A Bookselling Sci-Fi Nightmare: The Computers Take Over the Marketplace
- By Renee Roberts
Monsoon promises sophisticated services, but at what price?
by Renée Magriel Roberts
I don't know how many of you remember "Colossus: The Forbin Project" on the big screen. Released in 1970, this movie was the progenitor of all computers-run-amok-and-destroy-the-planet flicks. The basic plot is this: Forbin, a scientist working for the United States government, creates an expensive super-computer capable of running the country's strategic missile system. More intelligent than any human being, Colossus is designed to avoid human failings and respond rapidly to nuclear threats emanating from the former Soviet Union.
Everything seems just fine, until the computer starts killing selected members of the population, makes Forbin a prisoner in his own house, and when he drags his feet at complying with its wishes, Colossus lobs a few nukes at U. S. cities. Turns out that Colossus has gotten together with its Soviet counterpart, another super-intelligent computer, they've mind-melded, and figured out that humans are the real problem and therefore expendable. So they are going to just take over to insure "peace". The movie ends pretty grimly (I won't spoil it by telling you the finale).
Although not a 5-star tale, this movie made enough of an impression on me to create a certain wariness about computer technology. Nonetheless, I put these fears aside, became enamored of computers and spent many years in the industry before becoming a bookseller. In our bookselling business, we heavily use computers and depend on the Internet for our sales.
We all know there are dangers with spyware, identity theft, Internet credit card fraud, and even outright break-ins on computers. In earlier columns, I also discussed the proliferation of phony and stolen listings by computer programmers, who are not booksellers. But this week I was innocently introduced to a technological two-edged sword, that appears to solve a major bookselling problem, while at the same time creating a marketplace nightmare reminiscent of the Forbin Project.
My week began with an innocent email from ABE inviting me to find out more about Monsoon, a new software product designed specifically for the Internet bookselling industry. The heart of Monsoon is a book database with a powerful dynamic pricing engine under the hood. Simply put, this software will automatically help you set and re-set prices on Amazon.com, Amazon.co.uk, Amazon.de, Alibris, ABE, and eBay stores as often as you care to have your listings uploaded. It does so by comparing each of your books to each of those individual marketplaces according to pricing rules that you set for each item.
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A Bookselling Sci-Fi Nightmare: The Computers Take Over the Marketplace
- By Renee Roberts
The Forbin Project (1970). A cautionary tale worth revisiting.
For booksellers selling good used books, this product solves one of our most pressing dilemmas. How do we quickly turn each listed book before the bottom drops out of it? Or, conversely, efficiently raise our prices if the book becomes scarce? And do we do that in each market in which we sell? (Assuming you are willing to sell your books for different prices in different markets.)
Ordinarily, you would have to go into each listing, whether new or whether you are editing an existing one, open up the browser, check the marketplace to see how much your book is now selling for, and then make an adjustment. With thousands of listings, this becomes a near-impossible task. Working in the background, Monsoon automates the entire process. It also integrates with shipping technologies like Endicia and, for larger businesses, with enterprise-level accounting software.
After a live demo with a polite sales representative, I do have some concerns about the product itself, in addition to its implications for our industry. The software looks as though it was designed for a very large bookseller (someone, say, the size of Powell's) who wants to send its listings to Amazon.com. Amazon gives booksellers the option of choosing specific conditions for their books: New; Very Good; Good; Acceptable. They do not have the rare bookseller descriptors Fine, Near Fine, Fair, or Poor. Given the number of rare books in our inventory, we found this inadequate.
Another concern is that Monsoon does not integrate with all the different bookselling sites, focusing primarily on the Amazons. It is unapologetic for this, as it sees Amazon as the gorilla in the bookselling jungle.
There is a data entry concern as well: While you can automatically upload your inventory from HomeBase, or other databases, the rules that govern the pricing for each book have to be individually decided upon, unless you want to set a more generalized rule. Messing with the listings of thousands of items we currently have for sale represents an uncompensated business loss.
Credit card processing was also problematic. As you know, Amazon and Alibris already process the financial transactions for each sale. The real benefit from having them do this is that we never have any problems or concerns with chargebacks. If a credit card happens to be stolen, as long as we can show that we have shipped a book, the transaction never comes back to bite us. Amazon does allow you to see cancelled transactions; Alibris does not.
We've found it to be pretty important to be aware of failed transactions -- those that are actually good, but where the buyer has perhaps inadvertently listed their working address as their billing address, and so fails the AVS check. Although it is somewhat awkward on Amazon to contact customers directly, we do so when the transaction has failed. Because we handle all of our own transactions on ABE for major credit cards, we are able to solve these problems and save the sale, instead of never knowing about it. Conversely we've done a very good job of avoiding potential problems.
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A Bookselling Sci-Fi Nightmare: The Computers Take Over the Marketplace
- By Renee Roberts
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Monsoon, however, forces you to give this up on ABE and use ABE payments -- i.e., now ABE is processing all the credit card transactions through its automated systems. This means that you are no longer aware of failed attempts to purchase and there is no particular guarantee that I can see from ABE that chargebacks will not be applied back to your account for stolen credit cards. This is also a non-starter for us, because we prefer taking responsibility for our own decisions, rather than allowing a piece of software to do it for us.
Then there is the cost, which was revealed at the end of the demonstration. I was told that the software price was over $1,000 up front, plus 3.6% of our sales.
Now, I don't know about you all, but I am sick to death of everyone having their hand out for a piece of every transaction. We already have a cost-of-sales that includes unreimbursed shipping, packing materials, associated labor to process the orders, credit card costs, shipping software fees, overhead allocation and usually an 8 to 20% commission.
To meet the price objection, I was told that I could increase our sales 3-fold daily by using Monsoon. Sounds good on paper, but can you handle packing three times as many books? Will these be expensive books, or books priced down to the nubbin? Will an increase in the quantity of your business require an increase in cost -- more employees, for example? Can you physically replace your inventory at the very least as quickly as it is being diminished?
Investing in this software, moreover, is like getting in bed with a monopoly. Original software of this sort is not readily replaced with another product. What exactly are you going to do when your entire business is dependent on Monsoon and the company decides to raise its commission rates? Or requires some expensive upgrade? Or becomes part of some other company who has different requirements? Or goes out of business?
But concerns aside, and my concerns may not be yours, there was one nightmarish scenario that lingers over all. Imagine that you invest in this Colossus-er-I mean Monsoon software package and it is dynamically adjusting your prices up and down in all these markets several times a day. Say that you have set the rules on your books so that your price is the absolute lowest on Amazon, or even the average of the five lowest books.
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A Bookselling Sci-Fi Nightmare: The Computers Take Over the Marketplace
- By Renee Roberts
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Now imagine that your colleague down the street also buys this software. Two Monsoon applications are now testing the marketplace and readjusting prices, in effect communicating with each other through their actions. If both are told to price books at the absolute lowest -- what do you think is going to happen to your pricing? I would say it's heading down the drain with every upload. Now, what will happen when 50 booksellers buy this software, or 100? Prices hit rock bottom at the speed of light. Monsoon is designed for cutthroat competition through underpricing. When the competition is cutthroat, however, the throat being cut may very well be yours.
For booksellers with bricks-and-mortar establishments, what are you going to say to a customer who buys your book for $29.00 in your shop, and then sees it for $2.00 on Amazon? Or will you check your computer at the register and say "today it is $2.00, it might be more or less tomorrow".
I can't help but think that there is, by necessity, a human-scale ecology in our bookselling marketplace, analogous to the ecosystem of our planet -- one that we need to respect. While we can gain a competitive edge in the short term and even solve productivity problems through the most sophisticated technologies, we may wish to reconsider when an investment simultaneously sows the seeds of our own destruction.
Renee Magriel Roberts can be reached at renee@roses-books.com.
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