Thursday, April 16, 2015

Saving Books One Penny at a Time

Save a book from this fate: buy it for a penny
Have you ever noticed what seems to be thousands and thousands of used books on sale for a few pennies each on Amazon.com?  Many of them are being offered at one cent each, in fact.  Have you ever wondered how anyone could afford to sell books at that price?

The secret, my friend, is in the price being charged to the buyer for shipping...what the shysters on TV like to call "postage and handling," with "handling" perhaps providing the largest portion of the profit being made on the entire transaction.  Why else would every single TV seller be so eager to give you two items for the price of one PLUS another charge for postage and handling?  

Well, according to The Guardian, it works pretty much the same way on Amazon.com when it comes to the sale of used books by third-party sellers.  Acquire them cheaply in bulk, slap a penny price tag on each book, charge the standard $3.99 shipping fee, and there's money to be made there for both the seller and for Amazon. 
The price point is partly a result of the market’s downward pressure: at a certain level of supply and demand the race to the lowest price swiftly plummets to the bottom. What remains inflexible is the $3.99 fee Amazon charges the buyer for shipping. From that $4, Amazon takes what they call a “variable closing fee” of $1.35. They also charge the seller 15% of the item’s price – which in the case of a penny book is zero. That leaves $2.64 to cover postage, acquisition cost and overhead. 
“All told,” Mike Ward concedes, “we only make a few cents on a penny book sale like that.” Now that hardly seems like much, true. “But keep in mind,” he adds, “that last year we sold 11.5m books.”
 (The most surprising bit in the article might just be that so many charity shops are giving away donated books in bulk if someone is just willing to haul them away on a regular basis.)

Do read the article because it might just get you in the proper mood to see what you can add to your own collection for only $4 a whack.  Some very good deals are to be had.

4 comments:

  1. That's interesting. I was briefly one of those third-party sellers- tried it for a year. I couldn't make a profit because I didn't have the sources to acquire enough books in bulk (or free) to compete with the penny sellers. It was pretty pointless if you didn't have a warehouse full, to be able to make money solely on the shipping/handling fee. Because yeah, amazon takes a pretty hefty cut from sellers. Good for the buyer, though.

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  2. You're right, Jeanne. Sellers who don't get books for pretty close to free don't stand a chance to compete with the guys who have warehouse space to store all the stuff they cart around. Even then it requires sales in huge numbers just to cover expenses and hit the black, I imagine. Sellers have a good shot at filling in some spaces in their collections cheaply, but I would imagine that only a very few really expensive books slip through the cracks of those big sellers.

    I tried e-bay for a while but found I was taking a loss on most items and was lucky to break even overall. Not worth the effort.

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  3. They always get you on the postage and handling! I am often outraged when buying something online especially from places that charge you according to the amount of your order. Garden seed companies often do this. So, for instance when I ordered $25 worth of vegetable seeds I get charged $6 for shipping and the envelope arrives and it only cost them $3 to mail the thing. Grrr!

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    1. I had a similar experience when I ordered one of those little SD Cards for my video camera. It came in a little cardboard sleeve that fit inside a regular, letter-sized envelope. Weighed almost nothing. Postage & Handling charged me was $4.75. Actual postage cost was less than 80 cents. There went the bargain.

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