Sooner or later used book dealers start looking for ways to grow their business faster.
That's because as a one man or one woman operation there's only so far you can go until you reach a state of equilibrium.
One way of expanding that continually comes up is the question of whether or not it's profitable to hire a book scout.
That's a complicated question, with no real easy answer. But it's an issue worth exploring since any bookseller who wants to expand will wrestle with it. Therefore, you want to make the most informed decision as possible.
The genesis of the question is that it seems reasonable that two used book dealers who are out scouting will be more successful than just one. And generally that's true, because you'll have twice as many opportunities to be in the right place at the right time since you'll hit twice as many locations.
At face value this appears to be an excellent argument for hiring someone to work for you. But as I point out in my book, Internet Bookselling Made Easy! there's more to consider than what meets the eye.
The first thing used book dealers need to consider is how much profit you expect to make from your surrogate helper. After all, no one works for free.
Suppose your helper is out book scouting and runs across:
"Solving the Compensation Puzzle: Putting Together a Complete Pay and Performance System," by Sharon Koss, ISBN 1586440926, [Paperback]
In mid 2012 I sold this book for $40.00, so if your scouter finds it, you definitely want him or her to make the buy. The question is, how much should you compensate your buyer?
|A small army of book scouts can add significantly to your bottom line.|
It's customary to pay your buyer 15% of the listing price for each purchase made, plus the actual cost of the book. That means your buyer would receive $6.00 plus an average of $2.00 to cover the cost of the book, for a total of $8.00 even. This is your Cost of Goods Sold (COGS).
If you sell the book for $40.00, then you not only subtract the COGS, but you take another 15% commission right off the top as Amazon's commission. So your total out of pocket on this book is $14.00 for COGS and selling expenses.
After subtracting all of your expenses you're left with a solid $24.00 profit so this was still a great transaction for you.
Forty dollar books come along all the time. But you'll also come across the $100.00 book on a relatively consistent basis too. Now you're talking about a $68.00 profit.
But the vast majority of books scouters find for used book dealers will be in the $8.00 to $30.00 range.
These are what I call bread and butter deals; the common books that you can count on picking up every single day.
For example, if your hired help picks up 25 books every day that list for an average of just $12.00 each, you'll add about $3,200.00 in additional profit to your inventory monthly, depending on how many days are spent scouting (either 20 or 22). Here's the math:
In this case, I assume the scouter will be on the streets five days a week, four weeks per month. I could have said five days a week times 4.33 if I wanted to be super accurate. But using 20 days keeps things nice and tidy.
Of course, you increase your business risk because you're training your competition in a very short period of time.
When you pay your bookscout $15.00 for a book, he or she will know they just handed over a $100.00 gem to you because they know their commission rate is $15%.
So they're very much aware that you're making fabulous online marketing profits as a rare used book seller.
Sooner or later those people wise up, get their own barcode wireless scanners, and start cashing in those gems themselves.
Now, not only have you added more used book dealers to the field of battle as competition, but they already know all your best routes and locations!
It doesn't sound like such a smart idea anymore, now does it?
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