How Do Penny Book Sellers Make Money?  I am not sure if they do – if they do make a profit it is minimal a few cents at most.  Lets break down a penny sale on Amazon and see how it works.  Lets assume the seller is a Pro Merchant on Amazon and pays the $40 monthly fee.

Let’s assume the book weighs less than 1lb for shipping purposes

$4.00 – is the amount collected by Amazon – this is the $.01 plus the $3.99 standard shipping charge.

($1.35) – is the amount Amazon takes out of the shipping leaving $2.65.

($2.38) – the amount to ship a book that weighs 1lb or less via media mail as of today.

Potential profit $.27.  Twenty-Seven Cents - not factoring in other expenses such as labels, envelopes, internet, time spent listing and shipping and all the other subscription fees that make up your overhead.  So lets say a penny seller can make $.20 on each sale.  You would need to sell 500 books a day to make $100 a day at that rate – which means you are going to have to have someone help you prep all those books for shipping further eating into your profits. 

 Does this make sense as a business model – not to me.  Understand though – this is their business model – penny sellers are not by accident.  So they must be ok with those lousy margins.  Maybe the penny sellers do not value their time properly and are ok with stuffing 500 envelopes with books for $.20 each.

Sellers of books for a penny are the worst – they clutter Amazon with the junk listings with no descriptions but they do make money and so does Amazon.  Remember – Amazon makes $1.35 for every penny book sold.

Selling books online can be very profitable. When individual sales are quickly glanced at the potential for profits can seem great.  I have bought many books for $1 and sold it for $30 or more many times – very fat profit margins.  The thing of it is that becasue I do everything online I can lose track of my margins.  Managing your bookselling venture like a small business is important. 

I sell my books online and do almost all of the back office business online.  This creates a very simple business to run but because so much of the processes are done online.  My books and envelopes are the only real things I store.  I manage my overall business on a cash basis but keeping track of the details is important.  Here are things that are easy to lose track of in terms of really figuring out what your margins are:

• Marketplace monthly fees – Amazon is straightforward but eBay is variable
• Commissions taken per book by the marketplaces
• Postage – Amazon takes another chunk here
• Cost per envelope
• Monthly fees of Endicia
• Monthly fees of Inventory Management System – in my case The Art of Books
• Cost of books

The list can go on and it becomes depressing how much others make when I sell one book – everyone gets their cut.  So when I sell a book for $10 that I bought for $1 I am not making $9 (or even $8).  This is one reason it is some important to figure out your margins as you can figure out what books are not worth selling.

Keep track of everything, work the numbers and focus on the bottom line and you should see your profits increase.  Regulary shop around for new vendors.  Is your inventory management provider the best for the money.  How about your envelope provider? Ink toner?  All of these eat into profits.  Spend time shopping and save.

Many online booksellers wonder about the mysteries of the Amazon Sales Rank.  These booksellers ponder the deep philosophical questions of what is the Amazon sales rank – how is it calculated, when is it calculated and what does it all mean and when will my book sell.

The bottom line on the Amazon Sales Rank is this – the lower the number the faster the book should sell.  What this means that if you have a book with a 40,000 sales rank and another with a 600,000 sales rank the one with a 40,000 rank is in higher demand.  Does this mean the lower rank will sell first? Not neccesarily – you need to factor in supply, your price point  and the books condition.  The lower ranked book likely has many more of them for sale on the Amazon marketplace so your copy needs to be priced to move as other copies are going to be listed after yours  and they will likely beat your price. 

 I recently got a copy of Tom Dorsey’s book Nuclear Jellyfish (I still have it unfortunately).  I listed it on Amazon to match lowest price for its condition and expected it to sell in a day or two given that the book had just been released.  Weeks have gone by and the book is still on my shelf because the price dropped on it almost immediately and I am terrible at repricing my books with any regularity.  There are, of course, dozens of copies of the book for sale and it is likely heading to penny seller territory soon enough.  Its sales rank at the time I listed it was below 10,000.  Usually the book sells quickly but sales rank alone is not a guarantee.

I have had books with high sales ranks (in the millions) go immediately.  This is often books that are out of print and there are no other copies for sale or the copies that are listed are prohibitively expensive.

Amazon Sales Rank is predominately a buying tool for me.  Sales Rank and price are the two main factors in considering what books I buy.  If it has a high resale value I will generally buy a book regardless of sales rank.  The lower the resale price the lower the sales rank needs to be.  Generally any book that sells for less then $5 I will not bother with regardless of rank.  Between $5 and $10 the sales rank needs to be very low and above $10 I am willing to have books be between 400k and 800k in rank.  Above that the book needs to be at least $12.  All of this is fluid and depends on how much inventory I have and how sales are.

So does it matter how Amazon calculates sales ranks? No.

Another gloomy report in the NY Times again today.  Though traffic is up at Amazon sales are down.  Not good.  I have had good sales so far this month but am I missing sales?  Should I cut my prices to beat the competition.  On Ebay should I offer free shipping?  No – at least I am not – though on ebay I see a lot more free shipping.  I just had one of my biggest weekends  ever in terms of sales and am hesitant to cut my profits for more sales as even some of my very high sales rank books are moving.  If only the books with very low sales ranks (up to 100,000) were selling I would make changes.  Something to keep an eye on.  I hope your books sales are going well also.

The holiday season through the end of January is the busiest time of year for most booksellers.  I would say late August/early September is the second busiest (beginning of school year).  Last year my book sales spiked in December and were even higher in January.  Like many retailers, whether online or brick & mortar, we depend on this time of year.

The holidays are the biggest factor for the sales spike in December but what about the increase in book sales in January?  I think there are several factors to help explain January sales:

1.  Another school semester generally starts in January so all the students are buying their books online

2.  Customer Returns – many people are returning items to Amazon and using the credit to buy books

3.  Gift Cards/Cash Gifts – People receive these for Christmas and redeem them in January.

Hopefully the economy does not lessen the impact of items #2 & #3.

I would suggest that you still have time to increase your inventory to take advantage of this online buying season.  I have approximately 600 books coming from one of my sources next week to be ready for the season.  Library sales this time of year are few and far between so if they are your primary inventory source you will need to look elsewhere.  You will also need all the shipping supplies to meet the new demand.  Last year I was filling anywhere from 35 to 55 orders a day during these two months.

If you need help with finding alternative book sources for the holiday season I recommend several in my bookselling guide which can be purchased here www.booksellingguide.com.

No matter what  – prepare now for the online bookselling high season so you can actually enjoy them rather than running around looking for inventory.