Better World Books: What other dealers can learn from the new model
- By Susan Halas
BWB processing facility in Mishawaka, Indiana near South Bend.
By Susan Halas
The editor tells me that what AE readers, especially AE readers who are booksellers, want to know is about ways to make more money. So while there are many different ways to examine Better World Books, one of the most controversial companies in the bookselling pantheon, this article will stick to what it is, what it does, and what others in the book trade can learn from them.
Better World Books - What It Is & What It Does
Better World Books is a seven-year-old multi-faceted for-profit B corporation with its front end acquisitions department based in Georgia and back end warehouse facilities in Indiana. It has gross revenues somewhere north of $40 million a year and a double digit annual growth rate. Last year they paid off more than $2 million in debt out of cash flow. At the time I visited their Mishawaka operation in early October 2010 the company had over 300 employees of whom about 45 were in Georgia and the rest were in Indiana. The company has recently opened a UK affiliate in Scotland.
A barebones synopsis of their history reads like a fairy tale from the world of capitalism:
Less than a decade ago three Notre Dame undergrads stumbled quite by accident onto a money making opportunity in the book trade. Their first venture - on-line textbook sales - was profitable from the onset. An outgrowth of that experience was a "business plan" (a phrase that will reappear again in this article). Their idea won the "Business Plan" contest at Notre Dame.
Winning the contest got them in the door. Once inside some savvy venture money appeared. Along the way, one of the business plan judges became their CEO. The young founders were quick studies and they came already equipped with strong math and IT skills (if not exactly flush with knowledge of the ancient and honorable trade of book selling).
They rapidly learned how to extract money from diverse segments of what soon became a huge flow of inventory. From textbooks, they went on to systematize popular post- ISBN titles, sift through thrift store rejects, cultivate library de-accessions, and expand into the antiquarian field. Waiting in the wings are a variety of ways to "monetize" used books while simultaneously acquiring enormous quantities of inventory with little or no up-front expenses.
BWB receives many of the books it sells as donations. The company teams with literacy oriented non-profit organizations. These partners receive a portion of revenues generated by donated books. The partners also receive many actual books as well. Those who want to donate can deposit unwanted books at large bins in high traffic locations around the nation. The company also hosts book drives seeking donations of unwanted volumes in many communities.
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Better World Books: What other dealers can learn from the new model
- By Susan Halas
The workroom for antiquarian, rare and collectible books.
BWB also makes a well organized effort to contact library systems with a very appealing offer - to take all, repeat ALL, their unwanted books, track the sales and compensate the libraries for any books that eventually sell. Payment is made on a sliding scale that ranges from about 15% for low value books to 50% for books worth $500 or more. All books become the property of BWB and payments are made to the libraries after the transactions have been completed.
BWB also buys books from thrift shops typically at a cost of about four to eight cents a pound.
This integrated model has multiple virtues: It creates tangible benefits for their literacy partners, a cash flow for their library client base, a feel good aura for the donor, and a decent amount of revenue for the corporation. Call it Win-Win-Win-Win. What it hasn't done so far is give them much understanding of their product also known as "books" or make them a lot of friends among the older generation of booksellers.
Better World Books sells recent and older books on their own site www.betterworldbooks.com. It also lists on 22 different on-line locations. The company has two small retail outlets for popular titles, both in Indiana, and they are presently establishing a growing niche in the antiquarian, rare and collectible (ARC) market.
The key to their rapid rise owes much to algorithms, SKU codes, statistical and pricing theory and a systems approach to volume. It's a model that has more in common with processing aluminum cans than the traditional life-of the mind. BWB sees books as a cheap and plentiful commodity. The goal of the bookseller as a corporation is to acquire, process and turn around the inventory in the shortest amount of time. Each sale "monetizes" a small amount of profit multiplied by a very large number of sales.
BWB has 350,000 square feet of warehouse in Mishawaka and about another 80,000 square feet of warehouse space in the UK. In Mishawaka they process the incoming flow of books at the rate of about 100,000 volumes a day. The sorting is largely automated and divides books into pre and post ISBN categories. It also distinguishes between books that come from libraries and books that come from other sources like donation bins and thrift stores.
The determination of what has value happens very rapidly and is done for the most part by computers. Books that do not meet the BWB value thresholds are either shipped to literacy partners or sent by the container load to be recycled for such uses such as paper napkins.
The books come in two streams: boxed books shipped to BWB from libraries are treated differently and somewhat more gently than books from thrift stores and donor boxes. These come in huge cardboard containers known as Gaylords. Books in Gaylords are treated roughly; if they weren't wrecked by the time they got to Mishawaka, what's left after BWB has taken a fast look is, in many cases, waste paper.
Their success with libraries is not surprising given that BWB is one of the few dealers that will take it all. Not only will they take it all, but they will do all the related work too - from supplying the shipping boxes, to listing, tracking the sales, shipping orders, then cutting the checks. The libraries supply the books, BWB does the rest. They do have some competitors, but not too many, as few other companies can make the same offer or do it with comparable efficiency and cash flow to the libraries.
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Better World Books: What other dealers can learn from the new model
- By Susan Halas
Better World Books antiquarian, rare and collectible staff in the Mishawaka warehouse.
What They Know
This company is definitely in the book business, but their grasp of technology not withstanding, so far they only really comprehend the part of the business that relates to "reading" as a popular pastime. They also understand entertainment offshoots like CDs, DVDs and other digital media. Their book world has a universe of about 6 to 8 million titles and at any given time about 1.6 million of these books are physically on hand in the warehouse. Most of these books have Amazon rankings. The Amazon rankings refer to velocity of sale, which means how fast the book will sell. These rankings also help the company estimate how many copies of any given post-ISBN title they may be able to sell in a year and from there to estimate how much back stock of popular titles to keep on hand.
What They Don't Know Yet
They haven't yet mastered the art of processing non-ISBN titles, and they don't yet really understand the other reasons for having and keeping books, particularly older books.
They do know a bit about some of the higher end or more specialized parts of the book trade. This is knowledge gained from sending ARC staffers to the Colorado Book Seminar and the annual Virginia Rare Books School short courses. The ARC staff combines this knowledge with daily hands-on contact with huge numbers of books.
However most of the know-how and detail that was once passed down through the generations inside the book trade is still outside their orbit - at least for the time being. Though they are readers, friends of literacy, book lovers all, they still have a distinctly limited knowledge of books and the book trade, at least as it is traditionally defined.
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Better World Books: What other dealers can learn from the new model
- By Susan Halas
BWB donation box.
What Dealers Can Learn From BWB
Though the Better World Books business model is generated by the technology, business climate and mindset of the 21st century, there's still much that traditional book dealers can learn from their practices.
For starters there is nothing to prevent any dealer from doing what BWB does:
Any dealer can talk to libraries or other potential donors and solicit their no longer wanted books. Any dealer can develop code and automation processes. Any dealer can find non-profit partners. Any dealer can put out donation boxes and ask for gifts - with or without a non-profit tie-in. Any dealer can offer to pick up the books others don't want and take them ALL away.
The point is that while any dealer could... many dealers don't, won't, can't or don't-know-how to do any of those things. Also very few more traditional booksellers are as young, smart, hip, quick, hard working, coordinated and pleasant to deal with as this fast paced crew.
You want energy and work ethic with a little athletic flair and a great deal of youthful enthusiasm? You want whiteboards covered with math code? This is your double digit combo of fast growth and a quick learning curve. It is impressive to see it all delivered in one neat logical package.
What any older book dealer can see is that BWB will eventually find out more about books and their tradition. They also will eventually understand the worth of books prior to the invention of the ISBN number. But in the meantime this company, its inventory and its rejects constitutes a gold mine (if not the mother lode) of good stuff at low prices. There's value here and plenty of it (See end of article for contact info and how to make an appointment to view their stock in person).
The other thing more traditional booksellers can learn from Better World Books is the concept of a written business plan. In all the years I've been buying and selling antiquarian books, and all the years my parents did it before me, I have never once heard the words "business plan" mentioned, nor have I ever heard someone going into any segment of the used book business say, "I think I'll sit down and write my business plan today." I have seen notes on the back of an envelope. I have heard threats of imminent divorce if certain spouses didn't sell some of those books immediately... but a written down plan? No, this is a new animal.
At BWB I heard about "business plans" from every lip, from every sector, from every department. If that's what makes it go, perhaps the rest of us should take the hint. We could all learn a thing or two from committing our ideas to paper and then tracking how the actual results match the conceptual projections.
I have many positive things to say about this company. It has recognized a need and stepped in to fill it. It has systematized what previously was unorganized. It does a significant amount of good along the way and keeps over 300 mostly young and talented people employed in a corporate model, which includes a regular paycheck and benefits such as health care, vacations and stock options.
That said I do, however, have some reservations.
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Better World Books: What other dealers can learn from the new model
- By Susan Halas
Sorters throw rejects into Gaylords.
Cultural Strip Mining
Many of us have been to mining country and seen what the physical landscape looks like after the miners take off the top of the mountain. My reservations related to BWB are similar to my reservations about strip mining, only transposed to a cultural context.
To be truthful, my bone-to-pick is not so much with BWB as it is with their client libraries. If the unwanted parts of the collections of Brooklyn, Ithaca and Cleveland, to name a few I saw during my visit, are going to be shipped off en masse to be sold fast and cheap and the leftovers pulped, then I hope that the people making the decisions to send ALL these books away have a solid criteria to support their actions.
I hope that the decisions to dump thousands of volumes from academic libraries has a rationale behind it that is more substantial than the limited revenue stream these books may eventually generate and the space their absence will make for newer and more recent acquisitions.
I also hope that the decision-makers inside those distant libraries have informed their own universities, towns and cities of their intentions to dispose of huge numbers of books at rock bottom prices by sending them to a far away place. I truly hope that the "ALL" that's going to BWB is only the "ALL" of what is not wanted at home. But I have a gut feeling that this may not be the case.
I do not have a problem with disposing of thrift store rejects or outright gifts from individuals. But when it comes to libraries, especially academic and scholarly libraries, most of these titles were acquired with public funds or with funds from gifts and endowments. As such they represent cultural resources of those communities.
Such books are not just recently acquired cultural resources, but the accumulation of many years standing. I hope the people inside those libraries are qualified to make a fair estimate of the value of what they're throwing or giving away, because the young people at BWB - whose primary orientation is reading for enjoyment and whose notion of value is based heavily on a post-ISBN mass market world - are perhaps not the folks to ultimately entrust with that task.
They're learning, they're smart, but there are very few intellectuals in this crowd. They are learning, but even the fastest learning curves have limits. I would hope that some of the AE Monthly readers and dealers in cities where BWB does business will know who decides which books are leaving and who gets to review the de-accessioned titles before they're packed up and shipped out the door forever?
The Tipper
My other reservation is the tipper.
The tipper is a front end loading dump mechanism that raises the Gaylords to a height of about 8 feet and then spills the contents onto a waiting wheeled bin for sorting. Not only is it hard on the books, it's hard to believe that anyone who seriously cares about books-as-books (as opposed to books as a stand-in for aluminum cans or plastic bottles) would use a tipper. Perhaps another method would be more costly, but it would also be more respectful of the product - the books.
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Better World Books: What other dealers can learn from the new model
- By Susan Halas
The tipper in action.
The Next Generation
That said, the shape of Better World Books is, like it or not, the shape of the future. On the plus side, these are bright, motivated people. Most are 30 or younger. To meet them is to be assured that there will definitely be a next generation in the book trade.
While we're waiting for that generation to mature, other dealers looking for a good value and inexpensive inventory can find BWB on line. They can also make an appointment to visit in person. The company extends the customary trade courtesies and has an excellent record of customer satisfaction.
Book buyers who want to visit in person contact:
Tara Gilchrist in the Antiquarian, Rare and Collectible (ARC) department:
(574) 855-5228 – Eastern Time Zone.
tgilchrist@betterworldbooks.com
Better World Books, 55740 Currant Rd. Mishawaka, IN 46545
An appointment is necessary for an on-site visit and it should be scheduled at least 48 hours in advance.
The company offers a trade discount of 20% on orders over $10. Visitors to Mishawaka can buy books selected from recycled (rejected materials) for $5 per large box. For those who actually visit the warehouse prices for books listed on-line are also somewhat flexible. Check with Tara.
Find all the on-line inventory at www.betterworldbooks.com.
This site also includes antiquarian material, but it is not broken out separately. There is also a great deal of other information related to the company at this URL.
BWB antiquarian stock is also listed separately on ABE books at
www.abebooks.com/bookseller/BETTERWORLDARC.
BWB also sells at auction via eBay. Their auction offerings include antiquarian materials, and media lots such audio books on CD, music CDs and DVDs. Auction offerings change frequently. http://stores.ebay.com/Better-World-Books-ARC.
Reach AE Monthly writer Susan Halas at halas@hawaii.rr.com
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