In recent years, low-cost booksellers have proliferated on the web. But how does a company that’ll sell you a book for a penny make a profit?

Source: A Penny for Your Books

 

Operations like Thriftbooks step in and buy these landfill-bound books, sight unseen, for around 10 cents a pound. Thriftbooks has 10 warehouses across the country, each with its own name. Ward says each of them is “about the size of your typical Walmart,” somewhere between 70,000 and 90,000 square feet. The enterprise is still largely a human operation: Between 15 and 18 people at each warehouse sift through the truckloads of books, sending more than 80 percent of the material immediately to the recycling plant. (Hey, it’s better than the dump.) That 80 percent may include stuff that’s obviously garbage: old three-ring binders, notebooks, half of a Bible. Anything that might possibly be sellable is scanned into the company’s database.

Discover Books, another major used bookseller on Amazon, is also based in the Seattle area. Unlike Thriftbooks, Discover Books relies on automated scanners to enter books into its system, which can handle more than 60 books per minute. “If there’s any history of that book online, our system will pick it up,” says Tyler Hincy, Discover Books’ vice president of marketing.

Each company takes pains to pick out any rare books that might be difficult to scan automatically. The systems rely on barcodes and International Standard Book Numbers (ISBNs), relatively recent innovations in the history of book publishing. Thriftbooks has a special “vintage” team dedicated to picking out rare, older books, trained to recognized first editions. Discover Books relies on its regular scanning system to pick out potentially valuable vintage books.

From that point on, it’s all about software. Say a new copy of “A Visit From the Goon Squad” is scanned into the database. The software races to figure out how many copies are in stock, how many copies have been sold, how the price has changed over time, what the current average, high and low prices are on Amazon, Barnes & Noble, Half.com, AbeBooks, eBay and Alibris, and decides: Do we want this book? If the software’s algorithm decides that this is a book that can be sold and is worth selling, it will be stocked and automatically listed in the online marketplace where it has the best chance to be sold. This all happens tens of thousands of times per day.

This is a game of pennies and lightning-quick readjustment. Buyers have no particular loyalty to any of these sellers; it’s all about what’s cheapest and what’s listed first. Each company, seeking an edge, builds and zealously guards its own software. Ward was the lead developer on Thriftbooks’ software before he became president. He has 12 developers, a full-time data scientist and two financial analysts on his staff. Discover Books’ software is known in-house as Trim2. “We have software that we’ve spent years and a lot of money on,” Hincy says, “tweaking to be as optimal as possible to give that book the best opportunity to be sold.”