The second news item to appear in the past month was the announcement by Alibris that they would be going public. No date has yet been set for the offering of stock nor have they yet estimated how much money will be raised. Alibris is second only to Abe in the category of used book websites. Their fees are hefty: 20% of the purchase price. Unlike Abe, all of their sales are through their website. You buy from Alibris, rather than from an Alibris independent bookseller. A downside to this fee is that some booksellers will charge more for a book on Alibris than for the same book sold elsewhere, although this can happen on Abe and may happen more in the future with their increased commissions.

Exactly what Alibris plans to do with the money they raise is unclear. In their recent filing with the Securities and Exchange Commission they say, “We presently intend to use a portion of the net proceeds from this offering to grow our product supply, expand marketing and sales and invest in technology and operations infrastructure. In addition, we may use a portion of the net proceeds of this offering to acquire complementary technologies or businesses…” That’s sufficiently broad and vague to not really tell us much of anything. Their financial reports show rapid sales increases, more than doubling between 2001 and 2003, but also show significant losses and cash outflow. The offering may be more about funding current plans until the company becomes cash flow positive than about funding new ventures. As to whether this stock offering is a vehicle for current owners to cash out, none of the shares being sold are those held by present shareholders (all are being sold by the company itself). However, current shareholders will be able to sell most of their shares after a waiting period of no more than six months (and the rest within a year) if they so choose. To see Alibris’ SEC filing, go to Hoover’s Online at http://www.hoovers.com/alibris/--ID__100912--/free-co-factsheet.xhtml.

Returning to Abebooks, its increase is not quite as substantial as it may seem. The reality is many transactions generated through the Abe listings are concluded outside of the Abe website. Abe sellers’ names are visible. You can contact the Abe seller directly about a book before placing an order. Personal relationships between seller and buyer are very important to many booksellers’ businesses. Rather than closing off this relationship, Abe facilitates it. The downside for Abe is that through these independent contacts, the bookseller can simply sell the book directly to the customer. The seller can avoid paying the commission and Abe will be none the wiser. This is a common practice, and probably the rule when it comes to expensive books. Abe has preserved the important relationship between buyer and seller, but the reality is this is a major loophole in its ability to make money. Were it not for this loophole, Abe might well charge a substantially lower commission, one that most booksellers might consider de minimus.