On May 3rd celebrate your local independent bookstore with the first California Bookstore Day. Books published exclusively for this event will be available only at participating bookstores. Eureka Books will have select titles for this occasion, including The Sleeper and the Spindle by famed science fiction author Neil Gaiman, whose contribution to California Bookstore Day is an illustrated edition of a short story inspired by Sleeping Beauty.
To name just a few of the titles:
- Quilting with Style: Principles for Great Pattern Design
- Quilts from the Quiltmaker’s Gift: 20 Traditional Patterns for a New Generation of Generous Quiltmakers
- 70 Classic Quilting Patterns: Ready-to-Use Designs and Instructions (Dover Quilting)
- Applique Masterpiece : Affairs of the Heart
- Applique 12 Easy Ways! : Charming Quilts, Giftable Projects, and Timeless Techniques
- Garden Party: Applique Quilts That Bloom (That Patchwork Place)
- Quick & Easy Quiltmaking: 26 Projects Featuring Speedy Cutting and Piecing Methods
- Applique in Bloom
- Pink Lemonade & Other Delights : 10 Refreshing Quilt Projects
- Fast Patch: A Treasury of Strip-Quilt Projects (Contemporary quilting)
- The Border Workbook: Easy Speed-Pieced and Foundation-Pieced Borders
- Lois Smith’s Machine Quiltmaking
- Quick Quilting: Rotary Cutting, Machine Piecing, Machine Applique, Machine Quilting
- Cat’s Meow : Purr-fect Quilts for Cat Lovers
- Botanical Wreaths: Nature’s Glory in Applique
- Machine Applique: A Sampler of Techniques
- Radiant New York Beauties: 14 Paper-Pieced Quilt Projects
- Pieces of the Past
- Magic Stack-n-Whack Quilts
- Magic Base Blocks for Unlimited Quilt Designs
- Super Simple Strips
- Contemporary Classics in Plaids & Stripes: 9 Projects from Piece O’Cake Designs
- The Standard Book of Quilt Making and Collecting
- Quilts for Fabric Lovers
- Sensational Scrap Quilts
- It’s Raining Cats & Dogs: Paper-Pieced Quilts for Pet Lovers
- Fantasy Fabrics: Techniques for Layered Surface Design
- Plentiful Possibilities: A Timeless Treasury of 16 Terrific Quilts
- Go Wild With Quilts : 14 North American Birds & Animals
- Timeless Toile: Terrific Quilts, Pillows, and Purses
- Precision-Pieced Quilts: Using the Foundation Method (Contemporary Quilting)
- Paper Piecing with Alex Anderson: Tips Techniques 6 Projects
- Easy Paper-Pieced Keepsake Quilts : 72 New Blocks Including the Alphabet!
- Paper Piece a Merry Christmas (That Patchwork Place)
- Scrap Quilts
- Scrapmania: More Quick-Pieced Scrap Quilts
- The Scrap Look: Designs, Fabrics, Colors and Piecing Techniques for Creating Multi-Fabric Quilts
- Rotary Roundup: 40 More Fast & Fabulous Quilts
- More Quick Rotary Cutter Quilts
- Rotary Riot: 40 Fast and Fabulous Quilts
- Dutch Flower Pot Quilts
- Little Quilts : All Through the House
- Quilts Galore!: Quiltmaking Styles and Techniques
- Old Favorites in Miniature: Patterns and Instructions for Making Nineteen Miniature Quilts
- Twenty Little Patchwork Quilts: With Full-Size Templates (Dover Quilting)
- Working in Miniature: A Machine Piecing Approach to Miniature Quilts
- Quilts for Red-Letter Days: More Than 30 Small Celebration Quilts
- Quilted for Christmas: Book Two
- Mariner’s Compass: An American Quilt Classic
- Applique Masterpiece: Little Brown Bird Patterns
- Pieced Borders : The Complete Resource
- A Bird’s Eye View
- The Block Book
- Baltimore Album Legacy
- Applique Designs: My Mother Taught Me to Sew
- Baltimore Album Quilts: Historic Notes and Antique Patterns : A Pattern Companion to Baltimore Beauties and Beyond
- Quilting Makes the Quilt
- Attic Windows: Quilts With a View
- Stripes in Quilts
- Jacobean Applique: Exotica, Book I (Bk.1)
- A Quilter’s Ark: More Than 50 Designs for Foundation Piecing
The first of an infrequent series of bookstore economics
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A couple of years before he died, Peter Howard of Serendipity Books, in Berkeley, was hired to appraise a small, general used bookstore in the greater Bay Area. Peter had appraised other bookstores and liked to use that platform to express his views of bookselling. The result is a rare look inside bookstore economics, with the conclusions and observations of one of the most knowledgeable, respected (yet simultaneously disliked), and successful booksellers in the trade.
The shop in question, which I’ll call Ye Olde Bookshoppe, had been open just over seven years at the time of the appraisal. There were two partners. When Peter visited, the store had 45,000 titles in stock, about evenly divided between hardcovers and paperbacks. What follows are extracts from the analysis section of the final appraisal.
The partners had been involved in bookselling in various forms for ten years. Together, they pooled $5000 in cash, plus 15,000 books acquired at an average of $1 per and 10,000 books acquired for $2,000. “20 cents each!!!” writes Peter. So 25,000 starting books acquired for $17,000, mostly at garage and estate sales. Their average retail price was $7.
Walk-in Traffic and Internet Sales
“Ye Olde is a general used book store catering to the walk-in public, humble and modest readers, and scouting dealers,” Peter wrote. “The bookstore is not heavily patronized nor sustained by university faculty or students. There is no separate section for selling rare books or first editions.”
“Ye Olde’s rent increases every year. They are forced to gross more every year, though market conditions for open-premises used bookstores HAVE NEVER BEEN WORSE SINCE THE END OF WORLD WAR TWO” (emphasis in the original), due to the Internet. “More than 50 similar booksellers in the Bay Area have closed recently, only one has opened… Booksellers with 20,000 good and valuable books go home, put them online in one or two years, and average $25,000 or more in profits. No overhead. Ye Olde’s owners cannot go home. One cannot sell $7 books online and earn a living and support two families….Ye Olde serves its local, not very academic, middle-class neighborhood only. At the minimum price of long hours and endless scouting. And they have kids.
“The 3000 books Ye Olde has listed online, selling for an average of $40 (when sold), are locked in the back room, and are falling over somewhat from lack of attention, though they are in numerical order by computer listing, rather than by any other useful order (by subject, by author). They sell only one or two books each day.
“These 3000 books are not available to the public. Ye Olde does not have enough space, money, or staff by which they could both offer books on line and yet house them in a manner so that they are simultaneously available to curious walk-in traffic. It is the worst of possible situations, not the best. [In a random sample], there were cheaper copies online of all but one of the online books surveyed. The time and effort expended in putting these books online resulted in a tremendous waste of money. Moreover, the books online are locked upand cannot be seen by walk-in customers who would happily pay shelf price because most walk-in customers do not comparison shop at used book stores.”
When a partner is not working, “he spends his discretionary time scouting for books that he might sell for more than he pays. There are no other stores that sell for prices averaging less than Ye Olde. Therefore they must scrounge flea markets, benefit auctions, thrift stores, house calls, over the counter purchases. They cannot buy books from other book stores.”
Here are Ye Olde’s financials. All numbers are rounded to the nearest thousand
|Year||Rent||Overhead||Books Bought||Gross Sales||Cost of Goods Sold||Ending Inventory||Taxable Profit/Partner||Actual Take-Home|
Note: The actual take home is less than the taxable profits because Ye Olde invested some of its profits to growing its inventory. Actual take-home is per partner, so in year 7, the two partners each made $42,000.
Commenting on Ye Olde’s financials, Peter noted that bookselling is a “trade that takes a lifetime in which to master little, suffer much, and on the average, earn less than any union laborer.”
Cost of Goods Sold
“The only variable in an honest book business is the estimated cost of books sold,” proclaimed Peter at the top of the section on inventory. “Cost of books sold is computed either by the coding and recording of the cost of every single book (Serendipity’s method) or by equating the cost of books purchased with the cost of books sold in a fiscal year. Ye Olde records the cost of books sold on an annual basis as the amount of money spent on books that year, and report that figure annually on federal tax returns, to the truth of which they swear. This method is allowed by the IRS, especially when the average price realized is small and steady records are maintained of checks written, deposits made, bills paid. Their manual bookkeeping is extremely hard and time-consuming work.”
Ye Olde had a very low cost of inventory, averaging just 29% of sales for the first seven years.
Profits and Margins
“The more expensive the book, the greater the profit in absolute dollars, if not the greater ratio of cost to selling price. Ye Olde pays 29% for books sold (less the cost of books UNSOLD). Simply enough, they make $7 on a $10 sale, before overhead. But dealers who pay 80% instead of 30% and who average $50 a sale, instead of $10 per sale, make $10 profit. Most antiquarian booksellers average 60% for cost of books sold, making $20 gross profit on a $50 sale.
“Ye Olde is at the very bottom of the food chain that is the book business. They sell the cheapest, least profitable type of book, and only that type of book, and have absolutely no means by which to get ahead, except by inching forward, their success depending entirely upon long hours (read: good health, lifetime commitment); the willingness of others to sell them books at the cheapest values in the book business; a rent that does not interfere with their ability to pay based on their gross; yet a large enough space to contain an endlessly growing stock.
“Almost all dealers leave a portion of their profits within their business, in order for their businesses to grow. Ye Olde struggles to increase their inventory a bit every year. This means taking less money out of the business. If the business does not grow and the inventory increase, Ye Olde will fail.”
“Inventory is the stock of material for sale, and the cost to the bookseller of that stock. Ye Olde buys books by check and with cash…. Ye Olde records sales with a cash register and in a salebook daily under lock and key, entering by day and summarizing by month, distinguishing between taxable and non-taxable (dealer) sales. The account book is maintained in pencil and appears absolutely straightforward. Single entry bookkeeping, manual. Currently $200,000 in annual sales. Two employees gross $100,000 per annum each.
Each partner works an average of 3.5 days per week in the store, often until three or four hours after closing.
Peter’s conclusion, at the end of the appraisal: the store is worth $35,000 – the value of its inventory, at cost, even “though it is worth less than its cost….The cost of used goods does NOT REFLECT the value, as COST is likely to be too generous, and does not take into account the number of books residual in inventory that have declined in value, and have been repeatedly de-selected as candidate purchases by customers. Ye Olde must constantly remove books for which they paid money because they have not sold, making room for new arrivals that might have a better chance of selling. Yet booksellers’ stocks, so long as they remain on the shelves, may not be depreciated, legally.
“A business may have goodwill of value, calculated by the cost of replacement to the relevant community: e.g., a new barbershop (find one that will give you a shave with a straight razor!!) or a new hair salon. There are startup costs to recover, there is value in having “good deed” foot traffic (sponsoring ball team, donating to local fundraising auctions, internships underwritten). Dentists and veterinarians sell their practices and get a little more extra for the good will of their good name and their patient lists in the community. The notion of good will having value is NOT APPLICABLE when the good will is dependent upon “key man” personality or depth of friendly knowledge, or in the circumstance that the businesses has no likely future beyond the present owner. Used bookstores are always representative of and extensions of their independent owners’ personalities and utterly dependent upon their specific knowledge, non-transferable, earned over a lifetime.”
Next up (when I have time!), some comments on the conclusions herein.
Since the story ran in the Tri-City Weekly, we’ve had a lot of requests about what we brought back from Serendipity Books, in Berkeley. I have to say, the interest caught us a bit unprepared. But we’re making an effort to pull some of the cool and interesting stuff out of boxes and to put it in the shop. Here’s the first bit: R. Crumb’s 1975 Yum Yum Book, a full-color graphic novel retelling of the Grimms fairy tale about the girl who kissed a frog that turned into a prince. The cheapest copies online are selling for $25. We just opened a box, still sealed from the printer after 38 years! and are selling them for just $12.48.
NOVEMBER 15 UPDATE: SALE IS OVER. ALL MERCHANDISE IS SOLD
Parking will be tight at Serendipity during the sale. The store in on the edge of a residential parking zone, but if you stay to the east of the shop, you should be fine parking in the neighborhoods (but read the signs carefully).
There is a parking lot on-site, but it will be for loading and unloading only. So drop off your bags and boxes, find a parking place, and walk in.
Due to the expected volume of sales, we cannot store books over night. Please have a plan to remove all books by the end of the day.
The sale opens to the public on Saturday at 10 am.
Saturday, Nov. 9, 10-6
Sunday, Nov. 10, 10-6
Monday, Nov. 11, 10-6
More info on Berkeley parking regulations can be found here: http://www.ci.berkeley.ca.us/Public_Works/Transportation/Parking_RPPMap.aspx