May 10, 2005

News & Opinion: Books for A Penny

By: 800-CEO-READ @ 12:35 AM – Filed under: Publishing Industry

The Wall Street Journal has an article today about the penny books you can buy on Amazon [sub. needed].
But we wondered: How do people selling books for a penny make money?

Basically, they don't. Penny books are such a low-margin business that a single misstep can mean the difference between being in the red and being in the black. (Incidentally, you can buy "The Red and the Black" for a penny.) Here's how the Amazon penny-book business works: Amazon charges customers $3.49 per book for standard shipping, charges sellers a 15% commission on the one-cent sale, then gives sellers a $2.26 shipping credit for each book sold. This means a penny book is really a $3.50 book, but that's still pretty cheap, and you don't have to leave the house.

Charles Criscuolo used to sell books and CDs at a store on Clark Street near Chicago's Wrigley Field; he closed his brick-and-mortar store in 1999 and now does most of his business on Amazon through the Flashbacks zShop. He says he has an inventory of about 2,400 books: Most cost between $5 and $10, and about 20% of his inventory is penny books. He's a subscriber to Amazon's Pro Merchant program, which costs $39.99 a month, plus that 15% commission per sale. (Amazon charges sellers who don't belong to the program an additional 99 cents per sale, so penny books only make sense for Pro Merchant members.) Mr. Criscuolo says it costs him $1.42 to ship a typical book at the media-mail rate. Throw in another quarter for packaging and he's left with somewhere in the neighborhood of 60 cents -- minus what he paid to buy the book, of course.

"If you paid a dime or a quarter, you're making a little money," he says.

Conclusion: Go for the buyer, not so good for the seller.