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Sector Spotlight: Bookstores

The bookstore sector generates an annual turnover of $1 billion

Canada’s bookstores are fighting back against Amazon with book signings and in-store cafes. With e-book sales stagnating, the death of the bookstore has apparently been exaggerated.

Facts & figures*

  • The bookstore sector generates an annual turnover of $1 billion
  • There are 1,056 bookstores operating nationwide, employing 11,930 people
  • Independent bookstores face stiff competition from eBooks, Amazon and chain stores
  • But to remain competitive, they’ve fought back with in-store cafes, specialist books and book signings with popular authors
  • Sales of eBooks, which account for 17% of total book purchases, have stalled while there’s been a resurgence in paperbacks (54.2%) and hardcovers (23.9%)

*Sources: IBISWorld , Booknet Canada , Canadian Business

Brief overview

Canada’s earliest booksellers, Jean Seto and Joseph Bargeas, were based in Montréal and started importing books in the 1840s and 50s.

James Rivington was the first bookseller dealing in English-language books, setting up shop in Halifax in 1761.

It was common for early booksellers to also act as printers and binders.

During the 1900s, Canada-based booksellers would purchase their stock from three sources: direct from British publishers; from American printers who sold pirate copies of British books at a significantly lower price; or from Canadian printers who pirated British editions or reproduced them under licence.

Booksellers in Canada performed well until the late 19th century when the coast-to-coast railway lines expanded. Canadians instead started buying books on sale at ‘railway stalls’ or big department stores that sold books at a loss to attract more customers.

Many independent bookstores were unable to compete and were eventually forced to close.

 Fast forward to today, the largest market for new books in Canada is in Ontario, with 45% of bookstores based in the province. Around 70% of all books sold in English are imported from the US; Canadian books only make up 20% of the market.

Diversifying in the age of Amazon

Relying solely on the sale of books is risky as profit margins are extremely tight. And diversifying beyond simply selling books gives customers a reason to eschew Amazon and helps to build a regular customer base.

Operating as a bookstore café could be a great way to diversify your business and boost your turnover by selling tea, coffee and food.

To set up a café you must apply for the licenses required to sell hot beverages and food on your premises. Serving cold food such as sandwiches and cakes will allow you to prepare food in a small space without needing a substantial kitchen.

You could also host social events, such as reading sessions and book signings.

You may want to consider giving out loyalty cards and having special offers to entice customers to frequent your store over other retailers in the area.

You could also sell and hang on your walls local art or sell vinyl records – also, like books, refusing to die as predicted.

Selling online

Amazon has made life much tougher for main street booksellers – but if you can’t beat them, why not join them? If you’re keen to break into the industry but lack the capital to purchase a bricks-and-mortar business, setting up online is a low cost, low risk alternative.

Setting up as a book retailer on Amazon or eBay is a great way of running an online bookstore without having to set up your own website. You can benefit from Amazon’s established customer base, with many booklovers using the renowned site as their go-to for low-priced books.

However, you must consider the fees involved.

Booksellers can send their stock to Amazon, who then store, pack and ship books to customers on the seller’s behalf. This programme is called Fulfilment by Amazon (FBA). In April 2017, Amazon increased their FBA fees, resulting in a reduction in book retailers selling on Amazon.

US booksellers benefit from Media Mail, a cost-effective way to send books through the US postal service. Unfortunately, Canada Post doesn’t offer an equivalent service.

Set up a shipping account with Canada Post, Fedex, DHL or UPS to reduce your shipping rates. The higher the volume of books you sell, the lower your rates will be.

Canada Post has a Solutions for Small Business programme, which offers small yet immediate discounts for online enterprises that rely heavily on shipping.

There are a number of ways to build up an inventory of second-hand books either for free or at minimal cost. Websites such as Freecycle and BookCrossing offer cash-strapped entrepreneurs a chance to accumulate a diverse inventory of pre-owned books.

With second-hand stock, it’s important to take the book’s condition into account when setting the price.

Essential attributes

  • Passion for books and reading
  • Customer service skills
  • Talent for sourcing books, managing inventory and organising orders and deliveries
  • Strong accounting and cash flow skills
  • Willingness to host events and reading clubs and experiment with other attractions beyond selling books

Overcoming challenges

With Amazon and Indigo dominating the marketplace by offering unbeatable prices and speedy delivery, it is difficult for the humble, independent book retailer to compete. So the best advice is: don’t try to compete – at least on price.

Try to offer things that these giant corporations can’t, such as great customer service and advice, a tranquil physical space in which booklovers can relax and read, and social events where readers can discuss books and meet authors.

Promote these services through your website and social media.

Department stores and chain booksellers are another big challenge for independents. Buying thousands of copies of the same book, they benefit from a lower wholesale price and can more readily offer steep discounts and two-for-one offers.

Independent stores don’t have as much cash or storage space to buy in bulk. Carving out a niche for your store by offering specialist books – for example history books or foreign literature – could be a great way to give yourself a unique selling point.

It helps if your staff are experts in your chosen field, so they can advise customers on specific topics and recommend authors they perhaps haven’t heard of. You will be the heart and soul of the business, and your staff should ideally have a passion for reading too. This can be another major advantage your store has over chain stores.

Postage costs are a big challenge that online booksellers must face. In America, all main shipping depots are centrally located and the country is divided into quarters, which lowers the cost of shipping. However, due to Canada’s colder climate in the north, most of the population lives near the border, so shipping is done over larger distances, increasing costs.

There are not many ways for online retailers to overcome this issue. Just make sure that you research the various postal and courier incentives on offer for small businesses. It is worth researching the shipping discounts PayPal offers, for instance.

Buying a bookstore

If starting a business from scratch seems daunting, you could consider buying an established bookstore – with loyal customers, fitted out premises and inventory in place – instead.

When buying any business, it is important that you carry out due diligence checks, which means checking the trading accounts, visiting the premises and checking all relevant paperwork with the help of a professional advisor.

Find out what volume of stock is included in the sale price, the genres included, the condition of the books (if second-hand) and if any valuable or rare titles are included.

Also consider location – in particular footfall and the number and quality of competitors in the local area.

It’s also a good idea to have an understanding of the bookstore’s reputation. An easy way of doing this is by gauging the positivity or negativity of social media mentions of the store using social media sentiment analysis tools.

Krystena Griffin

About the author

Krystena Griffin writes for all titles in the Dynamis stable including, and as well as other industry publications.


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