The Bookseller Who Balked at Black Friday

By Edward Nawotka

CAMBRIDGE: Last Thursday—Thanksgiving Day in the United States—Lorem Ipsum Books, an independent bookstore in Cambridge, Massachusetts, announced what they called a “new Black Friday Shopping tradition”: The Anti-Sale. “In this special, one-day only event, the bookstore with 19,000+ gently used books will be offering none of them for sale at a discount,” said Matt Mankins, the store’s owner, in a press release.” As an added bonus,” he invited shoppers to “pay more than the cover price.”

What? A store balking at the prospect of offering a massive discount on Black Friday and having the gumption to ask for more? That seems positively un-American. In the US, Black Friday—the day following the Thanksgiving holiday—is routinely touted as “the most important shopping day of the year,” the day in which retailers move “into the black” (i.e. become profitable for the year). It is also the traditional kick-off to the holiday shopping season, a period that is said to account for as much as 25% of overall retail sales for the year, particularly for booksellers.

Many retailers, especially the big box chain superstores, such as Wal-Mart, Best Buy, and others, open at 6 a.m. to accommodate the throngs gathered to take advantage of “door-buster” specials: discounted products so cheap that people are willing to bust down the doors and trample their fellow shoppers to get to them.

Booksellers are for the most part notably absent from this scrum. Is the typical book buyer, or at least someone willing to give books as gifts, is that much more civilized than other shoppers? Or is it simply that getting a book at 40% off isn’t as exciting as getting a big-screen TV at 40% off? It’s more likely that many booksellers’ disinterest in Black Friday discounting stems from the fact that books are already drastically discounted year-round. Online bookstores, such as Amazon.com and Barnes & Noble routinely discount books 40% or more, and if you can’t get that discount on the Web site, you can typically get a weekly e-coupon emailed to you that will enable you to get the same at a bricks-and-mortar location. Warehouse stores, such as Costco and Sam’s Club, have been offering bestsellers at below cost—as loss leaders—to lure customers into the store to purchase other items. It is this practice—and not Amazon and B&N’s $9.99 e-book pricing—that likely prompted the ongoing price war that has reduced many bestsellers at Amazon.com, Wal-Mart, Target and other retailers to $10 or less.

Of course, the discounting has extended beyond the bestsellers as well: Today, on Cyber Monday (the second-chance day for internet-connected office workers to take advantage of online specials), the latest edition of the Oxford Atlas of the World, which was published in October and has a cover price of $80, is on sale for $27.20—a full 66% off and a number so high that it is all but guaranteed that Amazon is losing money on each sale. What’s more, nearly year-round, books can be had for as little as one cent plus shipping on Web sites like BookCloseouts.com and eBay.

European booksellers who benefit from fixed-book pricing, such as those in Germany and France, are surely looking on at this aghast. Perhaps only booksellers in the UK can truly empathize. They also offer deep discounts (albeit more often in the form of “three for the price of two” sales and other promotions) and are battling against the likes of Tesco’s and other large chain retailers, who also offer books priced as loss leaders. The book price battles may have even expedited Borders UK’s recent demise—and now the deep-discount “fire sales” going on around the country are likely to cut into other rivals such as Waterstone’s and W.H. Smith’s holiday sales.

So what is the long term impact of all this discounting?

Lorem Ipsum owner Matt Mankins

The consumer, naturally, benefits most, at least in the short run: Readers now have nearly instantaneous access to the broadest selection of books at the cheapest prices in the history of the world.

Publishers, who now have nearly limitless “vendors” (via web booksellers affiliate programs), still get paid their asking price no matter what price the retailers ultimately sell the books (though returns remain an issue) and it is likely that deep discounting has sustained the market during a recession when people have cut their discretionary spending.

Ultimately, those affected most adversely by the heavy discounting are the booksellers themselves. Retailers like Amazon or Wal-Mart, stores not primarily focused on the business of selling books, use these cheap books as a lure. Nearly all bookstores, whether they are chains or independents, do much the same thing—often more heavily discounting bestsellers in the hope of “up-selling” the customer on another book, or perhaps a sideline or two. But the downside is that, ultimately, American consumers are becoming conditioned to books being priced like cheap disposable commodities—$10 or so. And while it makes sense to price a novel that will be read only once at that price level, it doesn’t make sense to charge the same for an elaborately illustrated reference or art book. Or even an atlas.

It is, in my opinion, ultimately a form of asset devaluation. Or, to put it in other words, the book business is experiencing deflation. And anyone who watched their stock portfolio plummet in the last year will know that it is painful to wake up one morning and realize that what you have is suddenly worth half of what it was the day before. It will simply be impossible for book retailers of any kind to sustain real growth over the long term if the product is so cheap as to return little profit.

The fact is that while the value of books may be in decline, the single biggest expense—the cost of real estate—is relatively fixed. And it’s still all about location, location, location—whether physical or just in someone’s head. Just ask Matt Mankins, owner of Lorem Ipsum Books.

A graduate of the Massachusetts Institute of Technology and developer of an online book retailing and inventory system, Mankins is clearly a smart man. His bookstore, which he founded based on the principle of selling books at the same price in the store or on-line, has been open six years.

Yet, today, as he explains on the store’s Web site, it is “simply losing too much money at our current location to keep operating at a loss for much longer.” He needs to raise $50,000 to move the store to a better location around the corner and is trying to sell 5,000 books for $10 each over ten days starting December 1.

Of course, Loren Ipsum Books is primarily a used bookstore and charging $10 each for a used book is not unreasonable, and is likely to return a strong profit. The reason they are not already offering a discount is because they are selling books that were already devalued; the reason they invited buyers to pay more than the marked price is because it was, ultimately, a form of charity. (And this case, asking for charity, also functions as a form of marketing).

“We hope everyone will come in and take advantage of this anti-opportunity, as a means to show support,” said Mankins on his site. Not discounting, at least for Mankins, is the smart move.

But will it work for everyone else? We may never again know.

VISIT: The Lorem Ipsum Web site.

TRY: Lorem Ipsum’s “Choose-Your-Own-Adventure” story about why the bookstore should be saved.

LEARN: More about Matt Mankins’ Ka-Zam bookstore inventory management software.

BONUS: Does Constant Discounting Lead to Asset Devaluation?