Alamosa Writes . . . on Discount Book Sales

Pick up a book and turn it to the back. There is probably a bar code near the bottom. Near that, there is a price. This is the retail price. Not the suggested retail price. Not a possible retail price. This is THE RETAIL PRICE.

In the larger retail world, retail price is determined by the retail seller. Goods are purchased by retail stores at cost. They then determine the retail price as some function of the cost. This function is the mark-up. Mark-up can be anything from 100% (twice that of the cost) to 1000% of cost. Or more.

In the book world, the retail price is set by the producer and then printed irrevocably on the product. The cost to a retail store is figured as a discount off of the retail price. This varies by vendor, but there are standards. Generally, wholesale vendors sell books to bookstores at about 40% off the retail price. Publishers sell books direct to bookstores at about a 45% discount. So when a bookseller buys a book they are paying 55% or more of the fixed retail price. On every book.

Some retail outlets can buy books at such huge volumes that publishers (rarely wholesalers) will sell books to them at deeper discounts. Big box stores and Amazon can command discounts as deep as 75% of the retail price for bestselling titles. However, most brick-and-mortar stores can't command these sorts of discounts.

Books are also special in the retail world in that they are normally guaranteed by the supplier. In other words, unsold books can be returned to the publisher. These returned books are normally turned into remainders. These remainders are the "bargain books" customers see for sale at deep discount. Remainder books are boxed into huge crates and sold by lot. Retail stores can't control what comes in those crates. All of them failed to sell elsewhere, so the quality is predictably low. However, buying a crate usually means paying a very small amount for each book. Hence, the deeply discounted retail price.

This process is highly wasteful. Every bargain book on the shelf has at least four rounds of shipping behind it. Quite a lot of fossil fuel goes into those bargains. There are other aspects of returns that are even more evil, but that's a topic for another day.

But what about the latest bestsellers that are at 50% discount at Costco? Those books are at high discount but obviously not remainders. How can that be?

Two factors come in to play. First, Costco is a BIG BOX. Costco can order centrally in huge volumes and then distribute the books nationwide (maybe worldwide by now?). So publishers see that as a golden opportunity to sell lots of books in one shipment. They encourage Costco to buy bestsellers with deeper than normal discounts. Costco may pay 25% of the printed retail price for each book whereas smaller stores will pay 55% or more.

The second important thing about Costco is that it is not a bookstore. Costco makes its money selling stuff. Stuff like electronics and appliances which come with the 100% plus mark-up. Stuff like cereal and laundry detergent that comes with that 1000% plus mark-up retail price.

Costco can therefore afford to use books as lures. They advertise the latest bestseller at deep discount, perhaps making only pennies on each sale or even losing slightly. Costco is betting that customers will come in to buy this discount bestseller and then spend even more money on the rest of the stuff that is sold there. Betting accurately as it turns out. They use books as loss-leaders.

Obviously, with little to sell other than books, bookstores really can't afford to turn books into loss-leaders. When it comes to discounts, bookstores are severely limited.

Small bookstores are further limited by their inability to order from publishers in large volumes. It is not unusual for a small bookstore to pay the same price for the books on its shelves as customers pay retail at big box discount stores. In fact, it is a sad commentary on the industry, but I have seen many booksellers buy their inventory of hot titles at places like Amazon and Costco — at better discount than what they could get from the publisher.

So small bookstores try to make up for the higher prices they must charge (higher prices than box stores, but never higher than THE RETAIL PRICE) by adding service value. Small bookstores have broader selections of books — by definition in comparison to discount stores, but also broader in comparison to large bookstore chains, usually. Small bookstores have helpful, knowledgeable people on staff who help to find the right book for each customer. Small bookstores also tend to focus on regional interests, stocking books that are not carried by even the local outlets of chain bookstores and working closely with local authors and publishers.

Small bookstores play one further critical role. Like all small, independent businesses we are the economic foundation of each community. Small businesses earn the bulk of gross receipts tax for cities and states. We pay salaries that go back into the community because all our employees — from the top down — live here. We buy locally produced products whenever possible, supporting authors and publishers as well as local artisans who craft the gift items on our shelves. Many of us also choose to support arts, education and other causes at a much higher percentage of sales than big chains. We live here, so a vibrant community benefits us, too. (Of course, a vibrant community is also likely to support a community of avid readers. . . nod, nod, wink, wink.)

So here is what we recommend. Yes, buy your bestsellers at Costco. By all means! You get a better price and we don't have to burden our small stores with those books in large piles. Costco can warehouse the piles far more effectively than small bookstores. Plus, there is a purely self-gratifying dig at publishers who give huge discounts to box stores but not small stores. Publishers make less on each book sold at the box stores. They are purposefully devaluing their own products, their bestselling products. If savvy customers take advantage of that, decreased profits on bestsellers are their own fault! Serves them right, by my reckoning. So DO take advantage of that. (Whether you stay to buy STUFF is your own decision, but I don't recommend the experience.)

But then, when you are looking for a gift, or when you don't know what book you want to read next, or when you just want to enjoy the shopping experience a little more; please, please, please, buy books from an independent bookstore! You are doing something good for your community and for yourself. You won't find our selection or customer service in a box store, and a big chunk of every dollar you spend at an independent bookstore goes right back into your home.

Just please, understand that we really can't offer the same discounts as the box stores. Much as we lament that fact.