ABE -- To The Summit And Back
Some of the "summits" near Abe's home in Vancouver
By Michael Stillman
Abebooks held their much ballyhooed dealer summit early last month. It's not clear what their purpose was in holding the summit, but if it was to relieve the tensions that have developed over the past year between the site and some of its dealers, it was probably not a huge success. Abe started with an announcement that they would be taking over the processing of all credit card orders made through the site. Previously, dealers had the option to use Abe's services or their own. Processing through Abe is now mandatory. What upset dealers even more was the fee: 5 1/2%. Few booksellers are paying anything like 5 1/2% to process their credit cards. While Abe's cost is not publicly known, large users generally pay 1%-1 1/2% for card processing. It is hard not to see this as a 3% or 4% price increase.
Not surprisingly, this development overshadowed anything else that might arise from the summit. There were other issues, such as multiple listings by large sellers, books on demand reprints listed so as to appear in searches for original material, and visibility of dealer contacts. However, money trumps everything, and a transfer of a few percentage points from the booksellers' pockets to Abe's did not set well with the former. Nevertheless, this is more than a simple rate increase. Underlying it all are the changes taking place in the relationship between Abe and its dealers, particularly its older ones. For them, it is a painful transition.
The evolution of Abe has been difficult for many of its earliest sellers. They saw Abe as something of a family, a bookselling site run by book people. Everyone on both sides of the aisle knew and appreciated books and the trade. Everyone was part of a bookselling fraternity that had developed literally over centuries. Abe was the successor to AB Bookman, a technological step forward but still part of a long bookselling tradition.
Ultimately, this was not to be. Perhaps it couldn't. The traditional world of bookselling, based upon personal relationships, was no more immune to changes in the marketplace than any other Main Street business. We, as a people, talk about relationships and service, but we buy based on price and cookie-cutter familiarity. We hate Wal-Mart, even fight to keep it out of our communities, but when it opens, we shop there. Here's another example. Do you remember the tasty hamburgers they used to sell at the lunch counters in your local drug store (this one is for the oldtimers)? So why do we buy the atrocities they sell at McDonald's instead? Price and familiarity. When we travel, we eat at the same restaurants and sleep in the same motels we find in our hometowns. You'd think we never left. The trade for new books long ago succumbed to the large, impersonal look-alike chains. The old book trade is not immune.
ABE -- To The Summit And Back
Today, Abe is a business, its original, bookish owners replaced by a corporation. Like Wal-Mart, it tries to maintain a veneer of personal, neighborly relationships. Wal-Mart will sponsor local charities, and they will tell us in their advertisements how involved they are with our communities, but we know that underneath, beats an efficient, businesslike heart. Abe may not quite be Wal-Mart, but it is no longer the neighborhood general store either. It is in transition. It is becoming more like Wal-Mart, and it is doing so because business realities tell them it must to survive. Abe does not want to follow the path of your neighborhood grocer, druggist, department store, or all of the others who offered personal service when the market wanted price, convenience, and sameness. Still, for those who like the old ways, the change from friend and partner to a business relationship is painful. They feel hurt, let down, disappointed. They are angered by the perceived lack of appreciation. It's like the owner of the old Main Street shop watching his neighbors and friends pouring through the doors of the new Wal-Mart. It hurts.
So what does an Abe do, caught between the rock of business reality and the hard place of hurt dealer feelings? The answer, quite simply, is to make their site more effective for their dealers. Find ways to sell more of their books. Use some of their increased income to increase the dealers' income too.
Of course, a bit more diplomacy along the way wouldn't hurt. The dealers went to the summit thinking Abe's intention was to gather their input, but the reality was that it was primarily to announce already formulated plans. Another suggestion is not to try to disguise reality. The mandatory credit card processing was couched in terms of fraud protection and consistent performance for customers. These were undoubtedly factors, but dealers immediately understood that it is not necessary to charge 5 1/2% unless credit card processing is intended to be a profit center.
Nevertheless, for all of the hurt feelings, this is a business for the booksellers just as much as it is for Abe. I know there are some for whom it is a passion, a love more than a business. However, for most, the first concern is paying the bills, just as it is for Abe. If the dealers find a more profitable selling venue, they will move en masse, loyalty considerations to Abe notwithstanding. So, if Abe is to successfully wind its way through this difficult transition, it needs to help the dealers sell more. Ultimately, each side needs to increase its profits by making more sales, not by stealing margin from each other. Abe hinted at investing more in advertising and promotion, and if they do this, and it, in turn, generates more sales, they will quickly erase the hard feelings.
So, we will offer a little unsolicited advice to both sides. First, to the dealers. Abe is a business. You should not expect anything else, nor should Abe feel guilty for behaving like one. It will act in a way that it believes best suited to maximizing its profits. Its choices may be wrong. Raising prices may hurt its long-term profits rather than help them. We don't know. Nevertheless, Abe has a right to make those choices. It has every right to maximize its profits, and it has the right to decide the strategy it uses in an attempt to attain that goal. It's nothing personal.
ABE -- To The Summit And Back
Secondly, Abe is still a good deal. Maybe no longer a great deal, but with an effective 12% commission and a listing fee, it is still probably much cheaper per book sold than the cost of operating a storefront. It may be hard to see this when a few years ago, the commission rate was zero, but it is not unreasonably priced for what it offers. If it were, the calls we have heard from a few dealers for a mass defection would be answered. Reality is, most will continue to make money from Abe, though not as much, and as long as it is profitable, they will stay, all of the grumbling notwithstanding. You see, for dealers this is a business decision too.
However, this is no reason for overconfidence on Abe's part. What is happening to dealers is somewhat contrary to normal experience. Usually, as technology advances, prices come down. The computerized systems most booksellers use to manage their businesses cost but a fraction of what they did a few years ago. However, the cost of selling on the internet is going up. Probably, it started out too cheap. Meanwhile, increased competition and an enormous increase in the number of listings are bringing sales, at least for some dealers, down. While the bookseller is the immediate victim of this squeeze, Abe needs to be aware that it is a threat to them as well. It was hard for Abe's competitors to gain traction when Abe was so cheap and effective. However, if you squeeze too hard, cracks will appear in the armor, and openings for competitors will arise. This is particularly a challenge for a company like Abe, which while a leader, does not dominate its field like an eBay or Amazon. When all Abe charged was some modest listing fees, there wasn't much incentive or opportunity for others to enter the business. Now, with 12% of sales along with the listing fee, this looks like a much more interesting opportunity for competition.
Of course, Abe will continue to compete against the usual list of suspects, Alibris, used book departments from Amazon and eBay/Half. Biblio is trying to make headway by being like the old, more dealer-friendly Abe. But, all of these deal with the same type of cost structure that Abe does. They may succeed in further fragmenting the industry, or perhaps one will assume more of a leadership position, but their costs mean that they are unlikely to seriously compete based on price. The result is none is likely to be all that much more help to the dealers' business equation, unless they can do a much better job at selling than Abe does now.
However, technology normally moves costs down, not up, and as the dealers' costs rise, the opportunity for the creation of new competing technologies rises with it. What might those be? No one can say for certain, but take a look at Froogle. Froogle is Google's search engine for products offered for sale online. It is not well organized yet, but it is free. Sellers need only put their products up for sale on their own website, a relatively inexpensive proposition, and notify Google. Your books can now be found by anyone in the world in a nanosecond. This technology links listings on thousands of dealers' individual sites into one large database, and the current price for the service is zero. Froogle may be ugly, uncategorized and inconvenient today, but it would not be that difficult to design it to search only book sites, and present fields in a rational order, the way the book sites do. What is important here is that Froogle is relatively inexpensive to operate compared to a listing site. Lower operating costs mean it can be sold to dealers for a lower price. Now that Abe is more expensive, the opportunity to offer such competing options both profitably and at a considerable savings to dealers has grown. Unhappy campers will look for new campgrounds. Abe's campers today are a little less happy than they were a month ago. Abe should take this risk seriously.
This article has generated several Letters to the Editor which can be found here: Click here. Others are found at Click Here.