In December of 2008 I decided to start Thrift It and online bookstore based on my discovery of software that could be used to manage the store. I had been throwing around the idea for about two years after meeting a 22 year old from Detroit who was processing 60,000 books a year out of his parent’s basement. I though if he could do then so could I. I laid out my plan and launched the business. In 2009 I sold over 100,000 books with ever growing revenues. Profitability was elusive because of infrastructure start-up costs but 2010 appears to be making up for that. This post will outline the five key elements that I’ve learned over the past year in starting an online bookstore.
1- Planning: They say that when you write a business plan and you estimate that you need $X to get the business going that you then need to multiply that by 5. Well my experience with this business is that you’ll need to do more then that.
The key elements of my underestimations were based on my lack of knowledge of how much space books can take up. You can envision how much space it takes to hold 10,000 books but until you actually have them inventory you have no idea how much shelving is actually needed. I currently have 55,000 books online and I have a goal of having 75,000 online by the end of 2010. I believe that I will max out my 9000sqft facility at that point. Plan ahead or you’ll end up paying for it in the end.
2- Supply: People always ask me where I get all my books from. The reality is that there are so many used books out there that you can find them a ton of places such as Bookstores, Libraries, Schools, Universities, Charities, and Private Individuals. The key here is to understand your local market in order to find and profitably buy the inventory you need. If you remember the guy from Detroit I mentioned earlier well he got all his books for FREE! He found a few libraries in Detroit that were paying to get rid of their old books. He offered to pick them up for free… Next thing you know he’s picking up 60,000 a year! The books are out there you just need to go find them.
3- Facility: The key here is room to grow. The hardest thing to do is to find a few months in that your facility is too small and that you need to completely move your inventory. I started out in a 1200sqft office and then moved to a 3000sqft warehouse and again (all in the first six months) I had to again move into my current 9000sqft facility. I wasted countless amounts of money have to continually move and redesign my facilities. Plan ahead and you will avoid many of the problems I encountered.
4- Software: There are two major players in this industry Monsoon, Inc and Indaba, Inc. While I started out with Monsoon’s Pro-warehouse Edition I had numerous problems with their software and their support team. This led me after a few months to switch to Indaba Inc’s Program. Since switching I’ve been in close contact with the company’s owner Gary Jones and his whiz software designer Shin Yu. These two are the reason that I would recommend Indaba over Monsoon 10 to 1. Finding the right software provider is a key element to profitability in this industry.
*Software note* – You’re also going to need shipping software! I’ll write about this again later.
5- Logistics: Once you have your supply, your facility, and your software you then need to find a way to pick-up and/or have your inventory delivered. You then also need to be able to get your sales to the post office and/or to get them picked up by your shipping broker. This is a very complicated task at first. Making a decision as to whether you want to have your own truck or if you want to outsource your transportation is mostly dependent on where you inventory is coming from. If the inventory is local then you it may be cost efficient to have a box truck for local pick-ups. If it is coming from various states then you may want to utilize a trucking or logistics company.
This is a very basic overview of what it takes to sell books online. I’d be happy to answer any more specific questions you may have!