Every other weekend the wife & I go into the place and read books and magazines, for a couple hours at a crack. I see lots of people doing the same thing. I see students doing research papers there, using the stores books for information. I’ll tell you what I don’t see there: I don’t see many people purchasing books. I’ve been watching the check out counter for the last 10 times we’ve been in there, and I can’t figure how they make it work. It’s more of a library with a coffee bar than a retail outlet! Any suggestions on how they stay afloat?
Man, that is a good question. I can only think of:
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Website, there are banner ads and purchases there.
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Then they prolly have some advertisements along the walls or something.
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Then it (should) cost extra to have your book on the featured rack.
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If they own the coffee bar, then proceedes from that. If they don’t, they charge rent to the coffee bar.
If you watch the counter you’ll see quite a few people buying stuff. The mark-up on books is pretty steep.
Barnes & Noble/Starbucks. Now there’s a pair that deserve each other. Next thing you know, they’ll plop the whole thing down inside a giant WalMart.
Have they?
Peace,
mangeorge
Amazon.com doesn’t make a profit & they are still around.
B&N probably has other outlets & they just balance the revenue.
The B&Ns I go to here in NYC usually have at least a few people in line to buy stuff at all times. I think it depends on the location, time of day, day of the week, time of the year, etc. I know it’s horribly crowded in there during the winter holiday season, for instance. Maybe that’s when they make most of their money?
Me, I tend to buy more from Amazon than from B&N, because it’s often cheaper (though shipping can be a bitch), and because if I’m looking for a specific book it’s quicker to to get it from Amazon if B&N doesn’t have it on the shelf.
Maybe you’re just not noticing them at the checkout. The B&N by me has a HUGE counter with quite a few clerks behind the desk, and if only a few people are checking out you don’t really notice them because a line doesn’t form.
My SO and I make a day out a B&N, we go down there, pick out a ton of books, and peruse them while we are drinking coffee. I know that he and I spend a lot more at Barnes and Noble than any other bookstore, just because we have that time to really look at the books. At a regular bookstore, I go in and grab the book I want and leave, at B&N I have that extra time to get sucked into the book and then I just have to buy it.
Maybe that’s it, they make their money off of idiots like me who buy in bulk rather than a bunch of people each buying one book. And, as the others have said, there’s the website, the Starbucks, etc.
Rosebud
This may be the biggest key. Hundreds of years ago, when I worked for B. Dalton Bookseller, we had numerous stores that made a profit for exactly five weeks each year–and that profit was enough to pay the rent for the rest of the year.
(On the other hand, mangeorge’s comment about the markup, while technically accurate, does not actually cover the issue. Books are generally sold at a fixed publisher’s price with large chains getting a 49% “discount” on hardcovers and independents getting much smaller “discounts” (making it harder for the indies to make a profit), but there is so much overhead in maintaining stock and staff (and, especially, mall rents) that that 51% markup does not go nearly far enough to cover the cost of daily sales. It takes the huge volume of the Christmas boom to actually generate a profit.)
At my local Barnes & Noble, I always have to wait in line when I check out, so I’m not worried about them going under.
Many retail stores make the bulk of their profit during the Christmas season, and barely break even the rest of the time.
The markup on books is huge. In some industries, markup on product is often only a few percentage points. The markup on books can be as high as 50% or more. I worked in a stereo store when I was younger, and we used to push sales of cables, blank tapes, and other add-ons with every stereo sale, because the profit on the add-ons was often more than the profit on the whole stereo.
The overhead is relatively small. The employees don’t have to be well trained, and excess inventory can often be shipped back (or in the case of magazines, just the covers shipped back) for full credit.
The inventory doesn’t grow old and become devalued as much as in grocery stores and retailers of things like computer parts. And again, often the ‘hit’ from books that are remaindered and such is taken by the publisher and not the bookstore.
And, you’re probably underestimating their sales. Barnes and Noble is profitable all by itself, and doesn’t need the web site or other divisions to keep them afloat.
The whole idea behind letting you lounge around, buy coffee, sit and read a magazine, etc. is that the more time you spend in the store, the more likely you are to find something you want to buy. Also, the more you like to hang out there, the more likely you are to come back and make your book purchases there.
Even though they don’t just sprint in, buy something, and dash for the door, B&N is making a profit from those loiterers.
You guys have a point there about them making a profit overall, regardless of the seeming mass of loiterers. When I worked in a gas station we were open 24hrs. a day. No way did the graveyard shift even come close to paying for itself, but because we were always open customers knew they could stop in anytime. The increased daytime business more than payed for the extra hours.
I suspect that this is also true of other businesses that are open all night.
Peace,
mangeorge
the gas station next door used to be open 24 hours a day but they aren’t anymore…
the local bookstore won’t let you bring books or magazines into the coffee area anymore cuz people get them dirty.
Yep, big business like amazon and B&N don’t really need to make a profit (in the short run) to stay in business. As long as their investors believe that eventually money will start coming out they can pretend to be a yuppie coffee house or whatever their marketing guys dream up without making money off book sales. If all the local book merchants go out of business during that period all the better.
Tom, I don’t know what you consider a significant difference, but the independent bookstore I work at generally gets a 40% discount on books. And we actually do make a profit. (A small one, but nevertless, it’s a profit.)
As a proud former employee of the evil Haft empire, I can also attest to the fact that books come from the publisher at approximately 45%-60% of the cover price. Consider this: a John Grisham hardback retails for about the price of an oil change, or roughly four times my hourly wage in that hell ($5.75/hr in my lofty position as Receiver). Take forty percent off the cover price as a “sale” and one book still buys me for half an hour to an hour. John Grisham could write a cookbook and that one publication would likely fund my slave wages for a year just from my store alone.
Toss in The Latest Something from Tom Clancy, Mary Higgins Clark, Oprah’s Book of the Month, Deepak Chopra, and Steven King, and you’ve just paid for a staff, and likely most of the business’ operation expenses as well. Throw in a raft of children’s books, porno mags, and a few hundred copies of The Rules, Simple Abundance, Dumbasses for Dumbasses, ghostwritten autobiographies and philosophy-of-golf garbage, and you’re seeing profit peeping over the horizon. Keep some C++ books a few Penguin versions of Xenophon around to please the nerds and eggheads and you’re golden.
I live with the mixed blessing of being a bibliophile with a B&N only a block away. I love it, but my wallet doesn’t. I don’t read books in the store beyond a quick glance to see if it looks promising. I like to own books. I own lots of books–shelves of books, stacks of books on the floor, closets full of books, furniture supported by books (those are the ones I didn’t like, but hope to reread with new insight someday). My wardrobe is limited, my truck is decrepit, and my appliances are steam-powered–but my library is excellent. People like me do a lot to support nearby bookstores. Amazon can’t help with the “I gotta have a new book fix RIGHT NOW!” problem. I see lines in the local B&N–not long lines (they usually have 4 or 5 clerks up), but lines made of people with large stacks of books like mine. That ought to at least keep them from losing money most of the year, and surely they make a little!
True, but I only said it was harder. On a $19.95 book, you will pay $11.97 and the big chains will pay $10.17. That $1.80 difference means that you are spending over 17.6% more than the big chains to acquire inventory. That looks like a substantial difference to me. (It is not the whole story, of course, when you figure in the different rates for mass markets, trade paperbacks, remainders (and their specialty cousins), plus the whole issue of returns and related stuff.
I was only mentioning that indies have it even harder than the big chains. The bookstore markups that look huge to someone from a grocery (which might run on a 1.5% margin, if they’re lucky), tend to disappear pretty quickly when you figure that a grocery may have one or more inventory turns a week, while a bookstore is lucky to have three turns a year. (I’m grabbing numbers out of the air, here. I know supermarkets that do three turns a week and smaller grocers who do one turn a month. On the other hand, the best bookstore I ever heard of did almost five turns in a year and most of the smaller stores would not have done two without the Christmas season. Stock that does not move is capital that cannot be used.)
Sofa King is sort of right about how many sales it takes to cover his salary. I’d be curious, however, as to exactly how many of those books his store actually sold. In addition to his meager salary, the store has to buy a huge inventory, much of which will never be sold (as a receiver, King, I assume you had to box up a few cartons to go back to the publisher in your time), and pay rent, HVAC, insurance, and a number of other things. The aforementioned returns are used as credit to purchase other books (essentially making them “free”) except that the shipping and handling is absorbed by the bookstore, making them less free. (I don’t remember who pays for the UPS to get books into the store, although I thought that it was absorbed by the retailer.) And even though the returned books are “free” if they are not sold, the store still needs to expend the capital to acquire them that it cannot use for anything else unless they sell.
I am not claiming that no bookstores are making money. However, the appearance that people get, looking only at the mark-ups, that opening a bookstore is the same thing as printing your own money, misses a lot of the expense that makes a bookstore a money-losing proposition for much of the year.
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Well, the markup on books approximates 100%, which is typical for non-clothing, non-technical consumer goods. I’ll agree that electronics have slim margins, but books have a low markup compared to other amll-store items. Clothing is marked up 200% and more (often much more) and jewelry is marked up sometimes 500%.
Just so we’re on the same page: 100% markup means store X buys book Y for $1 and sells it for $2. This is known in publishing as a 50% discount, since books have a set retail price (unlike most other goods). Book prices can be altered by the retailer in only one direction: down.
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Relatively small if you don’t count the huge stores and warehouses, you mean. Bookselling as its is practiced today is not a low-overhead business.
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The inventory most definitely does grow old and become devalued (quick: want to buy a bestseller from three months ago?). Stores have to pack up whole books (hardcovers and trade paperbacks) or strip covers (mass market paperbacks and magazines) to be shipped back to the distributor or publisher for credit. And they need to keep their own records on those returns. It’s not a simple process; it’s expensive and time-consuming.
Finally, something I can agree with. B&N has been expanding like mad for the last decade because their huge stores make lots of money, plain and simple. There certainly are people who sit and read without buying (more than an overpriced coffee and muffin), but many more pass through and pay money for books.