Abe: A Walk on the Wild Side
- By Bruce McKinney
Abe has a lot to think about.
By Bruce McKinney
Abebooks, like most businesses that have done well enough to actually change scale, is looking to swim with the big fish. What they have created in the book business is nothing short of amazing. Their now increasingly apparent goal is to monetize their success. To do this they need to develop predictable earnings and they have been raising fees and shutting off backdoor communication between buyers and sellers to accomplish this. They have every right to do so and a high majority of book sellers are probably unaffected. For most Abe booksellers transactions are small and their buyers non-repeaters.
Perhaps 3% or two million of the seventy million books on Abe are serious antiquarian items offered by specialist dealers: antiquarian booksellers who see themselves as a special breed, as Bergdorf Goodmans among the Seven Elevens. Antiquarian booksellers are generally highly intelligent and in the relationship marketing business. They identify and describe often obscure material and place it in collections. They thrive on contact. It is their life blood. Abe faces the challenge of providing a formula or formulas that works for both used booksellers and antiquarians. To see into the future let's look back for a moment.
On most Main Streets in America you can feel if not actually see the history of retailing. There are the small stores and among them there are a few larger emporiums. The downtowns tend to be run down and the malls on the outskirts of town where merchants moved several decades ago themselves now beginning to age. Even regional malls, the praying mantis of shopping that years ago induced people to travel beyond their once preferred local shopping options now find themselves in the belly of the whale. Shoppers never stop looking and have now moved beyond geographical constraints.
Ten years ago the internet with its shopping options showed up as a blip on the radar. People were already used to buying mail order so the idea of viewing things electronically was simply the next new idea. At the same time states were raising sales taxes to offset the Reagan downsizing. Such taxes were efficiently collected locally while out-of-state purchases often went untaxed. Consumers quickly understood that savings on sales taxes tended to offset shipping cost.
Locally selection has always been a problem whatever the item. For books the problem is especially acute and so for new material the super-store emerged. Today Barnes and Noble, Borders, Powell's, Brentano's and others stock up to 70,000 titles under one roof and sometimes serve cappuccino and a snack, if not lunch. New books lend themselves to store distribution. They come in boxes and they are designed to be handled. They have ISBN numbers and store inventory identification. They warehouse well. There is also a system that supports new books. The New York Times ranks them by sales, offers reviews and anoints others as notable. The New York Review of Books weighs in as do numerous daily and Sunday publications. Everywhere movies are reviewed. So are books.
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Abe: A Walk on the Wild Side
- By Bruce McKinney
Exchanges, buyers and sellers have always argued.
Used books are another matter. New books have a "newness" premium that disappears as the cash register goes ching. Consumers of course are buying a consumable, not a collectible and generally understand they pay a premium. They nevertheless tend to keep the books they buy, lining their shelves with talisman of intelligence and memorials to experiences real and imagined. The day inevitably comes when the books must go. "We're downsizing, dead or simply losing interest." Many of them end up on Abe. "This book is the same as it was the day I bought it 10 years ago." This book owner means it. They haven't read this book. The spine hasn't been cracked and no corners were folded to note the forward progress of a reader's eyes. This baby is still brand spanking new. And this baby also isn't alone. In fact we are awash in unread and now unwanted printed material and it is Abe's job to sell it.
In the 1990s the founders of ABE began to build a site to list books that people wanted to sell. Others did it first and others have done it since but Abe, has done it better. Their reward is today to be the largest listing site of used, old and rare books on the planet. It's quite an accomplishment.
But what Abe is good at is listing books. Selling books requires buyers and there are nowhere near enough buyers to keep the inventory stable. Thus the listings keep on growing. Today they have 70,000,000 books for sale and more seem inevitable.
Abe is also a for-profit business and they have every right to be rewarded as the market leader they are. Amazon sells books and is worth an enormous amount of money. eBay derives some of its revenue from books and they too are worth tons of money. Abe has 13,000 sellers and perhaps an average listing fee of $35 per for total listing income of five to six million dollars. It's nice but hardly impressive by Wall Street standards. So for the past three years they have been trying to monetize their success. Their processing fees, now 8%, have much increased over the years although they remain far below what Amazon or Alibris charge. Recently they took steps to force sellers to run more transactions through them as in the past Abe provided such services but obligated no one to use them. Now this is changing. Links to sellers have been repositioned and obscured, a step that feeds a bookseller's natural insecurities. To gain revenue, Abe is kind of tricking inexperienced buyers into ordering through them. In other words they are using their stronger position vis-a-vis book sellers to tilt the table in their direction. But it's not a good idea to treat all book sellers the same.
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Abe: A Walk on the Wild Side
- By Bruce McKinney
Can peace be restored?
I'm sure Abe wants a one size fits all solution for their business and I suspect that many booksellers are comfortable with this approach. Most of Abe's books are after all pedestrian, out-of-print materials that will find a home in time at a low price. But about 3% of their listings are for higher value old and rare books that are part of a separate and distinct business that has as much in common with used book selling as cavier does with cotton candy. They share the common link of being printed just as new fiction and a Gutenberg Bible do but don't expect to find an original example of a Gutenberg Bible at Barnes and Noble. The world knows the difference.
Abe seems determined to impose a single pricing structure on all its book sellers. To do this it needs to inject itself into each transaction by creating a barrier between buyers and sellers. Its speed bump includes an 8% processing fee. Used book sellers, who are for the most part, happy to sell their books to anyone, have fewer problems with Abe's approach while rare book dealers feel dread. Rare book dealers tend to have fewer customers but significant relationships with them and Abe seems to be treating a book sale simply as a financial transaction. Now, by putting the seller further back in the informational queue they are implying that in time they'll eliminate all contact between buyer and seller. Many antiquarian booksellers view this as unreasonable and they are actively looking for alternatives. Nothing comparable to Abe exists but it's an open invitation for others to try.
Abe faces several problems as they contemplate the impact of using a single pricing set for its sellers. [1] Many rare book sellers aren't going to accept reduced contact with potential buyers. The contact trumps the sale in importance so they will relentlessly resist until an alternative marketplace looms into view. [2] The presence of higher end books lends a patina of quality to the operation and probably makes Abe both a more attractive public stock offering and outright buy-out candidate but if they can't work out a solution they'll lose this component of their listings. [3] An alternative market place for high-value material may already exist. It's not yet as interesting or effective as Abe but does anyone believe that Google, Froogle or something similar under another name can't replicate the Abe experience on a per click basis? Google is now a publicly traded company and will feel the need in the years ahead to monetize every opportunity at its disposal. Stockholders will demand it and the bean counters who will inevitably run Google will make it happen. Creating an Abe look-alike where commissions are paid for clicks looks to be a very logical alternative. In fact the only reason Google won't do it will be if the Abe model is so efficient they can't really improve it. The 8% commission plus credit card processing fees give Google plenty of room to believe they can and the online used book business is going to be someone's billion dollar business in the future.
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Abe: A Walk on the Wild Side
- By Bruce McKinney
none
An alternative that banks the fires and works for both regular book sellers and the rare book trade is a system of listing rates that are tied to asking prices rather than to actual transactions. Basically a seller would pay more to list and be given the opportunity to tell potential buyers they can buy through Abe or directly from them. It need not be too complex and might work like this. Today Abe assesses modest listing fees for various quantity levels. Give Abe sellers the option to choose the current listing rates and 8% sales commission or pay higher listing rates and be able to promote a direct purchase option. A significant percentage of buyers are going to buy through Abe whether the dealer wants it or not but they'll have the option to show buyers that direct purchase is possible.
In a listing fee system tied to asking prices it seems only a few price levels need to be considered. In this example I've assumed three levels and that the listing fee for books priced between $50.01 and $250 is twice the listing fee for material priced at $50 or less. Books priced above $250 would, in this example, cost 3 times as much to list as items priced at $50 or less. Because more expensive material usually is more thoroughly described Abe could permit extensive descriptions on more expensive listings and potentially limit the descriptions available at the minimum listing cost to some reasonable level.
X For books priced up to $50
XX For books priced from $50.01 to $250
XXX For books priced from $250.01 up
As an example a seller could list 500 units with asking prices up to $50, 350 books that are priced between $50.01 and $250 and 150 that are priced higher than $250.01. They would pay to list 1,000 books and pay a surcharge on the books priced above $50.01 and a higher surcharge on books priced at $250.01 and higher.
This would give Abe the higher revenue it deserves, give typical Abe sellers access to the order processing if they need or want it and permit those antiquarian booksellers who put their emphasis on customer relationships an opportunity to conduct their business in a way that works for them. It restores peace in the house and lets Abe get back to the business of building its business, something it has shown itself to be very good at doing.
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