The Truth About Christian Bookstores
October 2, 2008
Posted by Dan Edelen in : Miscellany, Writing Functions : Trackback,
Print This Post
,
Email This Post
As someone who worked for two years back in the 80s as an assistant manager/book buyer/Bible buyer/music buyer for two Christian bookstores, I know the behind-the-scenes realities. I know where the closets are that hold the industry skeletons, and I can tell you why things are the way they are.
I wanted to write about this topic a couple months ago when Frank Turk talked about Christian bookstores (at a link I can no longer locate), but Tim Challies’ focus on the issue of Christians buying retail from other Christians (particularly from mom and pop Christian bookstores) made this post essential.
So this post is about a few truths that I know about the business, plus I’ll ask a disturbing question at the end that I’ve been unable to shake.
1. It’s impossible for mom and pop Christian bookstores to make money selling just books, Bibles, and CDs.
The only lamentations that rival Jeremiah’s are those of Christians complaining about the black velvet paintings of Jesus, the WWJD? trinkets, the Precious Moments figurines, the Made-in-China Bible character toys, and all the whatnot that make up the average Christian bookstore.
But here’s a sad reality that most people don’t know: Mom and pop Christian bookstores buy most of their Bibles, books, and music through massive distribution houses that handle all the goods. Or, as we call them, middle men.
In my day, Spring Arbor was the primary Christian goods distributor. Most Christian bookstores, even the large chains, dealt with Spring Arbor on some level. As the buyer of books, music, and CDs at two Christian bookstores (one a mom and pop and one a not-for-profit chain), I dealt with Spring Arbor constantly.
What I learned firsthand is that a book with an MSRP of $10 would almost always cost me $5 to buy. If I sold that book at full retail, I recouped my $5 cost. That left me with $5.
See the problem? My “profit” left me with nothing except the ability to restock that book. No payroll, no building rental costs, no utilities, no nothing.
Which means…
2. Most Christian bookstores must meet their financial obligations by selling high-margin junk.
The WWJD? keychain that sells for $5 but cost the store $1 to purchase is what makes the Christian bookstore world go ’round and ’round.
No trinkets, no Christian bookstore.
Check out the last truth for an even deeper take on this.
3. Economies of scale dictate all those books you hate to see on the shelves.
Sick of seeing Joel Osteen’s grinning face staring back from book covers? Does it seem like every shelf in the bookstore has a book by Max Lucado or Joyce Meyer? Yet you can’t find that translation out of the German of the latest treatise on infralapsarianism?
There’s a reason for that.
When publishers have a mega-author, they can take advantage of a principle that Henry Ford pioneered: When you can make a boatload of something, per unit price drops like a rock.
So because the publisher of the infralapsarian book may only sell a thousand copies worldwide, while Mr. Osteen sells bazillions, economies of scale will tell you that the publisher won’t be offering much margin on it. Therefore, the bookstore is loathe to buy it when they can offer the high-margin Osteen book.
And since no one wants to go out of business, the bookstore rushes for the higher margin item and ignores the treatise you’re dying to read (and think that every Christian worth his salvation must be dying to read as well).
Of course, the very fact that the publisher printed up a bazillion of Osteen also hints that the Christian bookstore will be able to push a lot of Mr. Bright White Teeth’s books anyway. That explains why your local Christian bookstore is mostly stocked with bestsellers. You know, the books you, the discerning reader, wouldn’t touch for fear of having to explain yourself on Judgment Day.
It also explains another strange phenomenon…
4. So what’s up with all those cheap books by dead guys?
Well, let’s hear it for at least one glint of hope in all this. Many outstanding books by deceased authors exist in the public domain. This enables publishers to get around the sticky issue of paying royalties to authors and their estates.
A. W. Tozer is a classic example of this. He signed away all his books except for The Knowledge of the Holy, which, as many keen observers will note, is one of the only books of Tozer’s that’s handled by a secular publishing house. It also explains why that book, as slim as it is, costs a small fortune compared with Tozer’s other output.
And it also explains why Tozer, who has been dead since 1963, seems to have 800 books on the market. Publishers have free reign to repackage his old material any way they wish, so they keep regrouping his writings and calling them “new” books. Such is the case with many long-dead authors whose works are in the public domain. Publishers are free to jigger their output any way they wish and sell the “Frankenstein” book as something new. Publishers can sexy-up the titles, too, so that a book that 75 years ago was titled An Examination of the Tithe and Its Meaning for Our Times can be repackaged as Cast Your Bread Upon the Waters: How to Make Millions by Tithing. These books, while not bestsellers, are incredibly cheap to print, so they make money.
It all makes great business sense.
Still, for the mom and pops, even this won’t help because…
5. The big chain Christian bookstores that we love to hate can buy directly from the manufacturer much of the time. Mom and pop? Almost never.
When you’re a Family Christian Stores or Lifeway, you can negotiate material costs directly with manufacturers. Your buying clout means you get Osteen’s latest for $5 a unit and can sell it at a discount price of $18, while the mom and pops get it at $12 a unit and are forced to sell it at the MSRP of $25.
In short, mom and pop can’t compete on price and go out of business.
And I’m not even looking at the devastation wreaked by the push of Christian publishing houses into Wal-Mart and other spaces. For the mom and pop, fighting Family Christian Stores is hard enough, but when the crew from Bentonville encroach on your turf…well, you better have a different source of income for retirement than your bookstore.
Here’s the wackier outcome: Even the big Christian chains are finding it harder to compete against secular retailers. So they load up on black velvet paintings of Jesus standing at the door and knocking while their floor space dedicated to books and Bibles shrinks even more.
One other trend to note is that more and more churches have their own bookstores that are often run with no pretenses to making money. Sometimes they are even staffed by volunteers. So now churches are turning on mom and pop stores, too.
In short, it’s capitalism at work, pure and simple. Market forces are market forces. Goodbye, mom and pop.
Sure, some small towns still have that ancient Christian bookstore with the faded copy of The Purpose Driven Life at full MSRP sitting in the store window, but not for long. Internet bookstores are putting those folks out of business, too. No amount of Precious Moments figurines is going to stem that tide.
Challies’ post has a number of good comments from people lamenting this loss. Tim asks whether we should be throwing our business to the mom and pops out there.
It’s a tough call. While I agree that Christians should try to give business to other brothers and sisters in Christ, don’t those other brothers and sisters in Christ have to be competitive? I know that, as a businessman myself, my rates have to reflect what the market will bear or else I can’t compete, either. For that reason, I must adapt.
As I was thinking about this issue of the dying Christian bookstore, I had a startling question arise. It may be a foolish question. It’s definitely a dangerous one. No matter the case, I have to offer to you:
If God is sovereign (and we all believe He is), and He is the one who raises up and casts down, what does this say about the reality of the death of the small Christian bookstore?
I don’t like that question, do you? But it’s a question that must be asked nonetheless.
Comments are open and your thoughts are highy welcome.
UPDATE: I am told that my economic reasoning in #1 is as astute as that of a retarded garden slug high on LSD. For a better explanation of how retail credit works (along with a fine explanation of the Wall Street meltdown), check out this post.
You all like to talk about the shifting of Christianity to the Global South. And I couldn’t agree more. So, we got our own share of Christian bookstores too, but as Evangelicalism here is still here a minority compared to Catholicism, we don’t see big chains (yet) but mom and pop stores here and there.
So, you may think what you write in your post may be applicable to us down the equator line in the near future? I dare say no. Tell you why. I met someone at my church who told me he used to own a mom and pop that went out of business. I told him why and his answer made me sad and angry. When the store just started, he had people coming over to buy books and CDs -and maybe some trinkets too, he didn’t say this- but as the months passed less and less people came. (Oh, wait you may be thinking something is wrong in this account. After all, isn’t Christianity flourishing in South America?). Short answer: piracy made him go out of business. He noticed that even pastors (hope I heard him wrong here) were to blame. I mean, piracy of CDs mainly, because the average Christian guy here either doesn’t read his Bible or reads it and so has no time (oh, well money too!) to buy Christian books. And the few ones I knew bought some, bought the Oesteen’s equivalent here. For instance, once I had a sister come to me telling me how excited she’d been after reading “Good morning Holy Spirit” and learning that modalism was the way to make sense of the Trinity! Oh, boy. (back then, I didn’t know what the heck that was b/c I had just become a Christian).
Piracy in the Latin American Christian market is definitely a problem:
http://cookpartners.typepad.co.....acy-a.html
But it is also a problem for non-Christians. See, for example,
http://cookpartners.typepad.co.....0-pir.html.
Definitely piracy is on the move. Maybe so in the US? I remember that while waiting for the guys in my small group to come to our weeknight meeting, the host handed out to me a bunch of CDs to choose the environment music. Well, it turned out that most of them were…copies! When I pointed this out to her she seemed a bit embarrassed while adding that Keith Green encouraged that. Well, yes at that time I was making my way through a copy of Green’s bio I borrowed from her. But at the end of the book Green understood that it’s not sinful for Christian artists to charge for the songs they play and record. Not sure if he stuck to his whatever-you-can-afford policy ever since.
Btw, this makes me curious to ask Dan or others who worked in the retail how much percent of the sales (not the profits, we hear you Dan they survive on trinkets) corresponds to each of the categories: books, CDs and trinkets. My guess is that CDs may be the share of the lion.
Francisco,
Music can actually be a loser. I know of cases on certain artists that we lost money to stock them. Books are a break even proposition, though Bibles can have good margins, especially the high end ones. In fact, Bibles can rival trinkets for income.
I’m not too alarmed anymore about this. It’s nice to have the ability to drive a few minutes to get what I may need but really, the Christian bookstores are going to likely go away in the next decade because of the internet and larger chains that carry more than just Christian products.
I’ve not been a fan of Christian bookstores for a long time now. I’ve either purchased my materials at Borders Books, online for my Sony Reader ebook, or through Amazon and/or CBD depending on price. Most of the books I want aren’t even in stock at the stores so I have to order them online.
The truly sad thing is that most people who buy books in Christian book stores will never read them, any more than they will read the bible, which all those Christian books attempt to explain. I have only read a small handful of books that have given me an “AHA!” moment. Most are humdrum re-utterances of the obvious.
Now, as to your soul searching question:
What does it say about the death or disease of anything? Businesses fail for all kinds of reasons. What shall we say about the success of a MegaChurch that may as well have “Ichabod” written over the front door, while small fellowships, that exemplify what it means to be the body of Christ, shrivel and die? Small book stores fail for the same reason any Mom & Pop fails: Competition. Competition is shaped by the customer, and right now, the customer is shaped by advertising. When customers reclaim their role as human beings and stop following the Pied Piper of Iwannitcheap, then perhaps the rules regarding business success will change.
I noticed the other day that people used to have one or two items of good craftsmanship in their home, and little else, simply because they felt they should get the best, and the best cost money. Now we will our oversize homes to bursting with what can only be called junk, and pass up the articles of true craftsmanship because it costs too much. We probably spend more on the junk than we would have on the treasure, but it’s all caught up in this thing called “value.” We have lost sight of what true value means.
Imagine if Jesus had said, “The Kingdom of Heaven is like the man, who seeing a table full of junk, sold his treasure for a pittance so he could fill his home with trash.”
But it’s what we do every day.
David,
If you read some of the comments in Challies’ post, you hear a lot of people say that they got into the bookstore biz as a way to minister to people and now that has been eliminated.
In light of my question, why would God shut down a valid ministry? And why is it that the small guys, the ones who truly are looking at this as a way of helping people, are the sole ones getting killed in this shakeout? Why would God prosper the chains who only look at the dollar, while He lets the little guys who care about the people go out of business? Isn’t God greater than a bookstore’s competition?
As to quality, I used to save and save and save to buy that one thing of quality, but now that thing is so ridiculously overpriced compared to what it once was priced that I could save the rest of my life and not be able to afford it.
Several years ago, I saw a beautiful Art Nouveau (my favorite artistic style) dining room set that was done by a craftsman in the NW. It cost $28,000 for the dining table and eight chairs. Would I love to have that in my home? Sure!
But how would anyone justify such a thing when people who are losing their homes, are unable to pay their medical bills, and so on?
My wife and I have been married 12 years and we have purchased no furniture at all in that time save for four oak kitchen chairs to replace ones that fell apart. I examined the chairs carefully and thought they would last. They cost around $180 each when we bought them. Less than five years later, two of them broke to the point that they could not be used or repaired. The other two are not holding together, but we have to use them anyway.
And so it is with many people. They do not have the means to deal with stuff that falls apart prematurely, yet that is either all they can find or all they can afford. Many, like me in this case, think we have quality, but we don’t. I have always tried to buy real value, but I am afraid that real value is illusory for many people. They have no means so they are forced to buy junk. Stuff falls apart and they are forced to buy more junk. Many times they cannot save for anything of lasting value because their junk is always falling apart, and buying the needed replacement cannot be put off years or decades in order to get items of quality.
It’s a vicious cycle.
Psalm 73
Why would they go out of business? One of the reasons? Internet convenience. For better or for worse. Not only because it’s easier to google on the book’s or author’s name you’d like to buy and get a list of their works and buy it pretty quickly online but also because of this: if you get it this easy, why bother driving to the mom and pop after a demanding 8-to-5 job if you can have the book mailed to your doorpost? Duh.
Francisco,
I agree. Buying on the Web is usually much less hassle.
I buy most everything on the Web because I live pretty far from a wide selection of brick & mortar stores. Plus, I hate going from store to store to find one simple thing when I know I can find it on the Web in minutes.
My criteria:
Price: 60%
Delivery perks (speed, low price): 20%
Company Reputation: 20%
David,
I was thinking that exact passage when I was writing this. In fact, I think this passage for every post I write where it seems the “bad guys” are winning.
Still, given that almost all the mom an pops are dead, it’s disturbing. You would think that God would keep at least some of them alive. ALL of the bad can’t prevail and ALL of the good fail, can they?
When the business becomes more important than the message and we stock Osteen and Kinkaide stuff just to keep the doors open, it is time to find a different business model.
Having small church bookstores makes a lot of sense. Non-profit, and the books would be picked with some degree of discernment.
Matt 10:8 Freely you have received, freely give.
Obviously there are some costs that need to be recouped, but ….
Josh R,
What’s the different model you suggest? Churches don’t work well because, in most cases, their bookstores are not open convenient hours. Not only that, but they would tend to be sectarian, which makes it hard if you want to buy books by Watchman Nee or Smith Wigglesworth and the church is Reformed.
Fabulous post Dan.
As far as I’m concerned, the local Christian bookstore run as a service to the brethren when good Christian books were hard to find is a thing of the past. It’s time has long gone. The local church’s volunteer-staffed, not-for-profit bookstore is its replacement.
People opening these stores now are almost invariably wanting some form of income in a “Christian” environment. They think this will satisfy their two true loves — financial security and a lack of need for engagement with that nasty, sinful world out there. Thus the ever-increasing rollout of “Christian” businesses across every sector of the marketplace.
Which brings me to my conclusion: Most Christian bookstores now are not about Christianity but “Churchianity” — that lovely, gushy, feel-good land where everyone smiles at you as though they really were your brother. It’s a world filled with trinkets, dog-eared photocopies stuck to every wall, participation in any and every prayer meeting by any and every religious group (so long as we’re praying down some felt assault on our sensibilities) and bandwidth robbing on a vast scale as powerpoints and cheesy angel stories are forwarded and re-forwarded through cyberspace ad nauseum.
Not being able to satisfy with actual substance, Churchianity must keep supplying novelty to keep its enthusiasts coming back for more … the latest fad, fashion and freakshow combine to enthrall and help make (often non-Christian) marketers with a good eye for a sucker with too much cash on hand very rich indeed.
My solution: (1) Recognise that not everything with a “Christian” label is designed for your spiritual enrichment. Christian bookstores are simply businesses designed to take your money from you … just like any other. (2) Spend far more time serving the widowed, poor or hospitlaised than feeding your need for fell-good consumption. I guarantee that you’ll feel more fulfilled than ever before and you’ll have actually done something Jesus asked of you in the process. (3) Commit to the teaching of your good local church and support the ministry there. Spend your time at prayer meetings and bible studies, and your money in helping the pastor and members of the congregation who are in need survive. Not only will you gain far more spiritual edification than is possible from hours trolling the bookstores, you will become a vibrant and needed member of a community who truly cares about its members. Surely this is what “Churchianity” promises but cannot deliver.
Andrew,
Given what I wrote about the market pressures that force stores into Churchianity, how does a store resist that and still stay profitable?
Service.
Unless the coming stagflation/depression kills all the big box stores, I’ll never again set foot in a mom-and-pop expecting a good deal.
Rather, I’ll be expecting superior customer service and personal interaction. I’ll be looking for an “expert”: someone who doesn’t just push books to make a profit, but who knows (based on what I tell them about my preferences) that so-and-so’s new book is “just perfect” for me, or that I’d probably prefer band x’s CD to band y’s. Free coffee would be nice, too—and if they have a back room that they open up for free to the community for Bible studies? Even better. (Because really, if we’re in the middle of a study and realize we want a commentary or study guide… they’re right over on those shelves! How convenient!)
Indy retailers have never been able to compete on price. They’ve always had to compete on quality, service and aesthetics.
Dan,
Mom & Pop bookstores, clothing stores, camera stores, drug stores, clothing stores, you name it - are doomed in the new economy which requires large scale to succeed. M&P’s - regardless of merchandise type - are dropping like flies. Sure, there are rare exceptions but that’s what they are - exceptions.
IMO this is a non-issue and Challies’ blog as well as yours are unintentional tributes to the rock band Styx - “Too Much Time On My hands”. Unfortunately in this era of easy mass communication we (including myself here) feel that everything observed deserves comment and micro-analysis.
My take on this issue - lots of small stores are going out business - the fact that some of them some of them call themselves Christian is irrelevant.
Keith,
I’m actually stunned at your response.
What Challies raises is a good question: Do we Christians support each other? Yes or no.
I’m a Christian who fights hard to try to get Christians to understand how much we have to give each other cover. If we don’t watch each other’s backs, the snipers will pick us off. If we don’t hang together, we’ll hang separately.
I’m a businessman, too. If you read this blog long enough, you’ll know my positions on Christians and the business world. It pains me that we don’t help each other more in this regard. Should we not support our brothers and sisters in Christ in their jobs?
There’s too much marketplace sympathy and not enough sympathy for Christian businesspeople. That’s not a “Too Much Time on My Hands” issue.
I’m of the opinion that, all else being equal, I’m under no obligation to take a worse deal from a Christian when there’s a better deal to be had elsewhere. That would specifically include M&P bookstores whose prices can’t compete with what I’d pay at Amazon et. al. So I agree with the conclusions of this poster, if not his tone. It doesn’t bother me that M&P bookstores are disappearing because, honestly, I wasn’t buying anything from them to begin with. The only way I could see this being problematic is if there are book titles that simply can’t be purchased anymore because the large chains and online resellers refuse to stock them because of their limited popularity. In that case, the market is ripe for some sort of “rare books” Christian bookstore, that offers titles you can’t find anywhere else. At a premium, so they can remain profitable.
This one, perhaps?
Thanks, threegirldad! That’s the one. No wonder I could not find it since it was a guest blog.
I know a “mom and pop” bookstore that has all of its new books 30% less than the MSRP always. He also sells used books at a very cheap rate. So at least it isn’t terrible for all do it yourself Christian bookstores.
It’s not impossible, Brian.
He may be doing this as a non-profit and have other income sources. Some people do that. The bookstore is a sideline. Or they’re retired and don’t do it for a living. Those situations exist.
Or he may be a tough, smart businessman!
Gotta agree with Keith. The economics of it are interesting, but in the end….:yawn:
It’s a new world (and not a worse one, either, especially if you have Amazon Prime). For everything there is a season…and the season of the “Christian bookstore” is past. I don’t mean to sound overly glib about it, but the heresy they stocked and cheesiness they peddled for the last 20+ years almost makes it a relief that they’re going away. And if those things were justified by their need to stay in business, then they should have gone out of business years ago. I don’t start preaching heresy when attendance is down or giving is light in my church. If no one is going to come, we’ll close the doors. A shame? Terrible. But if the alternative is bad theology and bad taste, I’ll take door number 1.
Matt,
See my response to Keith.
I have worked at Barnes & Noble almost two years now. I loved it at first. I left full-time at a gas station for part-time at the bookstore. Then I had a hard holiday season, and my job became just a job. But after I found a book I really loved (”Quitting Church” by Julia Duin), my perspective changed. I look at my job more as a ministry now. I have more books to recommend: the autobiography of Chinese apostle Brother Yun; the ESV Study Bible.
I see the book business from many perspectives. When I go to mom-and-pop bookstores, I often realize how little I appreciate how we do things at Barnes & Noble. In many mom-and-pops, the aisles are too wide or narrow. There is too much or too little on the shelves. Books are strewn around haphazardly, even though the smallness of the store makes it easy for the on-site manager to see how sloppy their store looks. I think some people open small businesses because they hate how corporate managers drive them to be on their A game. Then you go in their stores, and you witness what a non-A game looks like!
The two worst situations: One store, a Christian music store, which also sells books, has terrible carpeting. All the music, which was not much (mostly on cassette, too, not CD), is behind the counter. The books are shelved in the back, often with other things piled in front of the shelves. The shelving has no uniformity. I expect that in a thrift store, not a retail shop. The last time I went in that store, a mountain of empty cardboard boxes was piled in the middle of the showroom.
Another store had a terrible location: on a downtown back street in a seedy neighborhood, facing the trench of a lowered freeway. Neither the store’s business card nor the Web site nor the voicemail listed the hours. I went on a weekday. It was open only on Saturdays. The place was marketed as friendly to self-published books, which is why I went. When I peered in the window, I saw a cart of retail, not self-published, clearance books at the front and not much on the shelves. When I returned on a Saturday, the clerk (dressed in T-shirt, jeans, and flip flops with no socks) had locked herself out. I have not gone back.
Books are expensive. Most non-discounted hardbacks that people buy run $24.95 or more these days. In some markets, that would pay for a month’s worth of cable TV, Internet, or cellphone service. The paperbacks are not much better. A typical trade paperback costs $14.95. I also frequent the bargain bins of libraries and thrift store book sections. Looking at all the A-list books of yesteryear (and this year) selling for a dollar can be discouraging. People see books they bought at retail price. Some shrug it off. Others vow never again. I find so many Bibles, some in unused condition, that I only reluctantly consider buying one new. That doesn’t take into account the pressure book businesses face from their chief competitor: public libraries!
Still, some Christians will not step foot in Barnes & Noble because we are “worldly.” (I think, too, that the Baptist Bookstore changed its name to LifeWay because many Christians would never go in the Baptist anything, and “the Way of Life” sounds arrogant on the one hand and cultish on the other.) They are willing to pay the premium to support a “ministry.”
I am learning, as I have tried hard to promote “Quitting Church” by Julia Duin, that selling books is hard! If you want to sell books for a living and make a living, you really will need to live on prayer.
Great information, thanks for sharing your experience and insight. I appreciate mom and pop businesses, but barring the unusual impulse buy, at the end of the day I am going with the online book seller and the best price.
Interesting post - Of course, I love books and love my brothers and sister in Christ who run Christian book stores. Honestly, though, I’m not too alarmed about the decline of Christian bookstores. Good books themselves are in good circulation among Christians it seems. Praise God for the local church. The real battle is there, not in the market. And thankfully, God has promised that neither the gates of hell nor capitalism will prevail against her.
I decided to shy away from my local Christian bookstore (a chain, non mom-and-pop), recently. I was searching for Francis Schaeffer’s “Trilogy,” and the bookstore didn’t have it stocked. I asked the lady who was working if they could special order that volume and she told me “I don’t know if we carry any of HER books.”
I do try to find things at the local christian store, but frankly I find it much more profitable, both from a budget perspective and a friendship forming perspective to buy books in the religion section of my local half-price bookstore. I find textbooks and other great Christian literature there, especially christian classics, that the Christian bookstore either doesn’t have or would charge close to double for.
Honestly, I can’t justify spending more money on books, at least at this point in my life, as a full time student pastor and seminary student and husband, than i have to, so I go where the best deal is found, and that’s rarely at the local Christian bookstore, and that includes my seminary’s bookstore. Even though they offer textbooks at a discounted rate, they rarely Amazon, which is where I buy most of my books.
Dustin,
I knew the authors. I knew the differences between the Bible versions. I knew everything I could possibly learn about what I sold as a Christian bookstore book and Bible expert.
I, too, am appalled by the lack of knowledge in most chain stores.
But then, is anyone surprised? Does anyone who makes less than $9 an hour know anything about the deeper aspects of their work?
But then, is anyone surprised? Does anyone who makes less than $9 an hour know anything about the deeper aspects of their work?
I’m not surprised now, but when I was in college in the late 80s, working part-time for a DoD contractor (nowhere near Christian retail), I was shocked that I could talk circles around any music buyer just by reading CCM.
Fortunately, none of them ever got annoyed when I threw in my USD $0.02 to other customers that eventually produced more sales.
Brendt,
I realize that I am fanatical about knowing about certain topics and researching them to the point of expertise. It’s why I was respected as a salesperson in my bookstore and computer retail sales experience. I got a reputation of always knowing what I was talking about, so people sought me out. At one point, Zondervan’s sales rep told me that I was the #1 store-based Bible salesman in all of southern Ohio. They had a nationwide sales contest and I sold so many Bibles that they had to create a separate sales category just for me. People would come into our little store and ask for me because I knew what I was talking about.
I made less than $10 an hour (in 80s dollars), but I saw my work as a ministry to others, therefore it behooved me to know what I was talking about so I could help other people. I don’t think most people look at it that way anymore. In fact, it just seems to me that more and more people are tired. You can see it in their posture. For that reason, they have little energy to invest in learning all they need to learn to do their jobs above and beyond the call of duty. (Heck, even to just the call of duty.)
Dan,
I wasn’t ragging on anyone (least of all you — your superlative history comes as no surprise). And I’ll gladly acknowledge that expertise on books/Bibles takes more effort than with music.
But my point is that I was more knowledgeable about my hobby than the buyer was about his job. And this being before Gore invented the internet, my only source was a magazine that the buyer could’ve read for free in his store.
Brendt,
Actually, I was simply expanding on your idea, not disagreeing with it.
I do that sometimes.
This is an excellent post and following discussion.
What used to be one aisle of good theology, real Christian classical books, Lewis, Tozer, Spurgeon has been cut down to 1/8 that size and I managed to pick up a few bargains. This is at a Family Christian Store, I also found they had the best deal on compact Bibles so I’ve spent a little more money there.
$25 total at Family Christian Bookstore
$200+ total at Monergism.com
$50 total at Amazon.com
So, comparatively, I have no need to go to the local Christian bookstore.
Why?
Because God’s command to be a good steward of the little money I have as a college student directs me to the best deals. I honestly believe that if we Christians look at competition as a bad thing we are missing the point. Yes, we should support our brothers, but good stewardship comes first.
Case in point, Gospel Tracts with the Law and Grace. WOTM used to be the only people who sold these gospel tracts and I’m sure that the revenue went to fund their television, radio, and other ministries.
Once other Christians with new creative, original ideas and methods of basically making enough profit to fund expansion into their ministry without gouging the evangelist, once these others entered the landscape, WOTM underwent serious cash flow problems and they had to ask for help from people to continue funding their TV and radio. This is my opinion on what went down, the two events are very close together.
So, was it wrong for evangelists to look for the best deals and different kinds of tracts (to get a better price and better design), thereby causing WOTM to ask for financial help?
Absolutely not.
The competition caused prices to drop, creativity to flourish, and it created many other ministries (customtractsource.com, evangelismteam.com, onemilliontracts.com, many, many more) in the process.
While we are talking about the collapse of a ministry (mom and pop Christian Bookstores), I understand that where I got my theology is where countless new Christians are getting their theology in a HUGE expansion of online ministry.
Sermonindex.net
Sermonaudio.com
Monergism.com
BlueletterBible.com
Spurgeon.org
ligionier.org
revivalschool.com
many etcs, etcs,
If God is sovereign (and we all believe He is), and He is the one who raises up and casts down, what does this say about the reality of the death of the small Christian bookstore?
Look at it long term, if I was born a hundred years ago, there is no way I would be able to accumulate the library of Spurgeon, but now I have that and more, instantly.
God’s doing something big here, we should get out of His way, and recognize what is happening. This transition from books to the computer is going to be just as instrumental in the expansion of the gospel as the transition to the printing press.
What about stores that compliment their new books with used books that are usually dropped off at the door at no cost to the book store? How do the used book stores fair compared to the new book stores?
Dan –
Someone linked me to your post here, and except for the public domain point, almost all of it is about half-wrong. For example, your first point here about how margin works is extremely near-sighted. In taking the example of selling one book, your paradigm is that your investment in starting the operation should be made up top you in the first sell-through. Well, that’s not true in any business.
I can tell you factually that WAL*MART runs its business not at a 50% margin but at something more akin to a 20% margin. So when it sells some item for $10, $8 is cost and $2 is profit — and in your view, that model is bound to fail because they don’t have enough money “left over” to make the second round of buys necessary to keep the operation open.
The right way to see that problem is “open to buy”. If you buy $100 worth of stuff when you start, that $100 of cost becomes a pool of money which gauges what you are able to buy in the future. So when you sell $50 at retail, and you paid $25 for those items, you now have $25 to replenish your stock.
The reason most mom and pops fail is because they do not understand this. They have no idea how retails works to generate a profit and repay the investment.
I’d comment on your other points, but I am out of time this morning.
Frank,
Thanks for commenting.
Your example of “open to buy” doesn’t seem any different than the example I gave. You can start with a $50,000 loan (good luck, nowadays) and have a pool of $50,000 to operate from that becomes stock worth $100,000 retail, but that $50,000 is all tied up in stock. If I sell it at a low margin, I’m basically gradually consuming my original loan, not generating additional profit over the top, which is what I need to keep going.
You can say that the actual potential sales value of the stock serves as a buffer, but then the worst thing that could possibly happen would be to sell a lot of goods because then you could never recoup the costs to repurchase stock if your margin fell below 50 percent.
Okay, so I’m stupid on how this all works. I admit that retail economics is not my area of expertise, which is why I never attempted to own a store that sells tangible goods. Still, I’m not seeing how your explanation is any different than mine.
Please stop back. I’d like to hear your comments on the rest of my points.
Maybe I’m missing something here. You take a loan for $50k and buy $50k worth of stock. You sell that stock at a 50% margin, i.e. $100k. Let’s say your expenses are 10%, so you’re left with $90k. Now let’s say the accumulated interest on your original $50k loan is $10k. So you pay that down, and you’re left with $80k in hand, plus your original $50k loan. You then buy $80k of additional stock and repeat the process. etc.
Buddy,
But the all you’re doing is perpetually leveraging your original loan with the assumption that it never comes due. That’s a recipe for disaster. It’s tied up in your stock and you still need to pay down the loan, not just the interest or else you are always owing the bank the original loan money and your real profits are illusory.
Re: perpetual leveraging.
In my simplified example, the loan amount doesn’t grow from cycle to cycle. However, your profits do. Suppose you were to repeat the process I described four or five times. At that point, your profit would be such that you could pay the loan off entirely and still have enough capital left to continue buying stock.
Also, consider that the initial pile of money may not have come from a loan. Or, may only partially have come from a loan. The retailer may have started with some seed money of his own. Suppose I start with $50k of my own money in the bank. I buy $50k of stock, sell it for $100k, and have $10k in expenses. So I now have $90k in hand. I can stop there and buy no more stock, in which case I profited $40k on my original $50k investment. Alternately I can continue, and invest some portion of that $90k in additional stock, which I hope to be able to resell for additional profit.
Buddy,
But then, as the margins shrink the leveraging becomes even greater and a company never truly can afford to pay back its loans. A wise friend of mine explained this in great detail and I will probably post his info with his permission.
Well, while my example may not be perfect, the point is still the same: Christian bookstores sell trinkets because they are high margin and high margin is always good, especially when many items are low margin, CDs for example.
As long as your margins are high enough to cover your expenses (including your salary) and loan interest then you should be able to devote some portion of the remaining profit to paying down the principal on the loan. To go back to real numbers:
I take a loan for $50k, buy $50k worth of stock, sell it for $70k and incur $10k worth of expenses. Interest on the loan for this period is $5k. I now have $60k in hand, i.e. my net sales minus expenses. Of that, I use $10k to pay down the loan. So now my loan amount is $5k less than when I started. I use the remaining $50k to purchase new stock, and repeat the cycle. After ten cycles my loan will be paid off. That frees me up to use that money for growing the business (i.e. buying more stock).
The simplest way to see it is this:
the $10 book is bought for $5. That initial $5 is your investment that stays in the business until some future point. The book is sold for $10, that gives you $5 top-line profit (to pay staff, overheads andperhaps even yourself - woo hoo) and $5 to buy the book again to sell it again. You might take $1 from the top-line profit to go towards a second book - this gives you $6 ‘open to buy’ assuming that your costs, fixed and variable, are $4.
So you sell 10 books at $10 in a day, and have $60 open to buy to stock 12 books to sell the next day, thus increasing your stock holding from your open to buy, not your overheads.
Kinda