The State of the Bookstore

By tom on August 05, 2011 | 25 comments

Hi Everybody,
I wanted to share with you an email complaint I received, and my response to it, because I think it encapsulates pretty well many of the frustrations plaguing the bookselling world right now, and the pain and turmoil that comes from an entire industry being turned upside down.  Add to that a recession that wont seem to end and things might seem bleak.  My customers aren't happy, the publishers aren't happy, and neither am I.  But I do believe that things are getting better.  RiverRun is slowly getting over this perfect storm of bad economy, bad weather, bad management, and changing industry.  It's your support that keeps us going, and each day the store is recovering a little more thanks to you.  Please keep coming back, we really appreciate your loyalty.
Here's the email we got:
Hi, I live out of state but have a vacation house up here that I visit several times a year.  In the past, I have enjoyed browsing your bookstore and have always purchased quite a bit, especially as I NEVER buy online or read electronically.  However, when I went into the store today, I was shocked to discover that there were virtually NO new books to browse through.  I don't understand the decision, it seems, to eliminate new books, and now I have no reason to shop there.  I saw and bought nothing today.  Do you think this will change in the future?  I am sad not to be able to support your store any further and hope these changes do not predict an imminent closure.
And here's my response:
Hi C_____,

Thanks for reaching out to us; we've received similar feedback from many customers.  While we appreciate that you never buy online or read electronically, approximately 15% of the public now own e-readers, and many, many people buy their books online.  Amazon, because it uses books as a loss leader, generally sells its bestselling new books for cheaper than I can buy them from the publisher.

When you combine this with the economic recession, we have seen a drastic reduction in sales of new books.  When you consider that most bookstores have profits of less than 2% of sales (including the big chains Barnes & Noble and Borders), you can see that it doesn't take much of a downturn to put a bookseller in trouble-- especially a bookseller like RiverRun which carries a very high rent due to our location in downtown Portsmouth.

Right now we carry approximately 60% new books and 40% used books, and I have to tell you, without the used book sales we would be out of business.
It's that simple.  The local community has been very supportive, and every day we receive very high quality used books from them to fill our shelves.  

It hurts me to stand in the middle of the store and know that I don't have the books in that I'd like to have, but sometimes we just don't have the money to stock the store the way we used to.  RiverRun is not the pet project of a wealthy retiree; it is a business that must pay its bills with the money that comes in the front door.  For now we are working hard to make do.

BUT!!!  All is not doom and gloom.  So far in 2011 we have seen an up-tick in sales and traffic from the previous two years.  While I don't think the recession is over by any stretch, things do seem to be slowly improving.

We host more than 150 author events a year, and those events serve as a constant reminder to our local customers that they like having RiverRun here.  They know that they can order books that we don't have in, and they know that we are trying hard to keep books (real, paper books!) and bookselling alive in our culture.

I am sorry that we are no longer an appealing place for you to shop, but I hope that you will support your local independent bookseller where you live.
It's important.  Borders is gone.  Barnes and Noble could be next.  Do we really want Amazon to be the only place in America to buy books?

I intend to stay in business until there is nobody who wants to buy paper books anymore.  That has required many, many changes in the last three years, and will probably involve many more, but I'm not going away.

Thank you again for taking the time to send us your thoughts,

Tom Holbrook,
RiverRun Bookstore
Thanks for reading... 


I don't think that August 8 post is right about distributors getting 70% or about Amazon getting the same deal as Ingram. I've been in the book business for a lot of years too, and almost everything in that post is inaccurate. The warehouse premium a retail bookstore with warehouses gets is a couple of points, no more than that. Amazon and Wal-Mart have their own distinct classifications which are not the same as Ingram's, and no one gets 70% or better unless it's on a closeout.

Tom, I really like the used books and love finding a nice surprise. I also love the occasional new book and love that you and your employees offer suggestions to us when we come in. I appreciate being able to buy books in Portsmouth and will continue to support you.

Can appreciate that RiverRun needs to carry used books, but will you please consider putting the new ones in a separate space.

Portsmouth now has too many used clothing stores and I'd never shop in them, nor used bookstores.

I think having separate areas for used and new books would be a plus, and then I wouldn't have to plow through everything. Thanks for thinking about this.


Tom, I agree with all of your points except one. I have owned my own bookstore for 39 years and worked directly with (and for) three of the largest book distributors for many years.

It is a myth that Amazon and Walmart sell books as loss leaders; they have never addressed that misperception because it is to their benefit to 'not go there.' Amazon, WalMart, and big box stores like BN and Borders are classified as distributors with nearly all publishers. I have operated as a distributor for several companies in the past, so I know this first hand.

The standard deal to become classified as a distributor is to have your own warehouse where you buy in bulk and ship to several stores instead of having books drop-shipped directly to your stores. Once qualified by that terminology, distributors typically have to order at least one copy of each title that a publisher has, becoming a "full-line distributor"; in doing so, they qualify for usually a 70% discount on regular orders of perhaps a hundred books of mixed titles from that publisher.

70% is usually the starting point with a graduated increasing discount based on publisher promotions, etc. This is the way Ingram, BT and other distributors operate; they count their gross margin discount instead of the discounted from retail rate as their margin. For example, they buy a $10 retail book for $3 and sell it for $6; this is 100 percent markup, which is the same way that most major retailers do the math. Based on net pricing, they talk about markup, not discount.

The puzzle about Amazon and the free shipping deal focuses around the question of their arrangement with UPS for 2nd day air rates. I've never seen it publicized and suspect that it is a deep trade secret, but I can imagine that it is similar to Fed Ex's deal with the Post Office to ship first class and Priority Mail packages.

The Post Office contracts with Fed Ex at a contract rate of several Billion dollars per year; it was one billion a few years ago; I haven't seen the contract amount recently.

That factor determines Amazon's gross profit margin. I suspect they are paying around $2 per package for 2nd Day air and around $6 for next day, based on their rates.

Two other factors:
1) Amazon acts as a 'distributor' for several other retailers, charging them for shelf space, shipping costs, and a thin margin on sales. This is the basis of their argument against sales tax, saying they are a 'distributor,' not a retailer and distributors don't collect sales tax.
2) About 2 years ago just before Amazon's stock started ticking upward, a major stock analyst gave them a strong buy rating, based on their business model. He explained that MOST of the things that generate Amazon's strongest profit are based on the Ebay model, that is, they simply sell books and other items on their Marketplace site. These are items that they don't own or ship; they simply take about 22% of the profit on the sale without owning, handling, or shipping the products. It's a sweet deal for them and extremely profitable.

Sorry for the long comment. I've been wanting to get this off my chest for a couple of years; this seemed like a good venue to do that.

To the poster who said:

Quote: "As someone with experience in several aspects of the book industry and a disappointed former customer (as of this June), I'd like to point out that while things are certainly changing as a result of e-books and the truly terrible economy the problems you describe absolutely DO NOT apply across the board. I know that many independent booksellers in New England are doing well. Some are even doing better than that. The book industry is still viable and most e-book readers (including myself) still continue to purchase tons of new books in small indepentent bookstores. It is neither fair to the book industry nor accurate to blame e-books and the economy when there are probably other more important factors in the mix."

To poster above, I completely agree, which is why I included "bad management" as one of the problems we are facing, and by that I meant me. I hope you can forgive me for not going to deeply into describing my own business mistakes, but if you must know, it's this: In my opinion, independent bookstores that were efficient, had low debt, and a bit of cash on hand when these changes began are faring okay. Having just borrowed large amounts of money to move the store to a larger space and buy out my business partners, I was not in a good position. I based my decision to do that on six years of double digit sales increases, increases that ended abruptly in the fall of 2008 when the economy tanked, digital readers first began to make headway, and a huge ice storm hit the seacoast the week before Christmas.

So yes, I stand-by my assertion that the problem was a combination of all those factors, including store level decisions. Better managed stores reacted and changed more quickly. For a year I believed that things were going to get better any day. That is my fault. I waited a long time to admit that the store was not going to be able to overcome it's debt load by sticking to the status quo.

The entire point of my blog was not to cast blame elsewhere, it was to acknowledge to my customers that the store was, in fact, disappointing at the moment, that I was aware of the problem, and that I was working hard to get us back to where everyone would like us to be. With the help of those customers who have stuck with us, we will get there.

Thanks for taking the time to comment. When people are disappointed and don't speak up, but simply stop patronizing the store, it is hard for us to fix the problems.


Re: publishers Consignment is just one idea, I'm open to any. There seems to be a continuum of ideas with consignment on one end and non-returnable, better discount on the other end. Either direction is fine with me, as long as the publishers try SOMETHING. I commiserate, I really do, but I'm also prepared to change and would welcome some initiative from the publisher that shows they think independent stores are still an important outlet for them.
Thanks for the feedback on the stickers. I will ask our (locally owned, locally operated) source to find something that comes off more easily. --Tom

This might not be the best forum, but if you're going to stick with used books for a while could you please find some new "used" spine stickers. They don't peel off and trying to remove them destroyed the cover of a hardcover book I was excited to purchase.

As someone with experience in several aspects of the book industry and a disappointed former customer (as of this June), I'd like to point out that while things are certainly changing as a result of e-books and the truly terrible economy the problems you describe absolutely DO NOT apply across the board. I know that many independent booksellers in New England are doing well. Some are even doing better than that. The book industry is still viable and most e-book readers (including myself) still continue to purchase tons of new books in small indepentent bookstores. It is neither fair to the book industry nor accurate to blame e-books and the economy when there are probably other more important factors in the mix.

Great piece, Tom.

But can I make one point on behalf of publishers (who should show some flexibility when retailers face unforeseen, if temporary, hurdles)?

Books are unique in that they are returnable - this is something that creates enormous financial issues for publishers in this day and age. I completely get why that is a benefit to the retailer - but it increases the share of risk that publishers have.

A move to consignment-style inventory would only place more of a share of the financial risk on publishers, increasing returns.

Just as independent booksellers have faced enormous obstacles in the last twenty years, so to have publishers - and especially small-to-mid-sized ones.

Too often I feel like the attitude is "let the publishers take more of the burden." CD's and DVD's don't get returned. Milk doesn't get returned. Canned peas don't. Books do.

These are questions I throw out - not in a confrontational way but in a "this is what I wrestle with every day" kind of way.

How much discount would you give up in order to sell on consignment?

Would you purchase non-returnable, at a higher discount? Or would you buy non-returnable with net-pricing?

Tom --

It seems that the 'general interest' bookshop is probably becoming extinct. The 'big box' stores will probably continue for the foreseeable future, offering discounts for bestsellers and mainstream books. And the online booksellers will continue to offer huge discounts to sell huge volumes of books.

I believe the opportunity for any bookseller is niche book categories. The big box stores have no depth in any category, and much of what they carry in a category is largely stuff that doesn't sell. With a niche bookshop, you can stock a depth of books, both classic and new, that the big box stores do not carry. Even online booksellers do not have access to lots of niche books, or their descriptions are nonexistent or not helpful.

The new model for retail bookselling must include an online component, but the real value to a brick-and-mortar shop is finding stuff you didn't know existed. You can do that with a niche bookshop. The days of selling everything-to-everyone is probably over. The future of bookselling may be selling depth-to-niche-readers. Or so it seems.

August 8, 2011

New books are easily available online--if you know what you want--but for the serendipity of looking through a well-run bookstore and finding books you didn't know about, it's RiverRun all the way. I like the used books, Tom; easier on the wallet and always an interesting selection. Long may you flourish!--Sarah Smith

Authors don't sign e-books, and the sensory appeal of a 'real' book...the scent of the print, the texture of the pages... that cannot be replaced. I run an indie store in Napa, California, and applaud your response to what is always a difficult discussion, one I have had myself on occasion.
Keep up the good work, friend.

Hang in there Tom and staff....what is old is always new again just look at the serge in vintage and recycled models. The running costs of the kindle dingle and electrontic junk will continue to go up. It is so inconvientient when goes flat, lost and stolen, let alone the host of medical issues still not reported.
With the economy now in disarray because of the mad men in washington still living in the 60's, people will come back to the written paper word. People need to wake up to the amazon cartel and stop thinking cheap. Landlords need to stop the Greed and City of Portsmouth need to encourage people to visit without the parking meter mobster mentality.
America will get through this.

I love holding a book in my hand and love RiverRun and all the staff for helping me find books, order them, call me when they're in...I will continue to buy ALL my books from you until the sad day when they don't publish paper books anymore.

I came by RiverRun yesterday and talked 1-on-1 with a presidential candidate. Not long before that, I attended a reading by a local author. Even readings by non-local authors have that other great attraction: the local reader. There is good evidence that shopping online drains money from local communities, even shopping at national chains instead of locally-owned business does that. But when local, independent businesses close, the community loses much more than that.

Thanks for the comments, folks. To the person curious about book returns-- yes, you can return books to the publisher-- you do lose quite a bit on the shipping, but it's manageable. The problem is, after rent, payroll, and the other costs of doing business, the money due to the publisher isn't always available when times are unexpectedly tough (say the 2008 ice storm for instance). When you owe the publisher money, they wont send you books, whether they are returnable or not. There's been a lot of talk about moving to a consignment model, which I think is worth trying. In general, the publishers have been very slow to change despite the ground crumbling beneath their feet, but I think they finally realize that the ebook model is not great for them financially, so I'm hoping they continue to look for new and innovative ways to work with booksellers. Thanks for your interest, and keep bringing us your used books!!

Thank you Tom for your candid, and heartfelt response to this person experiencing the not so new independent booksellers world. We locals support you, I hope. You provide great exposure to authors and their new work.

You didn't mention, Tom, one of my favorites... I see a new book on-line or
in the airport, etc. I want it! If I come into River Run with the title or author
or whatever information I can provide; someone there looks it up, orders it,
takes my money... but sends it to me with NO shipping fees. The turn around
time is VERY fast (think I can call and get the same service, right?).

You are doing a fine job and a service to Portsmouth. I hope you can do business for many years to come. I'll keep shopping at Riverrun. Although lots of the used books are ones I have traded in, I almost always buy something.
You and your staff are a pleasure to deal with. They actually know books !
Where else can anyone experience writers themselves every week of the year live, in person.

Keep up the good work,
Terry Weddleton

Hi Tom,

I'm curious. My understanding was that you most big publishers allow returns on unsold new books, something you can't do with used books. Has this returns policy changed? Does it not apply to smaller bookstores? If it does apply, where's the downside to stocking new books? Is it the upfront cost (cash flow issue)? The mailing costs?

Very well said.

Thanks for all you do, Tom and staff. Your vision and tenacity and presence downtown are appreciated.

I would sell the business if you can. Do you really think you can hold back the technological revolution that will soon make books into antique items?

So sad! I still love the feeling of real
Books. Have not surrendered to a Kindle
But have bought on used books
There is the mystery of who read it before
And imaging what they felt about the story.
Good luck.

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  • We are your friendly neighborhood bookstore, located in downtown Portsmouth, NH.  Small but potent, we offer a fine selection of new books with an emphasis on fiction, history, poetry and mystery.  We also have a great little kids section, and hold over 100 events a year.

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