Book reseller ThriftBooks enjoys healthy growth
When Amazon opened up its website as a marketplace in 2003 to enable the selling of goods from third-parties alongside its own stock, it was a revolutionary move for the company as well as myriad other retailers who have created sizeable businesses on its platform.
Among them is ThriftBooks that has built a business selling used books and now has revenues of $150 million per year of which over half is generated from its own website and it has a mission to grow this part of its business.
Mike Ward, chief executive of ThriftBooks, says: “Our Net Promoter Score is sky high at 78 but customers’ awareness of us is low with very few people knowing about us. This is a big opportunity for us. Our own site is more than half of sales and we think we could grow this level.”
The long term plan is for people to know ThriftBooks as well as they know Amazon, according to Ward, who clearly recognises it is a very tough task. But the company does have a number of factors in its favour. The stabilisation of the book market is one of these and is definitely helping it build its presence.
“The physical book world continues to grow after Amazon had predicted in 2011/12 that digital books would be more than half the market within three years. But the numbers I see today are that only 30% of books published are digital,” he says.
After the initial early adopter period – when Amazon promoted digital books at discounted prices – the market has found its stable position: “On paper it [digital books] made sense but it was not quite as good an experience as people expected. There is a tiny fraction of people who say it has to be paper-only and the same for digital-only whereas the vast majority like both. As long as books are printed it’s a growth story for us.”
The other factor in favour of ThriftBooks is the move to more environmental sensitivity from consumers and the growth in resale markets. The fact that the majority of books are bought from charities is also a positive aspect to the business.
“Almost all the books we have are from charities, with a few also from libraries. It helps stop the books from being thrown away and going into landfill. It is an opportunity for us to be a part of the lifecycle of these books,” says Ward.
When the company buys a truckload from a charity it does not know what it will contain – in terms of titles and the quality of the books. For those that fail to meet the grading standard for resale the paper is recycled. This is the simple part of the process, while the more complex element is the pricing of the books that are to be sold on the ThriftBooks website.
A pricing algorithm is used based on the spectrum of possibilities for the books, which at one end has titles that are to be placed at the lowest price in the marketplace and at the other end are scarce titles that are priced at a level that will enable a sale to take place within a certain predicted timeframe.
Using the algorithm for each book a dynamic pricing policy is adopted whereby frequent price changes are made for the books. For the eight million items stocked there around 100 million price changes made each day. With these analytical elements integral to the model Ward says the company is regarded as a technology business rather than a bookseller.
While attaining the same valuation as Amazon is highly unlikely, ThriftBooks has absolutely shown itself adept at delivering on its underlying mission of “getting books into the hands of people”.
Mike Ward spoke to Glynn Davis.
