Like his novels about the Old West, Larry McMurtry’s memoir “Books” is an elegy for a disappearing way of life. For McMurtry, selling used books was a calling, one that attracted eccentric personalities (like the store owner who hid his best books in paper sacks) and demanded esoteric knowledge, “near to alchemy,” of “editions, variants, points, bindings, provenance, cost codes.”.

McMurtry especially relishes the tactile aspects of the trade most threatened by the Internet. “What fun is there in clicking,” he asks, “compared to the pleasure of handling a fine copy of a rare book?”...
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Like his novels about the Old West, Larry McMurtry’s memoir “Books” is an elegy for a disappearing way of life. For McMurtry, selling used books was a calling, one that attracted eccentric personalities (like the store owner who hid his best books in paper sacks) and demanded esoteric knowledge, “near to alchemy,” of “editions, variants, points, bindings, provenance, cost codes.” McMurtry especially relishes the tactile aspects of the trade most threatened by the Internet. “What fun is there in clicking,” he asks, “compared to the pleasure of handling a fine copy of a rare book?” ndeed, the state of the art in used-book selling these days seems to be less about connoisseurship than about database management. With the help of software tools, so-called megalisters stock millions of books and sell tens of thousands a week through Amazon, AbeBooks and other online marketplaces. Some sellers don’t even own their wares. They just copy other sellers’ lists and then buy the books as necessary, pocketing the markup (though none acknowledge the practice, since it is banned on most commercial sites).

To small sellers like Joe Orlando of Fenwick Street Used Books and Music in Leonardtown, Md., megalisters treat books as “simply a widget that they can make a few bucks on.” The megalisters — a name originally intended as a term of abuse but now accepted by the accused — don’t quite disagree. “What we’re trying to do is provide cheap books for everybody,” said G. Seth Beal, the president and chief operating officer of Thrift Books, which lists three million books and has 180 employees. Beal says he personally loves handling and collecting old volumes, but his business model is based on achieving economies of scale through automation.

Thrift Books acquires its stock literally by the ton, usually from libraries, secondhand stores and charities. Employees enter each book’s SBN code into the company’s inventory, then post the book for sale on Amazon and other marketplace Web sites, using software to determine the price in relation to the competition. It isn’t just a matter of beating the lowest price. Sellers can adjust a set of variables — specifying a price floor, for instance, or ignoring competing stores with poor customer ratings — to come up with their own algorithmic “secret sauce,” explained Marc Fournet, the director of business develop­ment at FillZ, an inventory and pricing service.

Because of the sophistication of the software, automated pricing doesn’t necessarily lead to a race to the bottom. Still, many popular books can be found on Amazon for a penny — including “The MacGregor Brides,” by Nora Roberts; “The Bourne Ultimatum,” by Robert Ludlum; and six of the other 15 titles on The Times’s paperback fiction best-seller list from a year ago. The trick, according to a recent article in the trade magazine Fine Books & Collections, lies in the shipping allowance ($3.99 at Amazon), which lets an exceptionally efficient seller squeeze about 75 cents out of a transaction. Achieving that efficiency isn’t easy. With 13 employees and an inventory of more than 140,000 books, Harvest Book Company is on the threshold of megalister status, but Eugene Okamoto, the company’s president, says he hasn’t yet pushed costs down enough to make a profit from penny books. “That’s the holy grail,” he said.

Though the rise of the megalisters has hurt many mom-and-pop operations, the toll has been less than catastrophic. A database maintained by Susan Siegel of Book Hunter Press lists 3,968 “open shops” — as brick-and-mortar outlets are known — across the United States today, down from 4,119 in 2002. A 4 percent drop over six years might not be something to cheer about, but it would seem downright enviable to record or video store owners. What method are the smaller used-book sellers using to survive? “Hit ’em where they ain’t” by turning the labor-intensive “hand selling” approach into an advantage, says Gene Alloway, the co-owner of Motte & Bailey, Booksellers, in Ann Arbor, Mich.

The new strategy involves a selective embrace of e-commerce, focused mainly on a category of book that scarcely existed before the Internet — books you might call “rare but not collectible.” These are books sought after not as artifacts or for resale value, but for their content — often concerning subjects with appeal to fervent communities of interest. If you absolutely have to have Joseph C. Lisiewski’s “Kabbalistic Handbook for the Practicing Magician” right away, what else can you do but shell out the $149.50 for the cheapest of the three paper­back copies available on Amazon? (The other two are priced at $349.19 and $349.89.) Before the Internet, a magic aficionado would almost certainly not have found that copy of the “Kabbalistic Handbook” in his local store, nor would the seller have known to set the book’s price so high.

This segment of the market is not insubstantial. A recent search on Amazon, sorting by year, genre and price, turned up 99 biographies with paperback editions published in 2000 selling for over $100, including “Seth Green” ($201.88 and up), Elina and Leah Furman’s “unauthorized biography” of the actor who played Dr. Evil’s son in the “Austin Powers” movies, and “Without You” ($290 and up, with a CD), Dan Matovina’s group portrait of the Welsh power-pop band Badfinger.

In some cases, less obscure used books will also become extravagantly expensive. “Before the Storm,” Rick Perlstein’s 2001 book on Barry Goldwater and the rise of the conservative movement, was selling in July for prices above $130. “The original publisher took the book out of print quite prematurely,” Perlstein explained in a comment to a blog post on the subject.

A hand seller like Joe Orlando of Fenwick Street is doing much of his online business in this mid-to-high range. On Biblio.com, a marketplace devoted to independent sellers and the high-end rare-book trade, 44 percent of the offerings from Orlando’s Fenwick store were selling for $25 or more and 17 percent for $50 or more. When it comes to selling rare books, megalisters may be at a disadvantage, partly because there are fewer benchmarks for their pricing software. And Alloway of Motte & Bailey says he’s able to outwit the megalisters’ computers, provoking price wars and then buying up books at below market value, holding them until prices readjust.

Hand sellers are preserving and circulating this new alchemical trade wisdom in online forums on sites like BookThink and AbeBooks. “This thread is potentially worth thousands of dollars to each and every one of you,” one participant in a discussion board on eBay wrote under the heading “A book that looks like nothing,” where sellers pass along tips on surprisingly valuable books. And the hand sellers have allies in marketplace sites like Biblio, which keeps out the penny sellers with policies like a $1 minimum price. “The meat of our sales tends to fall in the $40 to $125 range,” said Brendan J. Sherar, Biblio’s chairman and chief executive.

After the great wave of creative destruction set off by e-commerce, the more adaptable breed of used-book seller seems to have survived with McMurtrian ideals intact. Chris Volk, a store owner and the vice president of the Independent Online Booksellers Association, says her colleagues are frustrated but undaunted by the megalisters. “In the long run,” she said, “people who know what they’re doing will win out.”

Hector Rivas has found out that a penny can go a long way. His company, Thrift Books LLC, sells more than 1,500 used books a day online. And 30 percent to 40 percent of those books cost only 1 cent.

"We're going to take over the world," he jokes. And he may, perhaps 1 cent at a time...
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Hector Rivas has found out that a penny can go a long way. His company, Thrift Books LLC, sells more than 1,500 used books a day online. And 30 percent to 40 percent of those books cost only 1 cent. "We're going to take over the world," he jokes. And he may, perhaps 1 cent at a time. Since Thrift Books started in 2003, the company has emerged as one of the largest used booksellers in the country -- with 400,000 books in stock and adding 10,000 titles online every day. The company is able to list a high volume of books each day using a program that developed by Thrift Books co-owner and software architect, Daryl Butcher. He says the software is what has made Thrift Books one of the leaders in the used book industry. "The software enables us to sell books on the Internet efficiently. Because this cuts cost and time, we can sell the books at cheaper prices," said Butcher. Instead of listing each book manually on every Web site, after listing one book on just one Web site, Butcher's program automatically lists that same book on all the sites it's programmed to, such as Amazon.com, Half.com, eBay.com, Alibris.com and the firm's own Web site that was started this year -- www.thriftbooks.com. On Amazon.com, Thrift Books has the highest customer rating of all high-volume sellers, Rivas said, adding that if you search any book on Amazon.com and Thrift Books has it in stock, the book will appear on Amazon's front page almost every time. This is because Thrift Books' software program automatically reprices inventory on a regular basis so that the prices stay competitive, which allows the firm's books to be viewed more frequently. The majority of the books are sold domestically but the company does ship internationally. Rivas says he wants to have the least human contact possible at the company's automated 25,000-square-foot warehouse located on Mercer Street, near Lake Union in Seattle. But the company still needs 22 full-time employees to grade the books' condition, sort them, shelve them, pick them out of the warehouse when they are sold and ship them to the customers. Thrift Books is privately held and has about $2.5 million in annual sales, according to Rivas, with 60 percent of sales coming from Seattle-based Amazon. "That first year we only made $1,000 in sales," said Rivas. "We've had our hardships and see ourselves as the major players in this market. Our software system enables us to continue to run on a shoestring budget, even today." The owners say they plan to operate in the same way they did when they started -- low budget -- no matter how big the company gets. With no significant connection to or profound love for books, the business partners saw books by the bulk as a low-risk, profitable business plan. The original owners, Butcher, who had an idea, and Jason Meyer, who was looking for an idea to invest in, met at a church function. "He (Meyer) asked me if I had a million-dollar idea and I said, yes," said Butcher. Rivas joined the team a few months later and all three men are co-owners of the company. "Our business model is like Wal-Mart's, buy in bulk and sell at deeply discounted prices," said Rivas. "We bank on volume to make money. If you're a small seller, you can't make money off of a penny." Rivas said as far he knows, Thrift Books is the only other company outside Amazon that sells books for 1 cent. And Thrift Books offers cheaper shipping rates for multiple book orders. The shipping rate for one book is $3.45; for each additional book, Thrift Books charges $2.59. The owners were so sure the plan could not fail that they started purchasing computers for Butcher's software before they had any books to sell. "We knew we could get the books. There was no doubt," said Rivas. With his marketing and sales background, he was able to increase inventory by purchasing books in bulk at warehouse prices from various places such as charities and thrift stores. Thrift Books pioneered profit sharing with local libraries by buying books, which are usually sold at the libraries' annual sales, and then giving the library a cut of the profit from sales of those books. The King County Library System was the first to partner with Thrift Books in 2004. Since then, the North Central Region Library system in Central Washington and the Pierce County Library System have also joined. Thrift Books' inventory of random books often ranges from best-sellers to "no market" books such as old encyclopedias and dictionaries. The "no market" books account for 20 percent to 30 percent of Thrift Books' inventory and have surprisingly been a success. "The reason why we say we offer 'hard-to-find' books on our Web site is because sometimes we get very old books," said Rivas. "We get feedback several times a week from our customers saying they were glad we offer the books they've been searching a long time for." The owners say there is always a possibility that they will start selling new books but for now their main mission is to define the used-book business. The online used book market has grown significantly. In 2004 national sales of used books were $2.2 billion, up 11 percent from 2003. Of the $2.2 billion, $609 million came from online sales, according to the Book Industry Study Group (BISG), an industry trade association. Thrift Books has plans to expand but Rivas would not be specific. "Right now, we want to become scalable and be able to replicate our warehouse anywhere in the country," said Rivas.

Earlier this month we pondered the strange Internet phenomenon of penny-book sales via Amazon.com, and reached the conclusion that penny books might be less a business model than an unintended consequence of a business model.

One reader begged to differ, contending that our argument really applied only to small businesses. And he knew what he was talking about, seeing how he was the president of a Seattle bookseller that sells more than 1,500 books a day on average, with perhaps 30% to 40% of those going for a penny...
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Earlier this month we pondered the strange Internet phenomenon of penny-book sales via Amazon.com, and reached the conclusion that penny books might be less a business model than an unintended consequence of a business model. One reader begged to differ, contending that our argument really applied only to small businesses. And he knew what he was talking about, seeing how he was the president of a Seattle bookseller that sells more than 1,500 books a day on average, with perhaps 30% to 40% of those going for a penny. We've been trying to find the most-efficient way to list the most books in the least amount of time with the least labor," says Hector Rivas, president of Thriftbooks (www.thriftbooks.com). Thriftbooks' weapons in that battle are technology, a willingness to experiment -- "we're young guys learning from our mistakes," Mr. Rivas says -- and those very economies of scale that we didn't think were such an asset in the penny-books world. But that said, a quick tour of Thriftbooks' business model only reinforces many of our initial conclusions: Penny books are a savagely low-margin business with little room for error, and not a good business for the little guy. Thriftbooks began in the summer of 2003 when the principal owners, Daryl Butcher and Jason Meyer, met at a church function. Within a week the two had bought computer