Q&A: How big can I scale my online used book business?
QUESTION: I have been selling books online for about a month now. I've sold about 300 books and am curious if there is a "limit" to how many books can be sold. Is there a point when my business can't get bigger? Sure, there is a limit to what one person can do, but can I build this into a large-scale business? In other words, if I had 20,000 books listed would I sell them at the same ratios that I am selling my current stock?
ANSWER: Great question. The short answer is, you can't scale a used book business to the same degree as you could with, for example, a business selling new products.
First, let's assume you'll keep your business a one-man show. Only so many hours are in a day for you to find books and list them for sale. You're limited to one geographical area, you can't go to every used book sale in the country to find more salable books.
And as your sales increase, you'll be spending more time organizing books, packing books for shipment, and dealing with customers. All these tasks will reduce the amount of time you can devote to finding new books.
Another thing that limits the scale of a used book business is the time-consuming inventory maintenance tasks that will multiply over time. I call it "getting rid of the deadwood." For example, let's assume that you're a good book picker, and 75 percent of the books you list for sale are sold profitably within 18 months. But because you have limited storage space, you decide to get rid of the low-priced books to make room on your shelves. Whether you sell these loser books off as a bulk lot, or donate them to charity, at some point you'll have to assemble them and dispose of them. And it's enormously time-consuming.
Most of my cashflow comes from books I listed for sale during the previous month or two. The good books get snapped up quickly, then you are left with slower-moving stock. So when your business grows to the point where your inventory consists of 20,000 books, you're likely to have a much higher percentage of slow-moving books. So the overall percentage of your inventory that sells on a daily basis will go down over time. How big you can scale of your business depends on your acquiring good quality stock consistently. And that depends somewhat on luck, and your persistence in finding good sources of books.
All of these issues we've discussed here are the things that limit the scale of a used book business, which is very labor- and time-intensive. But on the flip side, there are advantages to selling used books. The profit margins are high. I can't think of any other business where you can easily find your merchandise for a dollar or two per item and sell them at a 500 percent markup or more.
Short of hiring employees, I can think of one way to scale this type of business. That would be to recruit friends to find books for you, perhaps paying them a small commission for every book. Because I think that's the biggest thing that limits the scale of a used book business: the ability to find good used stock in quantity. The challenge here would be teaching them what types of books you want to avoid.
ANSWER: Great question. The short answer is, you can't scale a used book business to the same degree as you could with, for example, a business selling new products.
First, let's assume you'll keep your business a one-man show. Only so many hours are in a day for you to find books and list them for sale. You're limited to one geographical area, you can't go to every used book sale in the country to find more salable books.
And as your sales increase, you'll be spending more time organizing books, packing books for shipment, and dealing with customers. All these tasks will reduce the amount of time you can devote to finding new books.
Another thing that limits the scale of a used book business is the time-consuming inventory maintenance tasks that will multiply over time. I call it "getting rid of the deadwood." For example, let's assume that you're a good book picker, and 75 percent of the books you list for sale are sold profitably within 18 months. But because you have limited storage space, you decide to get rid of the low-priced books to make room on your shelves. Whether you sell these loser books off as a bulk lot, or donate them to charity, at some point you'll have to assemble them and dispose of them. And it's enormously time-consuming.
Most of my cashflow comes from books I listed for sale during the previous month or two. The good books get snapped up quickly, then you are left with slower-moving stock. So when your business grows to the point where your inventory consists of 20,000 books, you're likely to have a much higher percentage of slow-moving books. So the overall percentage of your inventory that sells on a daily basis will go down over time. How big you can scale of your business depends on your acquiring good quality stock consistently. And that depends somewhat on luck, and your persistence in finding good sources of books.
All of these issues we've discussed here are the things that limit the scale of a used book business, which is very labor- and time-intensive. But on the flip side, there are advantages to selling used books. The profit margins are high. I can't think of any other business where you can easily find your merchandise for a dollar or two per item and sell them at a 500 percent markup or more.
Short of hiring employees, I can think of one way to scale this type of business. That would be to recruit friends to find books for you, perhaps paying them a small commission for every book. Because I think that's the biggest thing that limits the scale of a used book business: the ability to find good used stock in quantity. The challenge here would be teaching them what types of books you want to avoid.
posted by Steve Weber at 12/28/2005
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