Then It All Changed

Starting around twenty years ago or so, the computer revolution increased the efficiency of printing, cutting production costs. Word processing enabled authors to flood the book market with new titles. On-line retailers, most notably Amazon.com, created a new way to market books. The supply of used books skyrocketed as lower prices caused the market to swell. Then Amazon gave their customers a way to sell their own books back into this market as used books. These trends developed into a downward spiral for used book stores. When customers could easily browse on-line for low cost used books, they could more easily find just what they want rather than taking the time to browse in the poorly organized "brick and mortar" used book stores.

Gradually, a new micro-industry developed of entrepreneurs who liquidate used book stores that are failing and then sell their inventories via Amazon. The used book prices started to plummet into essentially two market groups of books. Books that when new are mass produced at ever lower prices but read only once before discarding, such as popular fiction, become what the used book industry refers to as "penny books". The liquidators have an over-supply of such books, but they nevertheless list them on-line for one cent apiece plus a mandatory shipping fee. This is because the more books the liquidators list and ship, the lower their Amazon sales fees become as well as their bulk shipping costs per book. So, even though they barely cover their costs on the "penny books", these sales increase their volumes enough to make their other sales more profitable.

It is this other set of sales that is of course more interesting to the entrepreneur. These are books that for various reasons have settled into market prices similarly to how a stock market settles prices for shares of companies. However, many thousands of these book titles routinely sell within a price range of only one to five dollars, low enough that most used book stores cannot compete by either selling in their stores or even when trying to sell these books on-line themselves using Amazon's manual methods. Many book store owners blame Amazon for cut-throat competition, but Amazon has merely created a very effective and profitable marketplace--an infrastructure for others to use. It is the liquidators who operate much more cost effectively than retail stores that are the true competition.