If you are new to online book selling or just interested in finding out what the profit potential might be you want to be sure you have a realistic view of the market and its potential. I strive to do just that in this article. For the last five years I have been involved as a third party vendor on Amazon.com, Half.com, and other venues and then as a consultant to online booksellers with my daughter and business partner, Carissa. The aim of this article is to discuss the market potential of online selling.
Before we can answer the burning question of how profitable you can be we need to fill in some basic concepts. I will be covering three different markets for books. We will start with the market for new books fresh from the publisher then discuss the market for secondary books or seconds as they are called and finally the used book market. I will discuss sources, wholesale price (what they will cost you as the bookseller), retail price (what you can sell them for online) and how that relates to the business potential.
Typically new books can be purchased from a wholesaler starting at half the cover price. If you buy in bulk quantity you can get even better pricing. You can then list the books online for a competitive price to ensure you will sell the inventory you purchased while the book is new and the greatest numbers of people want to buy the book. As time progresses the initial demand is met and fewer people remain who want the book. Depending on how many books were published (and the supply / demand ratio) the price may go down, up, or stay the same.
The typical book will be discounted heavily by the retailers who were the largest purchasers of the book when sales start to wane. Since they paid the least for the book they have a wider margin and can still be profitable while discounting the sales price. The more popular the author and the more anticipated the book the quicker the price drops making it less profitable to the retailer. Large retailers will know they are betting on a sure thing and will buy large quantities and sell the book for a large discount from the first day it is on sale. The last few Harry Potter books fit into this category. For less popular books like text books you can actually get the cover price when the book is new. The best case scenario for new books is doubling your money.
A retailer who ordered more books than they can sell places the extras back on the wholesale market as seconds hoping to recoup some of their money. If you purchase seconds you are buying books at a greatly discounted price at a time when the book’s retail price is likely to fall quickly. I have done extremely well with seconds in some limited cases. I have purchased a number of books for two dollars and sold them for fifteen dollars online. This was the exception rather than the rule and I typically only did as well as new books. The other factor is I seldom had over three percent of my sales as seconds. The profitable ones are just that scarce. The best case for seconds in my experience was on average to double your money much like new books.
The last market is that of used books. The curious thing to me about this market is the relatively unrecognized value of used books. You see them everywhere in yard sales, thrift shops, flea markets, estate sales, church sales, auctions, and many other places. This was how I got started so many years ago. I went to a yard sale and saw a Masters Level text book on astronautical engineering. It looked brand new so I asked what they wanted for it. I bought it for a dollar and listed it on Amazon as an experiment. I sold it within three days for over forty dollars. I figured if I could buy a product for a dollar and sell it for over forty dollars I was in the game. It wasn’t quite that easy as I later found out but that one experience stayed in my mind. I kept careful statistics for the years we sold books online and I can tell you with certainty I am being conservative here. On average we paid one dollar for each book we listed and sold them for over ten dollars each.
In summary, you can see the used book market has huge potential for profit. The economic situation now is making the cheaper used books even more attractive to a wider market than ever before. Even in cases where someone is looking for a gift quality book, many are still purchasing used with a better condition rating. And for the seller, used books are typically cheaper to buy so it takes less capital to get started and the overhead can be quite small while offering the largest profit margins.
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