Innovative Retailer: Thrift Books

Brought to you by Retail Insider and PCMS

Name: Thrift Books

The Place: Headquartered in the States but selling internationally.

The Story: Selling books for a penny. How does anyone make money doing that for goodness sake? Listen and learn, people.

I’m listening: As the New York Times once memorably said: “Penny booksellers are exactly the sort of weedy company that springs up in the cracks of the waste that the internet has laid to creative industries.”

What? It means capitalism eventually commodifies creativity down to its lowest level.

What? OK, let’s just stick to the basics. In 2003 two men decided they had a million dollar idea. One of them was software architect Daryl Butcher and the other was Jason Meyer. Butcher was the person who wrote the book listings software for Amazon, which will be relevant.

I bet it will be: Their basic gamble was that someone somewhere wants that one remaining out of print, not stocked anywhere else, just fished out of the house clearance copy of whatever it is, but they cannot see it on the charity shop’s shelf or in the library sale because they don’t live in x. They live in y.

Simples: Yes, so simple no-one else got it. And they also saw that the internet could be the greatest global shop front ever conceived and also that the average chain of one second-hand bookseller on the High Street was woefully unprepared for, and inadequately able to service the opportunity. They started out in a small storage unit but within a year required an upgrade to a warehouse in Seattle which could hold 200,000 books.

Wow, that’s big: Then in 2006 they expanded to Washington in a site which could hold one million books.

Wow, that’s really big: And so on up until we get to 2016 when they opened a Chicago site which holds 10 million books.

Wow, that’s ridiculously big: But it’s also key to understanding how this particular innovative retailer has to work. It can only increase its revenues by accessing an ever increasing number of books. It has to shift an unimaginable amount of stuff to make any money at all and its labour intensive work with bulky items.

And where exactly is it getting these books from? Ah, this is the second clever thing. Think about the average shopping audience for a charity shop or library or school.

I’m thinking: It’s very small. And to be honest, most books donated to charity shops will end up going to landfill because the shops are small and can only stock a few things that they think will sell. Likewise the annual library sale – it’s the dog end stuff and that community has already had full access to it anyway so even less likely to buy it.

So? Thrift Books comes along and takes pallet loads and pallet loads of these books that even the charity shops don’t want. Hundreds of thousands of books processed every day.

So far to be honest it’s sounding like the worst business plan I ever heard: And then they sift through these dead end pallets from the charities, schools and libraries again and send most of it straight to the recycling.

No wait, it actually just got worse: And then they send what’s left (but remember this is still hundreds of thousands of books) to their stock receiving staff who sift again, inspect condition and determine demand.

I have a bad feeling about this: And they reject two thirds of what they see.

OMG I knew it: And then finally you are left with the books that Thrift Books actually think they can sell. High end it isn’t. Even the founders describe it as basically a ‘very large salvage operation’.

It sounds brutal: Ruthlessly efficient is another way of looking at it. But now the technology kicks in in a big way. Thrift Book’s secret weapon in the book selling wars are its algorithms which founder Butcher designed. They don’t have to list books manually on every website, list a book once on any of them and it replicates the listing on all the sites they use including Amazon, eBay.

Surely that means… yes, it means the company can list an almost unimaginable number of books every single day. But that’s not the only unique thing about the software.

Spill: The software automatically reprices the entire inventory on a regular basis based on how many copies of a book are being listed across the whole online spectrum so that the prices stay competitive, this means it is always at the front of the search listings which allows the firm’s books to be viewed more often and bought more frequently. And this of course is where the price can start to race down to a cent.

I’m sure it has its critics: You would be right there. Obviously the high street second hand book sellers fume at its price reducing tendencies and don’t believe a word of the CSR stuff that Thrift books puts out.

I feel for them: But as so often with shops, everyone likes the idea of a second hand bookshop on their street but they don’t really use it. It’s too hit and miss. Useful if you don’t have a specific book you want but are just aimlessly looking for any book. Totally useless if you are after something niche and out of print.

Still, I cannot even begin to imagine what sort of money they are making: As you can see it can be only a few cents per book but if you are selling 15 million books a year then it adds up. We cannot be sure of figures and remember only some of its huge inventory is selling for a cent.

Do we know what proportion? Specially trained staff with eagle eyes pick out anything rare or vintage and make sure it gets its proper market price but we can say that most stock sells for less than $5. And the profit margin on a book that sells for only $3 with such a lean operation (even the packaging is the thinnest plastic) soon starts to mount up.

Dare we mention the CSR stuff? Whatever you think the motivation might be the facts are as follows: Since inception $100 million given to charities through purchasing their books; for every 1.4 tonnes of books sent for recycling 24 trees and 7,000 gallons of water are saved; Thrift Books Gives partners with non-profit organisations like international literacy programs, prisons and the like and supplies them with free books to populate their libraries.

Could we just say that like most ventures – there are winners and losers: I think we could.


PCMS is a global provider of IT software and services for the retail industry. PCMS offers a full-range of integrated commerce solutions across selling touch points and also provides turnkey managed services and cloud hosting. Its client list includes John Lewis, Marks & Spencer, Waitrose, Whole Foods, as well as Walgreens in the US and fashion brands including Prada and Ferragamo across Europe.

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