A story of a phoenix and making repeat profits from a single book

from Booksellers NZ CEO, Lincoln Gould, reporting from San Jose

Visiting a book shop as an evening function didn’t seem to me to be the most fun thing to do, but then I did not know about Kepler’s in Silicon Valley (and I apologise to all New Zealand booksellers reading this, who know this famous bookstore).

Booksellers NZ Chairman Hamish Wright’s eyes lit up with delight when we arrived in a fleet of buses with a few hundred other attendees of the American Booksellers Institute Winter conference. Hamish’s immediate response to the store was “this is fantastic”. The store itself is huge, brightly lit, with a very accessible shelving system and highly trained and motivated staff at every turn. 

One of the key features of this store is its “community”. It was founded in 1955 by peace activist Roy Kepler at the time when the USA was wracked with McCarthyism. It quickly became famous for being a centre for activism, free speech and the rights of the individual. It also became a favourite for the students and staff at nearby Stanford University as well as the scientists, engineers and entrepreneurs of Silicon Valley.

To quote from the store’s website:

“As a community hub with varied, high-caliber author events, the bookstore attracted many bestselling writers, local authors and national leaders. Kepler’s was known for the breadth and depth of its inventory, often carrying books that were hard to find elsewhere, and for the talent of its buyers to choose to showcase books that would later become “sleeper” national bestsellers. Kepler's stood apart from its competitors.”

Kepler’s was voted Independent Store of the Year in 1990 but a few years later, financial pressures caused it to close - for a very short few months only.  The local community which includes Stanford University and much of the Silicon Valley stepped in along with a number of other investors and the store soon re-opened with Clark Kepler, son of the founder in charge again. The local community, who had protested in the plaza outside the store when it closed, actually came in their scores as soon as it was announced that Kepler’s was to reopen – to help pack books back on the shelves! The whole story can be found at www.keplers.com and has been made into a documentary called “Paper Back Dream”.

However, it was not just a very good quality bookstore we had found, but we came across a great tip for booksellers from one of Kepler’s directors, Michael Hoynes, a retired New York advertising and marketing  guru.

Taking a book from a shelf, he demonstrated how a book at say (NZ price) of $40 with a bookseller’s margin of 40%, could in fact return a much greater than usual profit.  When the reader buys the book, they are given the opportunity to resell it back to the store after they have finished reading it for $10 as a trade in on a new book for again, say $39.95 (with the $24 profit again). The original  book is then resold as a used book for say $20, again with an option to return as a trade in and once returned it is put in the store’s stock alongside new copies of the book (just like Amazon – giving customers the option of buying new or used books). So instead of simply making a profit once, the book has provided multiple profits amounting to $26 instead of the original $16 - and the bookseller has sold another couple of books along the way.

As Michael said: “It’s the same as selling new cars on the basis that the car yard will buy it back as a trade in on a newer model in a year or two and then sell it again as a used car. If it’s a good enough practice for the car industry, it is good enough for the book industry.

There may well be Booksellers NZ members who already have adopted this practice. It would be good to get feedback on the idea.