Improving Inventory Turnover in Your Bookshop

The Benchmark of Bookstore Sales Performance

By Louis Gereaux

Many of us who have become bookstore owners have a passion for books.  To live the dream as a professional bookseller, we also need to maintain a strong interest in the basics of the retailing business.  A foundation of the merchandising business is Inventory Turnover.  One turn is completed when all items initially on hand for that year have been sold and replaced by new items.

(Elsie esq./Flickr)

Keeping track of turnover of inventory can be a problem for the used bookstore owner because there will be titles which come into the store and then go out in a week, while other titles sit on the shelves for years.  Many of your titles are unique books that you may only have one copy of. FIFO and LIFO do not make sense in this situation.  Is there anything wrong with keeping a book around for several years until it sells?  A used bookstore is not a supermarket with food that goes bad in a short time.  Additionally, if the used bookstore owner received money for those books which sat around for years, what is the concern?

Your browser may not support display of this image. Whether it appears this way or not, the books that are sitting on your shelves are costing the business money – if not in dollars then in the time it takes to manage those books.  Most bookstore owners have limited space in which to keep and display their inventories.  That space could be better utilized with books that turn more quickly.  As an online business, much time is spent managing inventory and revising listings – time which is best spent on faster turning books.

A more fundamental question should be asked – what constitutes a sale in the first place?  Does an item markdown in price count as a sale?  If a book that did not sell for three years and then finally sold for the initial asking price – is that considered a sale?  Sales transactions that count in most businesses are considered the sales of those items which have been bought and sold in a year’s time.  That should make cause wonder and consternation in the minds and hearts of many used bookstore owners.  They should begin to question whether they are following the standard procedures of inventory turnover or not.

It is possible to have too high of an inventory turnover.  But it often means these increased sales are at the expense of prices which are too low.  There are many adjustments to be made to find the optimum in turnover and sales.  Find an optimum inventory level which is manageable and price it right.  The merchandise should be sold within a year to be considered a turn for that year.  A good used bookstore can turnover its entire inventory between 2 to 5 times per year.

Your browser may not support display of this image. There are exceptions to these inventory turnover guidelines because, for example, rare book dealers are looking for long term appreciation of their books.  It may take a rare book dealer a while to obtain their asking price and to find the unique customer they need for their rare books.  However, rare book dealers should still be following the business guidelines of inventory turnover because they need to operate as a business rather than as a hobby, for tax purposes.

Here are some suggestions for any and all used bookstore owners to develop some inventory turnover practices.

  • Find ways to get rid of ‘dogs’ so too much time is not spent managing them.  Marking down the price is one way.
  • Determine some focus subject areas for the bookstore.  As a small bookstore, it cannot be all things to all people.  Have groups of books in categories, so customers have something to browse through, and may give add on sales.
  • Make time to list books right after they’ve been received.  Books that are not listed won’t sell, and inventory turnover suffers.
  • Look ahead to the whole selling season, rather than monthly when making purchasing decisions.  What types of books will people be buying this season – this year as a whole – what’s hot right now?
  • Pay attention to your fast turnover items – nothing sells itself… that is a retailing myth.  Make sure the winners receive the best possible listing and a profitable price point.

Article Reference

A MANUAL ON BOOKSELLINGAmerican Booksellers Association, @1974, pp. 97-101

Image:  Elsie esq. via Flickr

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  • For some reason this post is showing up as having pictures that won’t load.

    Another handy way to deal with turnover is to make a planogram and determine if there’s any hot or cold areas of your store and adjust the layout accordingly. There’s a post here on Book Shop Blog about that:
    http://bookshopblog.com/2007/12/06/have-you-planogrammed-lately/

    Sometimes simply moving the location of a type of books will get them to turn over faster. I couldn’t get true crime to turnover at all until I moved it to a completely illogical location. You’d think it would sell when located near mystery or biography or nonfiction. No, DIED in all those locations. I put it next to scifi and it started turning over at a good rate.

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    • Nora,

      Thank you for the comment. Your article about planograms is a hardhitting look at the issue of inventory and where to place books for improving sales.

      I find that when I sell at flea markets (I do not have a street storefront yet) that putting the books into categories is one of the biggest challenges. It seems that those categories mean everything, and yet, if I mixed the books up a little, sales might improve.

      I’ve also heard of organizing books by publisher which sounds strange with so many mixed topics that can result, but that might be another useful method for getting the slow movers noticed.

      Sincerely,

      Louis Gereaux

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      • Simply just shuffling what shelf books as part of regular alphabetizing can often boost sales in a section because customers that are in all the time to scan the shelves will suddenly stop and LOOK at the shelf. And suddenly some dogs will start selling.

        Or you can just do the occasional random grouping for an event that will pull together things that don’t normally go together. Like this April Fool’s section I did for Pastafarianism:
        http://www.flickr.com/photos/21881149@N06/2366159721/

        It was so popular I kept it up for almost a month. Where else would you find a grouping of books on pirates, pasta, beer, and global warming?

        (Church of the Flying Spaghetti Monster website: http://www.venganza.org/ )

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        • I like the idea of the April Fools’ section. Seasonality is an important aspect to most every business and we must keep that in mind.

          For instance on Valentine’s Day last year, I had several books on love and relationships and they sold at that time of year. I wasn’t thinking along those lines that even books are subject to the holiday purchasing habits of our customers, but they are.

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