By that you mean nice carpeting and polished wood, soft lighting—
The whole nine yards. We weren't getting women to our downtown location in the proportions that most people have women as shoppers, perhaps because our area was a little bit edgy.
It was a developing neighborhood?
It was an undeveloped neighborhood—mostly warehouses, wholesalers, and auto repair shops. Kind of funky stuff, but not retail. Not restaurants and bars. Now it's all high-end national and local boutiques, and dozens and dozens of restaurants and bars. It's quite fashionable, I suppose.
In any case, I wanted to see if we could capture a different audience if we opened the store in a suburb, and that went well. And each year for about six years we opened a store. First, we did a travel bookstore downtown in about 1985. Then the Hawthorne District stores in about 1986. Then the cookbook store...somewhere in there we opened a store in the airport, and a technical bookstore. So I was both interested in segmenting books like technical and travel and cooking, and I was also interested in demographics, like urban centers, suburbs, and airports. It sounds like it was planned, but it wasn't. It was just opportunity and impulse. The only one of those that we don't have any longer is the travel store. The Internet took that business away enough to justify not keeping a whole store solely focused on the subject. And the cookbook store sort of morphed into a lifestyle store, with gardening and cooking and interior design. And now we have three stores at the airport.
What did you find with the suburban store that you built to look like Borders or Barnes & Noble?
Well, we were going to build a fairly fancy store in the suburbs—nice white shelving, a tile floor, banners over the aisles, and colors, and so forth and so on. But the aesthetics weren't right. So the first chance we got to get rid of all that, we did.
You shut the whole store down?
We moved it. And when we moved it, we moved it into a larger space. And at that point we went back to wood shelves. Pine wood, cement floor, more of an industrial look. That has always worked for us well downtown. That was my misreading of the suburbs—that I had to sort of pretty it up, and I was wrong. We've more recently moved that store into a space double the size—thirty-two thousand square feet. And once again we have a cement floor. In fact, the ceiling has exposed insulation as a sort of architectural touch. It looks very industrial.
Why do you think that works?
People want a calm background for the books. I don't think they need...I think Borders's and Barnes & Noble's message is "Buy the book and get the hell out of here" in some subliminal way. It's too bright, the shelves are low so everybody's watching everybody. You feel very exposed. Our shelves are about twelve feet high. You live in these little alleys, and there's a kind of cozy feel in that that makes it comfortable for customers. And you can sit on the floor, you know, you can spill something on the floor. It's not a big disaster.
You don't have to worry about messing up someone's living room.
No. And the used books look more comfortable in that environment, because they look a little shabbier when they're too exposed. So, that's where we are. In 1994 we went on the Internet with the only inventory we had in the database at that point, which was the technical bookstore. I'd only been up for about a month when I got a letter from England from someone saying, "I was looking for this technical book, and I was told in England it would take six weeks to deliver and would cost me the equivalent of a hundred dollars. So I thought, ‘Well, I'll just check out the Internet and see.' You had the book for forty-five dollars and you could get it to me in three days."
When I read this, I thought, "Holy hell! Here's an opportunity." So we got all our books into a database. We had what we called "the river" and "the lake"—there were all the new books coming every day that had to get entered, but we also had to back enter everything that was currently on the shelves. So it took a year.
Is that lake dried up now?
The lake is now part of the river. And we built up the Internet business to where it was about a fourth of our sales. So we were an early adopter for selling books online. Amazon came along, of course, and blew right past us. But we sell a lot of books via Amazon, and we sell books via eBay and Alibris and AbeBooks in addition to on our own site. We also carry inventories from England and Germany—our books are drop shipped to the customer. We do what we can.
I imagine that most people think of you as being in direct competition with Amazon. But, in fact, you're actually doing a lot of partnership with Amazon?
Well, I don't know. We are in competition at one level, certainly. I'm sure some of our business has turned over to Amazon. But I'm not foolish about it. If there's an opportunity to sell books, I'm going to sell them. Amazon is my opportunity. And we sell some new books there, but mostly used.
So you ship to Amazon and then they repackage and ship them?
No, we package and ship. We can ship in our boxes with our materials inside. So we can brand that shipment. They're good with that. And if somebody just orders a new book from us, we'll usually have a wholesaler fill that order. Ingram or Baker & Taylor drop ship for us in our boxes, so it cuts out shipping to us. That works well. We do the same thing with Gardner Books in England and Lieber in Germany, both wholesalers. And it works. Some of it is hard. It's not easy—a lot of infrastructure crossed with the Internet.
What are some of its particular challenges?
I think everybody, me included, thought the Internet was going to be this miracle way of making money, because for not very much money you could make all these books available around the whole world. Well, people didn't count on all the software writers you need to keep your Web site hot and current, or the editorial work that has to go into maintaining a Web site both in terms of the tracking game and also making it sticky for people to visit and to find value there so that they'll shop with us. Because we don't discount the books, you know. It's a small number—twenty, thirty books—otherwise it's retail. You would think we'd have no business, that people are nuts for ordering books from us.
Because there are cheaper places?
There are cheaper places. And yet, the brand, the interest, whatever...we maintain a good new book sale. I won't say it's growing, but it's steady. There's a lot of price competition in both the used book world and in the new book world. So it's been hard to build that business, but we think we can. We have a lot of people who visit the site but don't stay, and we have to find a way to encourage them to stay. A small percentage of these customers mean a lot to our business. My daughter's working with some consultants to redesign and redeploy our Web strengths.
The site certainly has a wonderful array of resources—interviews with authors, blogs...
We Tweet; we do everything. We do everything we possibly can with the resources we have. I always say that the people I have working on our Web site are a rounding error for Amazon. Amazon would have thousands of employees dedicated to what I have twenty dedicated to. On the other hand, I have to say we go toe-to-toe with them. They have things we don't have, but we have things they don't have. Sometimes they have them pretty fast after we have them, but we think of ourselves as innovators.
One of these recent innovations is our online buyback. Anyone in the U.S. can go to our Web site, check via a book's ISBN number to see whether or not we want to buy it, and then find out how much we want to pay for it. We'll pay the freight; all you have to do is box it, print out our label and packing list, and ship it in. Once it's received and we've checked the condition, we'll pay you via PayPal, or you can get virtual credit, which you can spend as you will. That has given us a pretty hefty flow of books.