73. Used Bookstores

is the Chase Sapphire Lounge at Boston, Logan.

You got Clem Chowder.

In New York, Dirty Martini.

Over 1,300 airport lounges and one card that gets you in.

Chase Sapphire Reserve, the most rewarding card.

Learn more at chase.com/slash sapphire reserve.

Cards issued by J.P.

Morgan Chase Bank and a member FDIC, subject to credit approval.

With the growing population and the growing popularity of energy-consuming tech like AI, the modern world needs reliable energy sources to meet increasing demand.

Wind and solar are powerful, but not always available.

The unmatched reliability of natural gas makes it vital for our energy needs.

People rely on oil and gas and on energy transfer to safely deliver it through an underground system of pipelines across the country.

Learn more at energytransfer.com.

A few years ago, Francisco Hernandez opened a bookstore, a physical bookstore.

Some people just flat out thought I was crazy.

When I was starting out and I was talking to bankers and brokers and lawyers, they were so skeptical.

They kept asking me questions like, you're not going to really sell books, right?

You're going to sell coffee, you're going to sell wine or beer or, you know, sell drugs or something to make this viable.

Hernandez's store is called Leaves.

It's on a tree-lined street in Brooklyn.

And it doesn't sell wine or beer or coffee or drugs.

It sells used books.

Books with worn covers, inscriptions, and that distinctive smell of old paper.

Buying a secondhand book, you're part of something bigger immediately because somebody else had that.

You're already in commune with somebody else over space and time.

There's something that is really special about that.

It may be special.

But the average used book isn't exactly a valuable commodity.

Americans throw away around 320 million of them every year.

We read them once or twice, or even not at all, and they end up being a bulky nuisance in the garage.

Used bookstore owners like Hernandez have access to a virtually unlimited pool of inventory, but they have to make a series of calculated economic decisions to figure out what's worthy of shelf space.

Every bookseller is going to have a very different cost-benefit analysis based on what you would think of as their brand.

Some books can be there as a conversation starter.

Some books can be there because they're fun and funny.

Some books should be there because their social and political importance are so huge that it needs to be in the public's eye.

But most books have to earn their rent in the store or else you don't make money.

For the Freakonomics Radio Network, this is the Economics of Everyday Things.

I'm Zachary Crockett.

Today, Today, used bookstores.

Francisco Hernandez says he wouldn't have known how to run his bookstore if he hadn't worked in someone else's first.

I started first learning how to buy and sell books at a place called Alabaster Bookshop in Manhattan on 4th Ave.

Bookselling is a bit like a guild, and you really need to learn under someone to learn the tricks of the trade.

It's weird sometimes what books are valuable and which ones aren't.

It became different to look at them not just as vehicles of knowledge or as like insight, but also as art objects.

I learned to appreciate dust jacket design and the physical construction of the book.

And I learned a lot about the history of how they were bound and how they were printed, which is its own art form, really.

Today, more than 50% of print books are sold by a single company, one that probably doesn't think much about books as art objects.

There's nothing that competes with Amazon.

They can out-compete everyone in price, and you can click a button and have that object come directly to your door in like one to two days.

That's just an incredible amount of efficiency.

If you're buying a textbook for a class that you don't really care about, nothing beats Amazon.

After Amazon opened its online store in 1995, the number of independent bookstores dropped by 43%.

But the industry has rebounded over the last 15 years.

Today, there are around 2,500 independent bookstores.

And according to the American Booksellers Association, there are another 200 or so stores planned to open in the near future.

It seems that some book buyers still want to browse shelves that have been curated by knowledgeable booksellers.

We're not selling books as much as we're selling an experience.

You could leave with friends.

I mean, people have met people that they loved.

People have gotten engaged in that space.

It's important for not only there to be books in that space, but booksellers and book lovers.

Sometimes that's other customers.

Sometimes that's me.

Sometimes it's my staff.

Bookstores may not have all the answers, but we have a large amount of resources to help explore those existential and emotional questions that people have about the world around them.

The algorithms are just not there yet to help us find those things.

Modern used booksellers don't have the luxury of stockpiling millions of books to compete with the thousands of sellers on Amazon.

They have to be a bit more discerning with their inventory, partly out of financial necessity, which is why you won't find any dust on the shelves at Leaves.

The turnover is so high, books don't have time to accumulate dust, really, which is important that it doesn't feel like you're pulling off these old dusty tomes that have been sitting there for 20 years and that everything feels very fresh and relevant.

Leaves sells books at a wide range of prices.

On a table outside the store, you'll find discounted books for $2 to $5.

In the back, in a glass case, there are first editions and collectibles with price tags in the thousands.

In between are more cheap books, magazines, a kid's reading nook, and a big selection of fiction.

Which is really the beating heart of the store.

So it's in the very, very center.

And then off to to the side, we have a lot of nonfiction.

And it kind of, the model for how it was put together was that it was more and more abstract as it went along.

It started off with language books and biographies and things that were easier, I think, for people to access socially and emotionally.

And then it gets to the

literary criticism and critical theory and esoterica.

Most of the store's inventory comes from people walking in with books they don't want anymore.

The biggest thing is always, well, it comes through the door.

People who come in physically with books.

And some people will come in and they need them out of their space, so they just donate them.

And then some people want us to buy their books.

If we can sell it, we're always willing to pay money for it.

So what do you do when someone walks in the door with like a cardboard box full of books?

The first thing I do is I pull them all out because I want to look at them and I want to touch them in the way that I think somebody who's going to buy it is going to touch them.

They're going to test the spine to see if it breaks.

So you want to go through it physically and test for condition.

And then usually I sort it out.

Say, hey, these are books that we, they might be great, but we're not able to offer anything for at the moment.

These are books we can offer maybe 20%.

These ones we can offer more.

Then sometimes we'll separate out special cases for books that I'll have to look up or do research on.

Sometimes I need to go to the library and take out a reference book in order to figure out what edition is this, how many copies of this book were made.

But often we're just making piles of books and separating them based on how well we think they'll do in the store.

And we try to do it quickly because time is important for people in New York.

What kinds of books are easiest to sell?

That's the paperback fiction.

We churn out so much of it every day that it supports everything else, really.

People are reading a lot of science fiction and fantasy.

I would say there's a tendency towards escapist books rather than reading maybe philosophy or current events.

People are in an escapist mindset right now.

And are there certain types of books that you have to turn away because people bring in too many of them?

Yeah, it tends to be like popular crime fiction and hardcover.

Sometimes it's Bibles.

You tend to have issues with things that are publishing fads.

Those clog up secondhand bookstores really quickly quickly a few years down the line.

Hernandez typically offers 15 to 30% of a book's resale value, or more if the seller is willing to take store credit instead of cash.

But some popular books will fetch a higher price.

Let's say, for example, we've got a $10

book of fiction, a paperback, that I think will sell very quickly.

We could pay up to $4

in cash, maybe $8 in store credit.

That person who brought in that one book may be able to leave with another book as like a swap, in part because I know that that book is going to sell so fast that it'll just become cash very quickly versus a $10 book that might sit for a long time.

Maybe it's a biography or history book.

I might pay $2

for it and get $4 in store credit.

That is going to have to pay more rent, really, because it's going to sit on the shelf for longer.

And collectibles, like first editions and signed books, tend to sit on the shelf for even longer.

If it's worth $500, but I'm going to have it for five years, I might want to pay $100

because the time to photograph it, to catalog it, might be 50 extra bucks, it might be 100 extra bucks, and then the time that it takes sitting on the shelf might be another 50 bucks, might be another 100.

You're in total paying 250 to 300 for a book you're going to sell for 500.

You net out like half.

If the book is really valuable, then you make more money in lower margins.

But walk-ins aren't the only way Hernandez acquires books.

We've gotten books from dumpsters and on the street.

Dumpsters?

Sometimes libraries or schools will just fill a whole dumpster full of books that they're getting rid of.

That's coming up.

The Economics of Everyday Things is sponsored by LinkedIn.

The best B2B marketing gets wasted on the wrong people.

So when you want to reach the right professionals, use LinkedIn ads.

LinkedIn has grown to a network of over 1 billion professionals and 130 million decision makers.

And that's where it stands apart from other ad buys.

You can target your buyers by job title, industry, company, role, seniority, skills, company revenue.

So you can stop wasting budget on the wrong audience.

It's why LinkedIn Ads generates the highest B2B ROAs of all online ad networks.

Seriously, all of them.

Spend $250 on your first campaign on LinkedIn Ads and get a free $250 credit for the next one.

No strings attached.

Just go to linkedin.com/slash economics.

That's linkedin.com/slash economics.

Terms and conditions apply.

The economics of everyday things is sponsored by Indeed.

You just realized your business needed to hire someone yesterday.

How can you find amazing candidates fast?

Easy, just use Indeed.

With sponsored jobs, your post jumps to the top of the page for your relevant candidates.

so you can stand out and reach the people you want faster.

There are no monthly subscriptions, no long-term long-term contracts, and you only pay for results.

Join the 3.5 million employers worldwide that use Indeed to hire great talent fast.

There's no need to wait any longer.

Speed up your hiring right now with Indeed.

And listeners at this show will get a $75 sponsored job credit to get your jobs more visibility at indeed.com/slash everydaythings.

Just go to indeed.com/slash everydaythings right now and support our show by saying you heard about Indeed on this podcast.

Indeed.com slash everydaything.

Terms and conditions apply.

Hiring, Indeed, is all you need.

The economics of everyday things is sponsored by Shopify.

Starting a business is a dream many share.

But for some, it stays just that.

Doubt creeps in.

What if the skills aren't there?

What if it's too much to handle alone?

Well, with Shopify, what if becomes why not?

Shopify is the commerce platform behind millions of businesses around the world and 10% of all e-commerce in the US.

Can't design a website?

No worries.

Just choose from one of Shopify's beautiful ready-to-go templates that match your brand style.

Plus, get help with everyday tasks like enhancing product images, writing product descriptions, or generating discount codes with Shopify's AI tools created for commerce.

And if you get stuck, Shopify is always around to help with their award-winning 24-7 customer support.

Turn those dreams into dollars and give them the best shot at success with Shopify.

Sign up for your $1 per month trial and start selling today at shopify.com/slash everydaythings.

Go to shopify.com/slash everydaythings.

Shopify.com/slash everydaythings.

Francisco Hernandez says that he's traveled all over the country in search of used books for his store.

All the way from California down south as far as Georgia, bought books in Maine and Vermont.

We use every avenue possible.

Goodwills, thrift stores, estate sales.

We'll buy whole collections after people pass.

We'll come into their apartment and buy maybe one book or we'll buy 2,000 books.

You know, I've spent 12 hours over a period of multiple days in somebody's apartment going through a collection.

It can be so much fun.

I mean, sometimes it can be devastating because, you know, there's maybe 10,000 books in the collection.

They spent 50 years accumulating it.

They died before they were willing to give any of it up.

And so you're there

going through the objects that are most personal to them.

And sometimes they have one little thing and I'll often, you know, put that aside for myself and keep it rather than try to sell it.

How do you decide if a big collection of books is worth investing in?

Usually I'll go through and find the most valuable books, get a really exact sense of what we're going to price those.

And then go through other books and then group them roughly, you know, between two, five, $10, $20.

So yeah, we'll kind of divide the labor up into ones that need more time and attention and ones that we can kind of just move through.

Because when you're going through a 2,000 book collection, you rarely have the amount of time that you really need.

Buying books is a gamble.

You can't be sure how long it'll take for a particular volume to sell.

But you can make an educated guess.

What I'm looking for are books that I've sold many times before.

If I know I might have a client for it, you're more likely to buy it.

Are there books that we don't have at the moment?

There might be a great book, but we have 10 copies of it, and so it's just going to take up space in the backstock.

There are a lot of booksellers, you know, book barns that have not infinite space, but more space than books.

But in New York, there's many more books than there is bookshelves to fit them, really.

So when you're going to invest in a big tom, it should be worth it.

And so smaller, you know, poetry books, chapbooks, things like that are easier to invest in because they take up so much less space.

The softcover, it takes up less space than the hardcover version.

Even if the hardcover is slightly more valuable, I'll go for the softcover every time.

Hernandez always has to take space into consideration because it's one of his biggest expenses.

He pays around $6,400 a month on rent for retail space and three storage units in two different boroughs of the city.

But his biggest overhead cost is his staff.

There are eight employees that work at Leaves, all of whom add expertise to the store.

I'm a really good curator.

I have a lot of experience, but I have my limitations just as a human and how many books I could possibly read and how many perspectives I can empathize with at any given time.

People who go into a used bookstore to buy a book are usually the kind of people who buy a lot of books.

meaning they're a potential source of recurring revenue.

So it's in a book dealer's interest to cultivate relationships with customers by learning about their tastes and preferences and suggesting new books and authors.

It's a very personal form of retail, and there are plenty of people who like the idea of working among books.

There are so many people out there who are interested and want to do it.

I get maybe one resume per day.

It's a desirable job, in part, because putting a book in the right customer's hands is a rewarding experience.

I sold a first edition of Gravity's Rainbow by Thomas Pinchid, which is a huge book and a really tough one to read.

And I sold it to, she must have been 16 or 17.

She brought in the money that she needed for it, as if she broke open her piggy bank, like in dollars and pennies and quarters.

And when I asked her if she needed a bag, she shook her head and held it like it was a baby and walked out.

This 800-pound beast.

Yeah, it was an emotional object.

Often, the books he sells are emotional objects for Hernandez, too.

The most valuable and maybe my favorite book right now is a signed copy of The Bluest Eye, Toni Morrison.

We have it for $4,500 right now, and that's a really, really special book.

You probably made a hefty investment in that, too.

Yeah, that one cost a little bit extra, I think.

It was a book that I wanted to sell because I just love it.

I wanted to own it, and there's no other way to own it other than to sell it.

Hernandez bought that volume from a fellow book dealer.

That's something he and other dealers do often, because a book might fit in one shop better than another, or it might be appealing to a particular client.

Any bookseller who comes into my bookstore gets 20% off any book that they buy, because booksellers buy books.

And we really want to keep the whole ecosystem afloat.

The more books that we sell to each other and to other people, it benefits everyone.

Leaves hasn't completely resisted the pressure toward efficiency.

They have a website where you can order rare and special books, and their listings also appear on used book platforms like Biblio and Abe Books, which is owned by Amazon.

But Hernandez says his physical store on that cute little block in Brooklyn is the heart and soul of the business.

And whether you're buying a cheap paperback or a 760-page copy of Gravity's Rainbow, it's there on the shelf because he or one of his knowledgeable staff pulled it out of a vast ocean of used books in the hope that you would find it.

More important than efficiency is human connection.

And I think that will never go out of style.

I think people will never not need that.

For the economics of everyday things, I'm Zachary Crockett.

This episode was produced by Morgan Levy and Sarah Lilly and mixed by Jeremy Johnston.

We had help from Daniel Moritz-Rapson and thanks to listener Jack Carlin who suggested this topic.

If you have a suggestion for an episode, feel free to email us at everydaythings at freeconomics.com.

Our inbox is always open.

All right, until next week.

I'm going to buy books, I'm sure, because I'm compulsive and have a sickness and can't help myself.

the freekonomics radio network the hidden side of everything

stitcher

oh gecko i just love being able to file a claim in under two minutes with the geico app could you sign it sign what the app yeah sure oh it rubbed off the screen when i touched it could you sign it again anything to help i suppose get more than just savings get more with Geico.

10 years from today, Lisa Schneider will trade in her office job to become the leader of a pack of dogs.

As the owner of her own dog rescue, that is.

A second act made possible by the reskilling courses Lisa's taking now with AARP to help make sure her income lives as long as she does.

And she can finally run with the big dogs and the small dogs who just think they're big dogs.

That's why the younger you are, the more you need AARP.

Learn more at AARP.org/slash skills.

With a variety of options, US Cellular Prepaid makes finding the right wireless plan for you easy.

That means you can get what you need at a price you can afford, all while staying connected.

Like two lines of unlimited data for just $60 a month and a free device like the Samsung Galaxy A165G, US Cellular Prepaid.

Terms apply.

See USCLU.com for details.