Amazon announced their earnings and stated that book (and all media) sales were flat but they are back-logged on Kindles.  Does this matter to us small online booksellers given our scale is so much smaller then Amazon’s?  Long term I think it matters if the Kindle really becomes an option for people.

People who buy Kindles are either gadget heads who just want the latest thing or they are avid readers who love having a portable library.  The avid readers are likely avid book buyers so the transition of their book sales to electronic form will have a long-term negative effect on online booksellers.  Will this happen soon – not likely but it does not bode well. 

One of the issues with the Kindle is that Amazon is pricing titles on it less than they are a regular copy of a book.  This can have the effect of havingo nline booksellers trying to beat the Kindle price on books.  I am not sure if the inventory and scouting services are showing Kindle prices yet but maybe they should.

Lets not forget that the Kindle is not the only device out there – Sony also makes one and you can even put books on your iPhone.  Sales of the Kindle are one thing but it remains to be seen if people are actually going to adapt to using it as their primary way to read – as we have seen with Amazon recenlty deleting Orwell titles there are several issues with the Kindle that will effect its popularity.

Electronic reading devices are going to have to become a whole lot more popular for online booksellers to throw in the towel

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.

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.

Will a recession hurt online booksellers?  Two interesting news bits in the business section of today’s New York Times.  The first is titled “Internet Sales in a Slump, Too” and stated online spending growth grew by 6% in the 3^rd quarter of 2008 down from 13% from the same time last year.  Good that it is still growing but sales are slowing. 

The second bit of news was a chart showing the share of visitors for retail web sites and the growth in those visitors (not in sales).  Amazon was shown as having 10.8% share of visitors to retail websites up 6%.  The increased traffic can only be good for online booksellers.

My impression of the economy and how it relates to online bookselling is that it will have a neutral to slightly positive effect. 

The used book market on Amazon offers tremendous value to book buyers.  Cost conscious buyers can get great deals on books.  The increased traffic to Amazon can only help.  I have seen traffic statistics for eBay but I would guess that they may have an increase in traffic given that the items there are perceived to be a value.

Personally, my sales volume is up over last year but it is hard to compare because I recently added a lot of quality inventory that has sold well.  My average sales price is also up this month (to about $14.25 per sale).  My international orders are doing well and I am seeing good sales from all the marketplaces I sell on (Amazon, eBay, Alibris and Biblio).

Hopefully the upcoming holiday season will be robust for online booksellers.