ABE -- To The Summit And Back

Secondly, Abe is still a good deal. Maybe no longer a great deal, but with an effective 12% commission and a listing fee, it is still probably much cheaper per book sold than the cost of operating a storefront. It may be hard to see this when a few years ago, the commission rate was zero, but it is not unreasonably priced for what it offers. If it were, the calls we have heard from a few dealers for a mass defection would be answered. Reality is, most will continue to make money from Abe, though not as much, and as long as it is profitable, they will stay, all of the grumbling notwithstanding. You see, for dealers this is a business decision too.

However, this is no reason for overconfidence on Abe's part. What is happening to dealers is somewhat contrary to normal experience. Usually, as technology advances, prices come down. The computerized systems most booksellers use to manage their businesses cost but a fraction of what they did a few years ago. However, the cost of selling on the internet is going up. Probably, it started out too cheap. Meanwhile, increased competition and an enormous increase in the number of listings are bringing sales, at least for some dealers, down. While the bookseller is the immediate victim of this squeeze, Abe needs to be aware that it is a threat to them as well. It was hard for Abe's competitors to gain traction when Abe was so cheap and effective. However, if you squeeze too hard, cracks will appear in the armor, and openings for competitors will arise. This is particularly a challenge for a company like Abe, which while a leader, does not dominate its field like an eBay or Amazon. When all Abe charged was some modest listing fees, there wasn't much incentive or opportunity for others to enter the business. Now, with 12% of sales along with the listing fee, this looks like a much more interesting opportunity for competition.

Of course, Abe will continue to compete against the usual list of suspects, Alibris, used book departments from Amazon and eBay/Half. Biblio is trying to make headway by being like the old, more dealer-friendly Abe. But, all of these deal with the same type of cost structure that Abe does. They may succeed in further fragmenting the industry, or perhaps one will assume more of a leadership position, but their costs mean that they are unlikely to seriously compete based on price. The result is none is likely to be all that much more help to the dealers' business equation, unless they can do a much better job at selling than Abe does now.

However, technology normally moves costs down, not up, and as the dealers' costs rise, the opportunity for the creation of new competing technologies rises with it. What might those be? No one can say for certain, but take a look at Froogle. Froogle is Google's search engine for products offered for sale online. It is not well organized yet, but it is free. Sellers need only put their products up for sale on their own website, a relatively inexpensive proposition, and notify Google. Your books can now be found by anyone in the world in a nanosecond. This technology links listings on thousands of dealers' individual sites into one large database, and the current price for the service is zero. Froogle may be ugly, uncategorized and inconvenient today, but it would not be that difficult to design it to search only book sites, and present fields in a rational order, the way the book sites do. What is important here is that Froogle is relatively inexpensive to operate compared to a listing site. Lower operating costs mean it can be sold to dealers for a lower price. Now that Abe is more expensive, the opportunity to offer such competing options both profitably and at a considerable savings to dealers has grown. Unhappy campers will look for new campgrounds. Abe's campers today are a little less happy than they were a month ago. Abe should take this risk seriously.

This article has generated several Letters to the Editor which can be found here: Click here. Others are found at Click Here.

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ABE -- To The Summit And Back

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ABE -- To The Summit And Back

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