AbeBooks Institutes Charge On Shipping
On April 2, AbeBooks announced its new commission structure.
By Michael Stillman
Few issues in the book trade cause anywhere near the controversy we see when AbeBooks announces a price increase. In a sense, this is a great tribute to Abe, as it shows the importance of the role they play in the old and rare book business today. Nonetheless, Abe receives few plaudits when one of these increases is announced. These are tough times for anyone not in the oil business, and while rate increases may be grudgingly accepted while sales are booming, sellers understandably see these increased commissions as coming straight out of their hides when sales are stagnant. Meanwhile, Abe looks at rampant inflation, especially for anyone dealing primarily in US dollars, and concludes that a rate increase is justified.
Here is what happened. On April 2, Abe announced a two-part increase. The first, and most controversial, extended the 8% commission Abe charges on sales to the shipping charges as well. Previously, if a book sold for $20 with a $5 shipping charge, Abe took in 8% of $20, or $1.60. Now it is 8% of $25, or $2.00 (plus, as before, 5.5% for credit card processing). The second part of the increase comes from listing fees for large sellers. The monthly fee for listing 50,001-100,000 went from $175 to $200, for 100,001-150,000 $225 to $300, for 150,000+ $300 to $400. We have not heard much objection to this part as it primarily affects the mega-listers, and this is a small group generally outside the mainstream of traditional bookselling. Abe also instituted a cost reduction on large orders, reducing the credit card processing fees on orders over $500. The fee on the excess over $500 will be reduced from 5.5% to 3.5% (the first $500 remains at 5.5%).
We asked Abebooks PR Manager Richard Davies why the listing site decided to extend commissions to shipping charges, and he responded with two reasons. We first recall that in the past, Abe has tended to skirt around the issue of wanting/needing additional funds and cited secondary reasons, such as advertising, a response that tended to anger more than placate sellers. This time, there was no beating around the bush. Davies explained, "we wish to increase our revenues because we face rising operating costs in online marketing and IT infrastructure." The increase was motivated primarily by a desire to raise revenue, and Abebooks is not attempting to hide that reality.
However, it was not the increase itself so much as its form that seemed to bother many booksellers. Applying a commission to shipping has them upset. At this point, I will air my suspicions that it is the increase more than its form that is the real issue for many. It reminds me of Colonial America, where the colonists vociferously objected to taxation without representation. In the 200+ years since, we have found that Americans really don't like paying taxes period, regardless of whether they come with representation. It's hard to imagine what form of increase would please dealers. However, there are certainly some reasonable objections to applying the increase through a commission on shipping.
AbeBooks Institutes Charge On Shipping
As to the type of increase, Mr. Davies explained, "buyers are unhappy with high shipping costs. We want to avoid listings where a book is priced cheaply but accompanied by expensive shipping. Buyers have made their opinions very clear to us and we wish to improve the whole experience for them." Good point. Few things can turn off customers more quickly then a seemingly low price accompanied by tacked on fees that make the real price high. Artificially high shipping expenses on mailed goods is a common practice. Usually, it is just meant to create the appearance of a bargain, but sellers could not help but notice that under Abe's old pricing system, lowering book prices while increasing shipping costs reduced the commissions they had to pay. This loophole has now been closed, but not without some unintended consequences.
The greatest objections come from those who ship overseas, both Europeans and Australians shipping to America, and Americans shipping in the other direction as well. Abe's intention may be to capture mainly American sellers who tack inflated shipping charges onto low priced books, but for those who regularly ship overseas, those large shipping costs are all too real. Overseas shipping has become increasingly expensive, and those who are punished most by this change are the international sellers who charge actual shipping costs. A bookseller who charges $30 to ship an item that costs $30 to ship, must now pay $32.40 in shipping and commissions. Either he or she must absorb a loss, raise prices, or create the appearance of overcharging for freight. None of those is particularly appealing.
The opposition on this issue has been led by IOBA, the Independent Online Booksellers Association. In an open letter to Abebooks' CEO Hannes Blum, IOBA President Shawn Purcell pointed to perceived unfairness in charging a commission on an expense over which sellers have no control. While conceding that AbeBooks needs to raise sufficient revenue to cover "expenses and acquisitions," and saying "we respect the right of any business to set their own fees and practice their own corporate guidance," Purcell questioned whether Abe intended to raise fees in a manner that would affect some booksellers more than others. He particularly focused on overseas dealers selling into the U.S. market. They already must contend with high shipping costs and a declining dollar. Purcell sees the increase as targeted at the booksellers who can least afford it.
Others pointed out that one of the most notable examples of high shipping, the $1 book that comes with a $5 shipping charge, would be unaffected by this fee (it would remain at Abe’s minimum charge of $0.50). Still others questioned the logic of fighting high shipping charges by increasing the cost of shipping to booksellers. It sounds counterintuitive. Won't they just increase shipping charges further to cover this added cost? That would worsen, not alleviate the problem.
Is there a more fair way to implement a rate increase? Perhaps. But the reality is that some sellers are bound to be more affected than others by any rate increase. Increasing the commissions on the price will favor those who shift more of the book's cost onto shipping. Maybe the most logical place to increase is in the listing fees. After all, this flat fee is, in effect, being eroded by inflation. However, increases here could be seen as burdening small sellers more, and might force some to leave Abe entirely. Somebody's ox is always going to be gored more than someone else's, no matter what Abe does.
AbeBooks Institutes Charge On Shipping
We asked Mr. Davies whether Abe's greater openness with revealing sellers' identities was costing them commissions, thereby necessitating a pricing change. He declined to place any blame here, saying that when it comes to sales transacted outside of Abe, "it is simply impossible to record, or even estimate, such a statistic." He stated, "We have always encouraged contact between buyers and sellers - being able to request extra images or confirm the exact edition or condition is something buyers really value. We accept this helps some orders to go around the system but this is not an issue of major concern." Obviously opening the lines of communications has a cost to Abe, though how much is unknown.
Of course, some booksellers question Abe's "need" to raise rates. Only Abe knows what its needs are, but business is not really about need. It is about the market. Few booksellers would refuse to raise prices if it increased their profits, even if they didn’t "need" it, or such increases drove some collectors from the market. Abe can hardly be faulted for running its business in a businesslike manner. They may be wrong that raising commissions is good for them. It could reduce total income by reducing sales or the number of listing booksellers. In this case, there would in time be a rollback. However, we suspect that Abebooks will still be a worthwhile investment for most of its members even with the price adjustments. Certainly there are alternatives for booksellers. There are several good cooperative and organizational book listing sites out there, along with a number of excellent smaller private ones that can add income to a bookseller's bottom line. However, these are more like niche opportunities. The extra income is worth having, but only an Abe or one of the other large sites, such as Amazon or eBay, can provide the volume of traffic most sellers need as a foundation for their business. Of course, those other sites often upset their dealers every bit as much as Abe.
One protest we suspect is doomed to failure is one rumored as of this writing to be planned by many IberLibro sellers (Abe's Spanish site). They are said to be discussing a one-week boycott. Many eBay sellers participated in such a boycott a few weeks back, and the effect was nil. A one-week boycott simply tells the target that while I'm mad at you, I still need you. Business relationships are built on mutual self-interest. If Abe becomes unprofitable to the dealer, or better options emerge, the booksellers will move on regardless of their personal feelings. If not, they will stay. Booksellers who are unhappy need seek out other options or find ways to coexist with Abe. Fair or not, there simply are no other choices available.
Editor's Note: Several Abe booksellers have written us to say that the new Abe charge on shipping fees also applies to any sales tax collected, meaning the amount of money collected for sales tax is insufficient to pay both the tax and Abe's charge.