73. Used Bookstores | The Economics of Everyday Things
Short Summary:
This episode of "The Economics of Everyday Things" explores the economics of used bookstores, focusing on the challenges and successes of independent stores in the age of Amazon. Key points include the careful curation of inventory based on a cost-benefit analysis considering factors like book value, shelf life, and brand image; the importance of human connection and the curated experience offered by independent bookstores; and the various methods used by bookstore owners to acquire inventory, including purchasing from individuals, dumpster diving, and buying entire collections. The episode highlights the resilience of independent bookstores despite the dominance of online retailers, demonstrating their ability to thrive by offering a unique and personal shopping experience. The process of evaluating and pricing used books, considering factors like condition, demand, and storage space, is described in detail.
Detailed Summary:
The episode begins by introducing Francisco Hernandez, owner of Leaves, a used bookstore in Brooklyn. Hernandez recounts the initial skepticism he faced from bankers and investors regarding the viability of a physical bookstore in the digital age. He emphasizes the unique communal aspect of buying used books, highlighting the connection to previous owners across time. This section sets the stage by contrasting the perceived impracticality of a physical bookstore with the inherent value and emotional connection associated with used books.
The next section dives into the economics of running a used bookstore. Hernandez explains that the industry requires a deep understanding of book valuation, going beyond simply considering the book's knowledge content and appreciating it as an art object, considering factors like dust jacket design and binding. He contrasts this with the efficiency and price dominance of Amazon, which sells over 50% of print books. The decline and subsequent resurgence of independent bookstores are discussed, attributing the rebound to the demand for a curated, experiential shopping environment. The quote, "We're not selling books as much as we're selling an experience," encapsulates this key differentiator.
The core of the episode focuses on the practical aspects of running Leaves. Hernandez details his acquisition methods, ranging from individual book donations and purchases to acquiring entire collections from estates or even dumpsters. He describes the process of evaluating incoming books, considering their condition, potential resale value, and shelf life. The pricing strategy is explained, with a higher percentage offered for store credit versus cash, reflecting the faster turnover of books sold quickly. The decision-making process for purchasing large collections is also detailed, emphasizing the need to balance potential profit with storage space constraints. Specific examples are given, such as the higher payout for quickly selling paperback fiction compared to slower-moving biographies.
The episode also highlights the importance of staff expertise and customer relationships in the success of Leaves. Hernandez emphasizes the rewarding aspect of connecting customers with books that resonate with them, illustrating this with an anecdote about selling a first edition of Gravity's Rainbow. He discusses his overhead costs, including rent and staff salaries, emphasizing the value of his employees' expertise in curation and customer service. The episode concludes by acknowledging Leaves' use of online platforms like Biblio and Abebooks (owned by Amazon) for selling rare books, but reiterates the importance of the physical store as the heart of the business. The final message emphasizes the enduring value of human connection over pure efficiency in the retail experience.