Selling Books on Amazon by Larry Scott - HTML preview

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The intent of a zShop is to provide you with your own online bookstore that can be accessed through a unique web address. The address is:

www.amazon.com/shops/your_store_name

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You can use this web address to give your customers a location where they can order. If you want, you could also sign up with a web hosting company so that you would have a unique URL (like www.booksellingMike.com) and then redirect your home page to your Amazon zShop store.

(2) Half.com

I chose to sell those items that have an invalid ISBN number at Amazon, through the eBay store called Half.com. In addition, I sell other items that have either a rarity factor (author-signed, first printings, etc.) or no ISBN number (Disney

Commemorative Books, etc.) through auction at eBay.

There are some tradeoffs when using Half.com (owned by eBay).

• There is currently less traffic for books than at Amazon.

• Any upset customer can destroy your eBay seller rating because both

their auctions and stores use the same rating system.

• They require a huge amount of books in order to pay them to use their

automated uploading services.

• Their system of processing book orders is pretty lame. It takes a while

to figure out what they sold and where you put those items in storage.

• It’s much harder to manage your inventory and monitor your pricing.

(3) eBay

I pretty much use eBay to sell anything that I can’t sell on Amazon or Half. I also use it when I have rare items where I know I can get more from an auction than sitting online at a bookstore.

There you have it, my online bookselling strategy that’s been working fine for me:

• Sell primarily at Amazon

• Minor overload selling at Half

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• Everything else is sold through auction at eBay

2.04

Operational Hardware & Software

I’ve chosen the following hardware and software to automate much of my

bookselling process and to make the business enjoyable. You could get by without most of it, but I highly recommend using these items to simplify your life.

Unfortunately, when building any business, there is a learning curve. In this case you will need to spend some time to familiarize yourself with all the different software.

You will feel uncomfortable at first, but it will become second nature very quickly.

Then you won’t have to think so hard each step of the way.

(1) Computer and Monitor

In order to run your new business effectively, you’ll need a solid computer to run the required software. The majority of the required software has been developed for Windows systems only, therefore I recommend using a solid Windows-based

computer system.

The computer doesn’t need to be all that powerful but it needs plenty of RAM – as much as you can afford. I currently use an old 800 MHZ, Pentium III system with 512MB RAM. I also highly recommend using at least a 17” monitor – I’m using a Samsung Flat Panel because it throws off a lot less heat than my old monitor and because the image is very crisp.

(2) Printer For Shipping Labels and Postage

I started out by manually printing my mailing labels and then running them over to the post office to send out. I then started to cut and paste the customer mailing information that was sent to me by email, but I still ran over to the post office.

My “state of the art” system works much, much cleaner. I bought a DYMO label printer that attaches to my computer like any other printer. Now I’m able to print my postage, delivery confirmation and mailing labels all at the same time. And I don’t have to run to the post office every 2 seconds and stand in line during the busy times.

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I’m currently using a company named Endicia for most of my postage needs. Stop by my website at www.tipsonbookselling.com to see if they are still my primary supplier.

(3) Bookkeeping Software

You need to keep track of a lot of details for your accounting. In addition to a qualified accountant, I highly recommend QuickBooks Basic for your bookkeeping software. This software package makes it a lot easier to track inventory, expenses and write sales receipts. Again, stop by my website at www.tipsonbookselling.com

to see if they are still my primary supplier.

(4) Book Database Software

You need to track all the books you’re selling. You could load all the books onto Amazon one by one, but that is time consuming and a pain in the neck (that’s how I started). I looked for a program that could streamline the book loading process.

There are many different systems out there. Most of them automatically load up pictures of the books, get book descriptions, help complete the sales paperwork, etc.

I looked at many of these but discovered that only one of them helped with the most time-consuming aspect of selling books effectively – the ability to help me

determine realistic pricing.

I chose a book database program called SellerEngine because of its ability to pull Amazon information from each of your book listings and show you very quickly where your price is relative to your competitors’ for the same quality of book!

Check out my website at www.tipsonbookselling.com to make sure they are still my recommendation.

The downside to using this software is that it doesn’t directly work with any other sites (Alibris, Half, ABE, etc.). Since almost entirely all of my sales come from Amazon, that’s a good tradeoff for my operation.

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(5) Contact Management Software

You need contact management software to email your customers when you send out their order, have special deals for them, etc. I started out using Microsoft Outlook so I could fetch my email, track the customer and print shipping labels directly from it.

My customer base has grown quite a bit so I have begun using ACT! as my contact manager because it has some advanced features I like to use.

Again, check out my website at www.tipsonbookselling.com to make sure they are

still my recommendation.

(6) Internet Connection

Running this business using a telephone dial-up connection would be very hard. You really need to invest in a full-time, high bandwidth Internet connection. Most places have cable or DSL services available for a nominal monthly fee. This fee is tax deductible as a legitimate business expense.

I personally use a cable connection. The cable service costs me under $50/month and provides about 3 times the speed of the local DSL service.

(7) HTML Editor

To make your life easier when setting up auctions on eBay, get yourself an HTML

editor. These programs let you easily create the web pages that eBay buyers see when they view your auction.

I use Microsoft FrontPage because it’s easy to use and I purchased it when I designed web sites for a living. There are other professional packages out there, like Macromedia Dreamweaver and Adobe GoLive, in addition to basic free HTML

editors that can be found at www.tucows.com

Stop by my website at www.tipsonbookselling.com to see what I’m currently using.

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Chapter 3 Set Up Your Accounts

ou need to set up accounts in order to sell online. These accounts assure that you agree with the terms and conditions of the individual online company

Y you are working with. If you have any doubt regarding the legalese, contact a lawyer.

For all of these accounts, stop by www.tipsonbookselling.com for the latest account URL’s.

3.01

Amazon.com

This is your primary selling account. Do the following after going to the signup page I provided on my website.

Click on the link that says “Sign In” under existing Sellers. You can now tell them your email address and create a password. If you are already an Amazon customer, just use the email address and password that you have been using to order books.

After setting up your user information, return to the page you arrived at by clicking the “Sell Your Stuff” link. Now click on the link “Learn about volume selling” under

“Have Lots to Sell?”

Now click on “Pro Merchant Subscription” and set up your subscription for $39.99

per month. This is the one that allows you to use the automated tools to do price changes and batch loading of inventory.

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3.02

Half.com and eBay.com

This account is both your backup selling account (Half.com) and your auction account (eBay.com). Do the following after going to the signup page I provided on my website.

Click on the link titled “my account” at the top of the page. If you don’t have an eBay or Half account, now is the time to set it up.

3.03

PayPal

This account lets you make and receive payments for eBay auctions. It also lets you accept credit card payments for eBay transactions (Amazon and Half both handle their own credit card transactions for you).

You don’t pay fees when you use this service to pay for items that you purchased, however you do pay fees when you receive funds if you choose to accept credit cards.

Go to www.paypal.com and set up your account as a new user.

3.04

Endicia

This account lets you buy postage online and then print it to your printer. The cost is $9.95 per month for the service, but you more than pay for that monthly fee due to their reduced delivery confirmation charges and from not having to drive to the post office and stand in line. Use the link I’ve provided on my website to get the equipment and service I recommend.

3.05

SellerEngine.com

Go to www.sellerengine.com to purchase and download the book database and pricing software. Please let them know that you found out about them from Larry Scott.

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3.06

YourBookstore.com

As your business grows, you will probably want to have your own online bookstore.

You will get orders from Amazon, and when you sell a book you’ll send these new customers a shipment confirmation along with a small piece of advertising with your web address on it that invites them to come shop at your bookstore.

After a while, people will start coming to your store before shopping on Amazon.

Then you won’t have to pay commissions to Amazon and you will keep the full

shipping and handling fee for yourself.

I’m still trying to find the most cost-effective way to set up my store. SellerEngine doesn’t gather book images, synopsis, publishing data, etc., so I would need to manually enter all that information each time I added a new book to my bookstore.

Check back to my website at www.tipsonbookselling.com to see how I solve this.

Until I do, I’ll keep using my Amazon zShop as my storefront.

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Chapter 4 The Books

he books you choose to sell define how your company is perceived. Are you a

bargain basement seller of romance paperbacks, a moderately priced seller of T school textbooks, or maybe an upscale seller of historical books? Whatever you decide to sell will determine what customers will come to your store.

4.01

What Kind Of Books Should I Sell?

I have found that almost any type of book you decide to handle will eventually sell.

I didn’t want to rely solely on books I could find at estate sales for supplying my book inventory, so I tried purchasing only brand new books. I found out that many places on the Internet sell remaindered books. Remaindered books are those books that didn’t sell at the bookstore so they were returned for credit to the publisher. The publisher requires these books to be somehow marked so they can’t be sold as brand new. The mark is usually in the form of a black permanent marker line across the top or bottom edge of the book. The book is still brand new, but now it is not perfect except for reading. The concept of buying these and selling against Amazons’ “new”

books was quite appealing. It’s so appealing in fact, that there are a bunch of booksellers doing the same thing. What does that do? It drives the price of the books way down due to oversupply. I refuse to sell so low that I’m giving my inventory away so I still have a lot of new, remaindered books in my inventory.

Another source of new books is to buy them at auction on eBay. I bought a bunch of newly published, soft covered books from a small publisher. I put them on Amazon and found that since nobody has heard of these titles, they never search for them and so far I haven’t sold a single one of them!

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That leaves selling used books. I have found that buying large quantities of used books has yielded pretty good results. You’ll find that a lot of the books you get can’t even be given away – but there will be a good number that people will pay good money for. Most books from well-known authors do NOT sell well – unless that book is collectible or happens to be in short supply. Publishers for known authors start out with huge print runs, swamp the market, and then people unload those books after having read them. You see it all the time in new bookstores – they sell a bunch of them and then they give huge discounts to get rid of their inventory.

A recent example of this is Hillary Clinton’s book, Living History. The publisher had forced the book onto the booksellers so that the booksellers had no choice but try and figure out how to unload them. I was at a Barnes and Noble bookstore the day after this book came out and they had already discounted it 30% to get rid of their inventory. I went to a small local bookstore and they were trying to compete with Barnes and Noble so they had it discounted 40% - THE DAY AFTER THE BOOK

CAME OUT! Unbelievable! (I guess that’s how they sold so many of copies of this book. I still haven’t talked to anyone that has read it.).

I tend to focus on business, science fiction and mystery types of books without much regard as to whether or not they are soft covered or hard covered. By narrowing down what I choose to sell, I can be more effective in understanding if I am buying items at a good price. By far, the most important element of selling items online is to sell QUALITY items. Stay away from musty, broken, torn and worn out books

because all they will give you is grief.

As you add books to your inventory, you will become much more comfortable with what sells and what to avoid. Until you get comfortable with knowing what type of book sells well, pick up a mixture of different books and see how they sell.

4.02

How Much Should I Pay For Them?

Normally, in business, you can determine how much to mark up an item and apply that across your product line. However, in bookselling, the process is not that clean.

As an example, you could purchase 100 paperback books for $50 and find out that 99 of them aren’t worth anything but one of them is worth $100.

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I try to keep my cost of inventory to an absolute minimum. I try not to pay any more than 50 cents per paperback (shipping and tax included) and I try not to pay more than one dollar for hard covers.

The exception I make to this rule is when I purchase used text books. By their very nature, text books are pricey. If you plan to buy a particular set of text books (as I have done on eBay), check out the titles on Amazon to see what they are selling for.

Then figure a price that is NO MORE than 1/3 of the lowest price (including

shipping and tax). It’s not that you are trying to rip anyone off; it’s just that textbooks sell at the same times as school sessions start so you may end up holding your inventory for a while. And you have to be careful to buy current editions that are not severely marked up or highlighted. These books take a fair amount of work to buy at the right price, but they can make you a pretty good profit when they sell.

4.03

Where Do I Store Them?

Okay, now that you have purchased some books, where do you store them? That

doesn’t seem like too hard of a question until you start to see that you need adequate space to store them. 1,000 books may not sound like much until you see how much they weigh and the amount of physical space they take up.

You need a place that is environmentally friendly. Musty basements or garages can quickly doom your new venture. Your inventory should be stored in the same living conditions that you prefer to live in – for me this means storing a lot of them in my spare upstairs bedroom.

Just how do you make all these books easy to find and not get damaged? Books should be stored vertically so that they don’t get that dreaded slant to them. In addition, they should not have other books on top of them, crushing their corners or bending the soft covers of the paperbacks. I started out by storing them in pressed wood bookcases from the local discount store. I quickly found that I was constantly shuffling the books as they sold so that the authors were in the right location so I could find them easily (who wants to spend 2 hours looking through thousands of books to find the one that just sold for $1.95?).

My current system evolved to track and manage inventory. When I enter a book in the database, I add a SKU (Stock-Keeping Unit) number in the description field.

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When a book is sold, this number is sent to me along with the book title. I simply decode the SKU, walk into the other room, and within 2 minutes I am back at my desk and sending the item out.

How do I do that? Well, I found that the little plastic storage crates that are sold at discount office supply stores work great for stacking and storing books. I just assign a SKU number to my current book purchase and put that number on the crate (I use a post-it note with tape to hold it in place). When I get an order, I just walk over to a stack of crates and look for that SKU number. When I find it, I know the book I need is within the box.

Some booksellers like to make up SKU numbers that start with letters denoting where in the house the book is located – like MBR to signify Master Bedroom, LR

to signify Living Room, etc. My SKU numbering system is pretty straightforward, when I buy new books I put the month, year and the number of the box I added this month. For example, if this is the 4th box I filled in December of 2003, the SKU

would be 1203.04 (December = 12, 2003 = 03, 4th box = 04).

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SellerEngine keeps track of each title as a unique SKU item. So what I do is allow the program to automatically keep the numbering system that provides a number like SKU-001345. I then manually add the 1203.04 to make the full number read

something like SKU-001345-1203.04. It’s now a breeze to find my book and the serial number of the SKU allows me to track items independent of each other.

4.04

Where Do I Buy Brand New Books?

New books can be purchased from various sources. You can buy them one at a time or a bulk lot of thousands of books.

(1) New Bookstores

Stop by your local new bookseller and check out their overstock tables. When you’ve been doing this for a while, you’ll find that occasionally these booksellers have something that is selling well nationally but not locally.

As an example of this, I discovered that Dan Browns’ book, The DaVinci Code, was being discounted to about $15. I knew that the first edition, first printing of this book was selling on eBay for over $45. I looked through the books and found a dozen First Edition, First Printing copies. I auctioned a couple of them off to recoup a lot of my initial investment and I’m holding on to the remaining amount because I learned that the film rights to this book have been sold and I expect the book’s value to keep climbing for quite a while. Again, don’t buy these types of books unless you can get at least 3 times what you pay for them at the store.

These stores also sell their remaindered books at a steep discount. But remember, it seems like all the booksellers in the world want to sell these things and many will sell them at almost no profit just to get them out of their inventory.

(2) Publishers

If you decide to set up your own web store and plan to do a large volume of books, you can contact a publisher to buy large quantities of books. Depending on the volume of your purchase, they will direct you where to buy.

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(3) Auctions

If you’re careful, you can buy new books at auction on eBay. Before bidding, check the books on Amazon to make sure they are sellable. Also remember to take into account the cost of shipping and handling when you’re calculating what you’re willing to pay.

I use an auction sniping service to get the best bargains on books. Sniping is the ability to wait until the last seconds of the auction before submitting your bid. By waiting until the last seconds, you don’t “show your hand” to a lot of other bidders that see action on an auction and start bidding the prices up.

This service also helps you to not play the eBay game of the “You’ve been outbid”

notice. You see, eBay sends an email to you when you’ve been outbid and then you get caught up in the bidding frenzy. Don’t do it!!

By using this service, you just put in the amount you’re willing to pay and it sends in your bid at the last second. If you’ve been outbid it really doesn’t matter because you put in the maximum logical amount the auction was worth to you without your

emotions kicking in.

Stop by my website at www.tipsonbookselling.com to see what sniping service I’m currently using.

4.05

Where Do I Buy Good, Used Books?

No matter where you go to purchase used books, make sure the books you buy are NOT ex-library, dirty, musty, torn, written in (other than owner and author

signatures or textbooks) or have highlighting in them (except textbooks). If the book originally came with a dust jacket, make sure yours also has a clean one.

I stay away from foreign books, dictionaries, bibles and encyclopedia sets. I also don’t buy BOMC (Book Of The Month Club), Time Life, Readers’ Digest or Oprah books.

You also want to be careful when choosing to sell antiquarian books. Amazon is set up to accept ISBN numbers, so if you buy old books you’ll need to either auction them off at eBay or sell them from your personal storefront. You won’t have the

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marketing power of Amazon trying to sell them for you. That’s not to say that you don’t want to buy them. You may find a real treasure, like a pristine first edition of Hemingway’s For Whom The Bell Tolls. You might get that book for $1 and find that it’s worth $500 in the condition it’s in. That’s part of the fun in this business –

it’s like going treasure hunting on a budget.

ALWAYS BUY QUALITY! Your reputation is on the line with the merchandise

you offer. If the book isn’t clean enough that you would personally buy, then don’t try and foist it upon your customers.

(1) Auctions

EBay – You can bid on book lots on eBay at Books>>Wholesale, Bulk Lots. The same rules apply here in that you want to keep your overall cost per book within the amounts you’re willing to pay. Don’t get suckered into believing that every auction is the one that you should have won. EBay sends you an email notification each time you are outbid to try and get you into a bidding frenzy – DONT DO IT! Set the price you’re willing to pay and walk away from it if it exceeds your initial calculations.

(2) Estate Sales

Estate sales can be a wonderful source for books. I’ve gone to some of these sales and have walked away with as many as 300 quality books.

There are many reasons people have estate sales. There’s the obvious reason that the last member of the family has died and the remaining belongings are being sold off.

But there are also times when retired couples are downsizing and just want the cash out of their belongings or when families need the cash and sell off everything. You can find when and where a sale is by looking in the classifieds of you local newspaper. At first, you may want to go to a lot of these sales to get a feel for how they work. Later, you may not want to spend the time on the road and will need to review the classifieds carefully to determine if they specifically list books as one of the items they are promoting at this sale. Most sales have at least a couple of good books but you probably won’t run into big book stashes unless the ad specifically states they have books for sale

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These sales are definitely classified as “the early bird gets the worm”. Major attendees are antique dealers. These sales are one of their primary sources of merchandise (where else do you go for antique goods?). A large percentage of these

“dealers” operate their businesses part time by buying items at estate sales and then putting those items in “antique malls” where the person who runs the mall gets a little rent from the dealer for the space and then sells the items on consignment without the part-timer ever having to be there. The problem is that these part-timers tend to take everything they view as “old” and that can mean that any good,

collectible, book gets snatched up quickly.

If you want a shot at the good stuff, you need to get to the sale a couple of hours before they open. There are usually bunches of people lingering around the doorway, waiting for it to open. The first thing you need to do is get to the front door and ask for the signup sheet. You jot your name on a piece of paper and remember your number. When the sale starts, a member of the selling company will come to the door and either read off some names or some numbers to let those people in. They only let a small number of people in at any one time to keep the feeding frenzy down. The problem is that the first 10 people or so will get the majority of the finds that are present for that estate. After that, you get access to stuff that hasn’t sold. For us as booksellers, that isn’t necessarily a bad thing. A lot of folks overlook newer books thinking that the only items of any value are old items.

The second day of these sales is usually ½ price day. I’ve gotten some real good deals on the second day. You can come in and find newer books that may be unique to the owner – they may be heavy into science, have medical or dental textbooks or just have books that most people don’t buy. This is great for you because if you find books that were published in low volume, you won’t have as much competition for them and they will command higher prices.

(3) Libraries

I’ve had very good success with my local library. They sell used books at the front door. Local people donate a good many of these books so these books are NOT ex-library.

The problem with old library books (ex-lib) is that people usually don’t want to buy them because so many people have handled them and they have all those library

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markings stuck on them. I’ve found that the best way to handle that is to NOT buy ex-library books.

I recently found a book on Object Oriented Programming that I purchased for 25

cents. I put that book on Amazon and it sold 10 days later for $28.00 – not a bad return for driving to the library!

Libraries also hold sales for large quantities of used books. These books are donated to the library that then offer them for sale as a way to gain more revenue for library projects. Check with your local library to see when the next one is scheduled.

(4) Rummage Sales

I’ve had some success at rummage sales. Most of the time these sales have the romance series of paperbacks – Harlequin and Silhouette. They also have old book club, dictionaries, encyclopedias, Time Life and Reader’s Digest types of books. I haven’t had much luck in selling these so I stay away from buying them.

(5) Thrift Stores

I’ve heard that some folks find really good deals at their local Goodwill or Salvation Army type of thrift shop. I’ve been to my local stores and can say that I haven’t been too excited about what they offered. Their books were well worn books I wouldn’t personally buy, and their prices were way too much to even consider for reselling.

That may be unique to my area so check the stores near you to see if you fare any better.

(6) Churches

I’ve had pretty good luck at a local church. The church I visit has a small store attached that sells donated merchandise. I try to stop in there once a month to see what they have. A lot of their books are in good condition and many are fairly new.

The prices have been very competitive so I can routinely pick up a couple of grocery bags worth of books to put online.

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(7) Run An Ad

Place a small classified ad stating that you buy books for cash. They call you and describe what they have. You explain that you aren’t looking for collectible books but books that you can resell at your online bookstore. You tell them that you pay 50

cents for good paperbacks, a dollar for good hard covered books.

You need to tell them you don’t pay for encyclopedia sets, dictionaries, bibles, Time Life, Readers Digest, Book Of The Month Club or ex-library books. You also don’t buy musty, dirty, torn or worn out books – only books that you would buy for yourself.

They come out to your place and deliver only the books that you have agreed to buy.

What could be simpler?

(8) Used Bookstores

We have a chain of used bookstores in our area. These can be a source for hard to find books that you know are selling well. These stores deal in volume so they don’t pay much attention to what they sell, just how much they sell.

You need to be careful though. Remember, if you can’t make at least 3 times the amount you paid then it probably isn’t worth buying.

(9) Book Scouts

No, I didn’t say Boy Scouts, the idea is to use book scouts. These are people that you work a deal with that become your legs and eyes out there. They go to estate sales and rummage sales and bring back large quantities of the type of books you told them you would pay for.

You could contact a part time antique dealer and offer to pay them for books they find at the estate sales they are already going to. Or you could find high school and college kids that go to rummage sales on the weekends and can use some extra spending money.

I have a single sheet that I hand out when I find a candidate to scout books for me. I refund them the actual cost for their purchases (they give me their receipts) and then

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I pay them for each book that meets the criteria I told them (I pay an additional dollar per hard cover and 25 cents for each paperback).

Here’s a copy of my handout:

Process:

Pick up a couple of solid, clean boxes at the grocery

store or liquor store.

Purchase the items at estate and garage sales. You ONLY

purchase those items that you would personally buy at a

used store – NO CRUMMY MERCHANDISE!!

The items usually cost $1.00 - $2.00 for a hard covered

book, $.10 - $.75 for a soft covered or paperback and

$1.00 - $2.00 for a poster. They will sometimes have a

special book at a high price – don’t buy it until you’ve

talked to me because they are usually grossly

overpriced!!

NOTE: Don’t overpay – I have limited funds and I’d rather

give it to you than the person selling you the book!

You give me the sales receipt from where you bought them

and I will repay you. I will then take them home and see

which ones I can sell and then give you an additional

amount as determined by the rates shown below.

Rates:

$1.00 per hard cover

$0.25 per paperback/soft cover

$1.00 per poster

Book Selection:

NO Old Library Books

NO Encyclopedias

NO Bibles

NO Dictionaries

NO Readers Digest editions

NO Book Club (BOMC = Book Of the Month Club) Editions

(Only choose books that show the original price)

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NO Oversized “Coffee Table” books with lots of pictures –

just reading books

NO School Textbooks

NO Paperbacks that are all crinkled up from too many

readings (or the book is curled and the spine is bent)

NO “Price Clipped” Books – Those books where the price

was cut out of the dust cover when the book was given as

a gift.

NO Books with a lot of writing and underlining in them

NO Books that have lines or marks on the edges of the

book – these books are called “remainders” and were

marked by the publisher to get rid of them at cheap

prices.

NO Books that have broken spines, torn or missing pages,

mold, mildew, ripped-up dust covers, etc. If you wouldn’t

buy it, who would?

Poster Selection:

Look for posters that are advertising pieces. Posters

from companies like United Airlines, Miller Brewing, etc.

They need to be in clean shape, without tape marks, tears

or mildew. Some older ones may be very brittle due to

their age so please be careful in handling these.

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(10)

Consignments

One final thought is to partner with others and take their books on consignment.

They buy the books and you sell and manage the online inventory.

You will need to store their books at your site. You may have to answer email questions about the book so you’ll need to see the book in order to answer the questions. You’ll also want to send the package out quickly once the book is sold.

The big advantage here is that you don’t need any cash for inventory.

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Chapter 5 Inventory

ow that you’ve found your books, you need to get them ready to sell. You

also need to be able to track them for bookkeeping purposes and to easily

N locate them so you can send them to the buyer.

5.01

Accounting

You must keep good records of your business activity to comply with local and federal tax codes. Always get and keep your receipts so that you have proof of an expense if you ever end up with an audit.

A nice side benefit to selling books through online portals such as Amazon and Half is that they handle all the sales tax paperwork, you are merely a subcontractor for them that provides inventory and shipping. If you should decide to set up your own online store in addition to selling through Amazon, then you need to follow your state’s sales tax laws and fill out the appropriate forms. Consult your accountant to see what is required.

You must document your inventory (book) purchases so that you can expense them against your sales. If you were to go out and buy 1,000 books for $1,000, you can’t just subtract that amount as an expense against income. You must determine what the cost of each individual item you purchased was, in this case it’s $1 per book.

Each purchase will be a different amount, so you need to determine and track the value for each book in your inventory. Then when you sell a book, you figure out which book lot the book came out of and you can expense that amount from the sale.

In our example, if you sold a book for $100, you would expense $1 for the cost of goods of the sale. If another book sold for $2, you would still expense $1 for the cost of goods of the sale. There is a dollar threshold where, if you stay under it, you can

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just expense the whole amount and not worry about inventory – check with your accountant to see what the current laws are for your situation.

I track inventory as simply as I can. First off, my Quickbooks accounting program is designed to track inventory. I just needed to learn how to use their system.

The way I keep track is to keep receipts on a monthly basis. For example, if I purchased 5 lots of books during the month, I would add up all the receipts from the purchases and count all the sellable items that I now have. Then I create a single inventory item that has the number of books that I purchased. That inventory item would be labeled something like 1203Books (Books I purchased during December 2003). That’s the basis for my SKU numbers so that I can find items quickly when they sell. The first box of books I purchased during December would be labeled 1203.01, the second 1203.02, etc.

Before counting the total number of items you have, look through everything and throw out bad merchandise or any merchandise that you can’t sell. When you buy books in lots, you end up with a few that are damaged due to poor packing or just poor merchandise that you don’t want to sell.

Set up a non-inventory, cost of goods account. Use this account for the occasional times when you don’t have a receipt or when you’re selling something that isn’t tracked by the inventory program.

All of this may sound complex, but it’s really not too bad. The main obstacle is in learning how to operate your accounting software. Again, your accountant should be able to help.

5.02

Inspecting Books

Let me repeat, don’t sell poor quality merchandise. When you get a new batch of books, go through them and discard any books that have torn covers, water damage, mold and mildew, a lot of marking in them or in any way makes them undesirable. If you wouldn’t personally buy it, don’t try and sell it to someone else!

Your reputation is all you have online. Nobody comes to your physical store and sees that you have happy customers and clean facilities. If you sell junk online, you

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will quickly tarnish your reputation with bad feedback from unhappy customers and you’ll have a tough time making money.

While you’re going through your merchandise, check to see if a book may be