other BISG reports, programs, and initiatives, visit www.bisg.org or e-mail info@bisg.org. 82

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