A Customer Asks About Book Scouting

03/28/06

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A customer recently posed the following scenario to me and asked for my response.

"I was thinking about selling books online, but when I started looking into it I discovered that there are some companies out there that will give me a cell phone and an Internet account to find books for them.  They will pay me for every book I find and I don't have to sell anything.  If I can get paid for every book they tell me to buy, why would I even consider bothering with selling online myself?"

My Response:

This, at face value alone, appears to be a good argument for book scouting, but as I describe in my book, there is more to be considered and this is a perfect application of the old saying, "You can't judge a book by its cover."

I guess the first thing you should consider is how much money you think you are going to get paid as a book scout, and to illustrate the trade-off between being a book scout of having your own online bookstore.  I will share an example here that can easily be scaled to monthly sales.

Suppose you are out scouting for books and run across:

"Kate: The Kate Moss Book," by Kate Moss, ISBN 0789301016, [Paperback]

If you are scouting for a service, you will be told to purchase the book and that you will be paid $30.00 for it in addition to the $1.99 reimbursement for purchasing it.  You will not be told the real value of the book, but since I recently sold a copy of it for $199.99, I can say for the sake of simplicity that it is worth $200.00.  The $30.00 that you will get for "finding" it represents 15% of the real value, which is probably generous because most "services" you can scout for will pay you closer to 10% of the real value.

If you were scouting for your own online bookselling business using a wireless lookup service, you would see that the book has a low online value of $190, a high online value of $220.00, and an Amazon.com sales rank of about 100,000, which means that even at this high price, the book is fairly popular.  There is no question, you buy the book and put it up for sale online.  If like me, you price the book toward the middle of those being offered, you will probably have it in your inventory for a couple months before it sells, at which time you will make a profit of about $168.00 after paying a 15% sales commission to the marketplace it sells through.  That is 5.6 times as much as you will get finding it as a scout for someone else, or $138.00 more!

In my case, I only paid $0.90 for the book and realized a profit of $169.09, or 18,788%, and had it in my inventory for about two months.

I don't want to mislead you, this was a gem that I sold, and this kind of sale does not happen every day, but I do have a dozen or so such sales each month and you could too.  The difference in 12 such sales each month (for sales comparable to the example above) is $1,656.00 more in your pocket as an independent online bookseller than as someone's scout.

The numbers are dramatic, but when you also consider the hundreds of books I sell in the $10.00 to $35.00 each month, you can see that as an independent bookseller the totals add up to a lot.

One other thing to consider is the large number of books in the $8.00 to $10.00 range.  As a scout you might be instructed to pass on these books because the cost of the book, shipping it to a warehouse, and paying you a commission don't leave enough profit to be had by the service you are scouting for.  As an independent online bookseller, these same books could make you $5.80 to $7.50 each if you were to pay a dollar for them.

Thus, you can now see and understand why it is to your benefit to be an independent online bookseller and not just a minimum commission scout for someone else.  The costs associated with being an independent bookseller are covered by the sale of just a few books each month.  The sale of a single "gem" can cover the costs for a few months.

Thank you Kate Moss!  When I discovered your book on a bookstore clearance shelf and learned it was worth $200.00, I had to read it myself.  While it is mostly pictures, I enjoyed it, and then I got to enjoy selling it too!

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