Monday, February 23, 2009

Selling books on Amazon no longer worth the effort

Before I came to b-school, I made a couple hundred bucks liquidating my personal library. It wasn't very many books, but it made moving easier--and easier to finance.

Recently, I've been buying books again, much to the detriment of my bank account, and thought to sell some online once I was through.

Well, guess what? Amazon now takes a 33% commission on any books you sell through them. I actually lost money on the last 2 books I sold, but one went to a marine, so I felt sort of obligated.

I will never understand why new books are so expensive and used books so freaking cheap (or free, if you use the library). Let's examine the drivers of a high willingness to pay for new books:
  • convenience: For many people, Amazon is definitely the most convenient way to buy books. It offers a wide selection; plus, due to Amazon's aggressive marketing tactics, most people have trained themselves to type "" into their browsers when shopping for ANYTHING. So, this reduces the search cost (currently unquantified in this argument) for the buyer.
  • status: I just threw this in here because I couldn't figure out anything besides convenience. Maybe some people feel more dignified with a new book or one that isn't wrapped in plastic? I don't, but it takes all kinds.
  • utility: A small, but important point: you can't read a book if it's just a few battered scraps held together by twine. But most readers can use a book for years without bringing it to this state.
Which brings me to an interesting point: Can books be considered a durable good? That might justify their initial high prices. You're buying something that you'll have for years...maybe for the rest of your life! Think of all the value there!

I think this is the most likely explanation, and unfortunately, it means that the business model for book sales is out of sync with the way most people use books: as temporary and disposable diversions. The way booksellers price books now is akin to Charmin making teflon TP and pricing it at $1,000/roll. Sure, you may have one square for the rest of your life, but who would need or want to?

This discrepancy is, to me, what makes the Kindle such a compelling value proposition to consumers: Buy basically one durable "book" at a high price, and then a low price for new content over the life of the "book."

This business model makes a lot more sense to consumers from a utility perspective. Does it mean that the Kindle's victory over print is inevitable? Hardly. Substitutes, including ultra-portable computers, NetBooks, and the various iPhone/Pods/whatevers, abound. The winning device will be the one that carves out a niches in your purse, or, in this case, bookshelf.

1 comment:

Christian Busch said...

i guess you could call books a durable good - but then again - most durable goods have an actual use as opposed to just entertainment. Not sure whether that's a concise definition though.