AbeBooks.com is one of the world’s leading marketplaces for new, used, rare, and out of print books with over 13,000 vendors offering over 110 million books. I recently had a chance to interview their CEO, Dr. Hannes Blum. An edited version of the interview will appear in the July issue of Amphora.
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Book Patrol – Firstly, I want to thank you for taking the time out of your busy schedule, it is appreciated.
AbeBooks recently announced its acquisition of Chrislands, a website provider for online booksellers. This comes on the heels of AbeBooks previous acquisitions of Fillz and BookFinder.
The earlier acquisitions of Fillz and BookFinder seemed to complement Abebooks in some way, at least on the periphery, whether it is the fulfillment and date routing that Fillz provides to booksellers or the book search functionality offered by the meta searching of BookFinder but Chrislands on the other hand seems to be in direct competition to the AbeBooks model as book aggregator.
It would seem that one of the greatest threats facing AbeBooks would be in the booksellers building of their own websites. Coupled with Google’s dominance in the search arena and Amazon’s far reach and you potentially have a situation where the user will eventually bypass the traditional 3rd party books sites like AbeBooks, Alibris and Biblio.
What is the overall acquisition strategy for AbeBooks and how do these recent acquisitions fit?
Hannes Blum – A couple of points here…. We expand AbeBooks in two ways – organically such as by setting up new sites like the recently-launched www.abebooks.it and by purchasing companies. When we decide to purchase a company, we look for firms that are successful, have potential to grow and are all about books.
Booksellers realize that they have to offer books for sale through as many different ‘channels’ as possible. Before the internet, that meant auctions, book fairs and catalogs as well as bricks and mortar bookstores. Today, the same rule applies and we accept that sellers are going to sell through other online marketplaces and also develop their own retail websites. We understand this and accept this. This is a part of the online bookselling world that we want to be involved with – Chrislands already does a great job and has fantastic potential. We’re not straying away from online bookselling but simply making sure we have a strong presence in another developing area of internet bookselling. We are prepared to diversify but we stay loyal to books. Chrislands complements AbeBooks very nicely – just like Fillz and BookFinder.com do. Each business gives us some influence in another part of online bookselling.
BP -Does the acquisition of Chrislands signify a change of course for AbeBooks?
HB – No. The Chrislands acquisition can be compared to our purchase of BookFinder.com in 2005. Both BookFinder.com and Chrislands have different business models to AbeBooks but they’re still essentially all about online bookselling.
BP – In addition to these acquisitions AbeBooks also has a minority stake in the leading book social networking site, LibraryThing.
-Are there any future plans to incorporate more of LibraryThing’s functionality with AbeBooks?
HB – Not at the moment but we could do more with LibraryThing in the future. We already have the BookHints recommendation system which is based upon the libraries of LibraryThing.com members. At a very basic level, we are constantly learning from Tim Spalding at LibraryThing. Tim’s site leads the way in social networking for book people.
BP – AbeBooks recently announced some changes to their pricing structure by extending the 8% commission on books sold to include shipping charges. These changes, much like the decision a couple of years to partner with Chase and bring the credit card processing in house, has met with much resistance in the bookselling community.
The credit card processing initiative left many booksellers up in arms and resulted in a one week boycott of AbeBooks by members of the Antiquarian Booksellers Association (ABAA). At the time, most booksellers were paying 3.5% or less for their credit card processing fee and where now told that AbeBooks will be taking care of all the credit card transactions and charging them a whopping 5.5% fee for the transaction.
-Why didn’t Abebooks simply raise the commission rate from 8 to 13%, inline with other online book aggregators, and leave the credit card processing fees out of it?
HB – You are referring to a change made in 2006. At the time, the ‘boycott’ was limited to a small number of sellers and had no impact on our business. In April 2006, AbeBooks began processing Visa and MasterCard transactions on behalf of its booksellers.
This decision was taken for several reasons. Mainly, we wanted to take control of credit card processing in order to better tackle online fraud. This was the first step in an on-going process. Today, we have to undertake stricter than ever measures against online fraud because of PCI (Payment Card Industry) requirements and the sheer volume of transactions that go through our sites. Since making those changes in 2006, we have invested millions in new PCI-compliant hardware and a new state-of-the-art data storage facility in Calgary, Alberta. The revenues from credit card processing fees are being used to good effect to protect buyers and sellers, and to ensure AbeBooks remains secure and robust.
BP – The recent announcement of extending the 8% commission on sales to include the shipping charge has met with equal opposition. The Independent Online Booksellers Association (IOBA) issued an open letter addressed to you citing their concerns that this new fee structure will unduly affect their international member booksellers who frequently ship books to the United States . On the other hand, and more importantly, the new fee structure also seems aimed at the mega-sellers or penny sellers who are selling books that are less expensive than the actual shipping charges and who are using the shipping charges as a profit center.
-Why not apply the new fee structure only to those sellers? There are an infinite variety of booksellers on AbeBooks and to place a blanket pricing structure on all of Abebooks vendors seems to stir up controversy at every turn.
HB – We decided to apply commission to shipping charges for two reasons. Firstly, we wanted to increase our revenue because we are being affected by higher operating costs. Increasing costs of hardware and in online marketing, and also the strength of the Canadian dollar combined with the weakness of the American dollar have all had an impact.
Secondly, our customers are unhappy when they find an apparently cheap book but then discover it has a very high shipping fee. This practice is not confined to any single type of seller but a number of booksellers across the board. We want to encourage sellers to lower their shipping fees because high shipping fees are unpopular with buyers.
I think we remain a very competitive online marketplace for books. Importantly, we offer flexibility in that sellers can set their own shipping fees, we offer a very high level of customer support to our booksellers, including 1 800 telephone support, and – very importantly – we offer access to international customers because we have a single database serving six different sites for North America, the UK, France, Germany, Italy and Spanish speakers.
Whenever we make a change at AbeBooks there is a reaction from our booksellers. A small number are very vocal. We have been very clear about why these recent changes have been made and answered countless questions from booksellers. We have staged online roundtables and met sellers in person during April at the London Book Fair and at the New York Antiquarian Book Fair.
BP – For most booksellers that I know, and many are the ones that have been selling on AbeBooks the longest, AbeBooks has become a declining revenue stream in the last few years. Most are seeing double digit declines in sales on AbeBooks with some booksellers claiming sales down as much as 60%.
-What do you attribute this across the board decline in sales to? Increased competition? Saturation in the marketplace?
HB – Sales across AbeBooks’ network of sites as a whole are actually increasing and we outperform most of our direct competition based on our knowledge – we facilitate sales of up to 30,000 books each day, sometimes more at the height of the college textbook seasons in August and January. On all online marketplaces, competition between sellers has increased – selling books online has become an extremely popular occupation. Anyone who sold books on AbeBooks before 2000 was part of a small number of booksellers and those same booksellers now face stiffer competition. There is also increased competition between the marketplaces themselves – the marketplaces compete for traffic and then the sellers on the marketplaces compete for the sales. Remember business changes much faster on the internet than in traditional commercial environments.
Nowadays, sellers list far more books for sale than they used to, so we try to encourage sellers to improve sales by offering better and more in-depth book descriptions, and give each listing an image, and also by closely monitoring their pricing and making adjustments when necessary. We attempt to give sellers as much guidance as possible so they are equipped to attract buyers.
BP – What steps is AbeBooks taking to try and increase sales through AbeBooks.com? The model of trying to increase revenue through increased fees for your vendors, as opposed to increasing revenue through the front-end and attracting more customers seems unsustainable.
HB – Our model is very sustainable because we keep it carefully balanced and we continue to see decent growth in buyers. As I said before, business evolves very fast on the Internet and online companies fail exceptionally quickly when business turns bad, so we wouldn’t be around if our business model wasn’t sustainable.
We make huge efforts to attract buyers through online marketing and more traditional marketing practices. Our marketing budget doesn’t compare to the money spent by the likes of Amazon but we make every dollar work for us. We drive traffic to the sites through extensive search engine marketing, thousands of affiliate websites, a regular stream of highly targeted e-newsletters, meeting buyers at book fairs, sponsorship and public relations.
Let’s take April as an example. In April, we launched a new website dedicated to Italy – that’s a huge undertaking and we’ve just opened up a new market for our sellers. It immediately had an impact and our most expensive sale in April was facilitated through AbeBooks.it when an Italian buyer purchased an Edward Lear letter for $11,491. We attended the LA Times Festival of Books where we had two booths and five members of staff who met thousands of bookloving people and told them in person about AbeBooks. We sent out around 18 different e-newsletters from our North American office and more went out to European buyers from our office in Germany. On our websites, there were author interviews, contests, and original content – all designed to draw buyers in and hold them on the site.
Clearly, we are doing something right because Which? – a consumer protection organization similar to Consumer Reports in the US – shortlisted AbeBooks.co.uk as one of the three best internet retailers in the UK. Just two months ago, the UK’s Daily Telegraph newspaper listed AbeBooks as one of the 101 most important websites in the United Kingdom. Having said that, we appreciate that there is much more work to be done.
Aside from our marketing efforts, we are also continuing to improve our own websites so that once a buyer arrives at AbeBooks they have a good buying experience and come back for more books. I can’t stress enough how important this behind-the-scenes work is. We want a first-time buyer to become a regular customer so they will buy from AbeBooks for life.
BP – The antiquarian, rare and out-of-print bookseller has been a seminal part of Abebooks vendor base since its inception. You will be giving the keynote speech at the upcoming Colorado Antiquarian Book Seminar in Colorado Springs .
-I was wondering if you be so kind to allow us a glimpse of what you plan to talk about that evening.
HB – I’ll be talking about several industry trends, including how we intend improve the visibility of used and rare book listings on our sites.
BP – It is amazing how much bookselling has changed in the last 10+ years since the advent of Abebooks and online bookselling. Abebooks has always been at the forefront of this brave new world, One of the company’s tag lines is “AbeBooks is changing how books are found, sold, and shared with the world.”
-What kind of changes in the ways ‘books are found, sold and online and shared with the world’ do you foresee in next 5 to 10 years?
HB – Firstly, books are not going away. The book remains the greatest technology of all time – they are portable, they are easy to use, they are durable, they convey a huge amount of information. But most importantly, books are loved and treasured, and inspire readers. We watch with great interest what is happening with the Kindle and other e-reading devices but these things are a long way from making a significant impact on the book world.
Looking ahead five to 10 years is very difficult. AbeBooks is 12 years old and look how we have developed. The founders were amazed when the site’s inventory reached one million books and then they swore that three million would be the absolute limit. Now we have more than 110 million books for sale and sellers continue to load up more books.
We expect new online bookselling markets to develop around the world – Eastern Europe, South America, Asia, India. We saw this coming a long time ago and have been ‘internationalizing’ AbeBooks’ business since 2002 so that we were not totally dependent on our core market in North America.
Perhaps the most accurate thing I can say is that things will continue to happen fast on the Internet. Bricks and mortar businesses can take decades to develop but online firms can make an impact in a very short time. Look at Google.
Last year, we conducted an extensive bookseller poll and they told us they intend to keep loading up books to increase their online inventory, so the choice for buyers is going to become even wider.
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