Q&A: How can I price books to outsmart megasellers on Amazon Marketplace?

QUESTION: When listing books (especially newer more popular ones), I consistently notice five or six megaseller listings with horrible feedback, about 85 percent. They usually lowball, and have between 100 and 1,000 copies listed. Should I price below them, match them, or above them? Are there enough buyers who will pay a few extra dollars to buy from a seller with better feedback?

ANSWER: The megasellers you're seeing are usually "remainder" or "overstock" book dealers. They get their stock from bookstore returns, etc.

The way publishing works nowadays, new titles get about three months to prove themselves in bookstores. If they don't continue selling like hotcakes, the bookstores return most of them. The publishers don't know what to do with the returns, so they sell them off at pennies on the dollar. These are the lowball copies you're seeing on Amazon Marketplace.

Many of these megasellers are the remainder dealers I mention in the "wholesale" appendix of my book "The Home Based Bookstore."

So yes, if you're competing with one of these lowball Marketplace listings, you can often get the sale at a 100 percent premium, when there's a savvy buyer willing to pay for guaranteed good service from a seller with sterling feedback.

When there's lots of overstock of a certain title on the market, however, one of two things usually happens:

1.) The book starts its descent toward permanent penny-book status if there's tons being returned, and demand is insufficient.

2.) The price recovers in six months to a year when the market has soaked up the glut.

For scenario 2 to happen, there has to be relatively strong demand for a book. Being in the top 25,000 in Amazon Sales Rank indicates reasonable demand for the book. But there's so many variables as to whether a book price can recover -- I've had some high-priced books on closeout that had Amazon Sales Ranks of about 80,000 where the price recovered quickly -- probably because there was not too many remainder/overstock copies out there. The thing is, there's no way to know all the variables.

And I'm sure you know fiction tends to lose its value, while business titles can sell strongly for years on end.

A few times when I've seen really strong-selling books offered at these ridiculous closeout prices, I've bought out the megaseller. For example, when you see a book listed at a low price by the Marketplace seller "Book Closeouts," you can usually buy that stock from "Book Depot." It's the same company, Book Depot is the wholesale arm. They usually sell booksellers the stuff they have listed on Marketplace at exactly half the price they've got it listed for on Marketplace.

This type of opportunity probably won't be around for too many more years though, because the publishers are starting to set up their own retail operations -- selling direct to consumers online. Once they have those businesses running, they can sell their own overstocks.