"Running the Numbers" and Considering

"Online Bookselling:..."
This Page Last Updated 08/20/2006, 16:25PST

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I recently received an email from a customer that was interested in my book, but had personal reservations about all things being marketed on the Internet.  Her message posed the following:

"I am considering online bookselling as a second income source, but I don't have money to waste and would like to know what the realistic cost of getting started would be before I even buy your book about it.  I have bought other "opportunity" books before and found them to be worthless because there is no way I could come up with the money to even get started, so anything you can tell me about the up front investment requirements, recurring costs, and how much of my time would really be required will help me decide if I am interested in buying your book.  Based on what you have posted on your website, you seem like an honest guy that is being straight, but I can't afford to be scammed again."

I appreciate your candor and understand your skepticism, I have read about many of the "opportunities" you eluded to in your email.

There are a few variables with respect to the start up costs that include:

Whether or not you have a computer, printer, and Internet connection.

Whether or not you have a cell phone.

Whether or not you already own some shelves to store the books you buy for inventory.

How many books you are able to buy for inventory, their cost, and their resale value.

Since you emailed me, I am going to assume you already have a computer, printer, and Internet connection, and since cell phones are so prolific now, I am going to assume you have one.

Lets assume you want to start with 300 books and will need to buy a bookshelf for them.  Lets also assume that you want to start on a shoestring budget and are willing to buy a bookshelf unit for $50 at a local thrift store.

The next thing we need to do is establish how much the books are going to cost you (and lets assume you are investing $25 for my book + S&H) so you can learn to distinguish the books that will sell online versus buying a bunch of expensive firewood.  By making these assumptions, and that the 300 books you are going to start with will cost you about $1.50 each, I have built a spreadsheet for you to see the numbers, but before we get to that I want to outline a few other things.

So, now you have 300 books and you are ready to put them online, so there is a seller's merchant account to consider that will cost you $40 per month and is worth paying if you are going to sell at least 40 books a month.  If you choose to start out smaller and sell fewer books while gradually building an inventory, you can list your books free, pay the same online sales commission, plus a $1.00 fee per book sold, this fee is not paid with the merchant account mentioned above, hence the discussion of 40 book sales per month making it worthwhile to to get a Pro Merchant account on Amazon.com.

Thus, your total investment would be on the order of:

Bookshelf                 $   50

My Book                   $   25

Inventory Books       $ 450

Merchant Account   $   40     (recurring)

Total                          $ 565

Now lets talk about how long it might take to recover your investment. 

This too requires a few assumptions such as:

What percent of new listings sell in a month: I personally see about 35% of my new listings sell the first month and 7.5% of the remaining books sell in each subsequent month.

How much profit per book will you realize after paying marketplace commissions.

How many books will you add to your inventory while selling others?  If you want to grow your business, you need to add more than you sell.

To demonstrate a realistic sales and business growth rate, I have made the following Excel spreadsheet and would be happy to email it to anyone that would like to put their own numbers in for the "Analysis Input Parameters" and monthly growth rates.