indexindexauthorShakeel HashimNoneNeed to dive deep into the financial movements that matter to tech? Get Shakeel Hashim's newsletter every Friday.f11fbe35a3
×

Get access to Protocol

I’ve already subscribed

Will be used in accordance with our Privacy Policy

The Retail Resurgence

COVID forced bookstores online. Can they survive?

Bookshop says it can help the industry. Not everyone agrees.

A woman walks by the closed Books Are Magic bookstore on May 5, 2020 in the Brooklyn borough of New York. City. (Photo by Angela Weiss / AFP) (Photo by ANGELA WEISS/AFP via Getty Images)

Moving online is easier said than done.

Angela Weiss / AFP via Getty Images

"None of us got into this to sell books online," Tom Roberge said.

Roberge is co-owner of RiffRaff, an independent bookstore in Providence, Rhode Island. For him, as with many others, bookselling was about the interaction with customers, the opportunity to put forward a unique point of view. Selling online was "not really something I ever thought I would have to do." But then the pandemic arrived.

Roberge's experience wasn't unique. For years, the vast majority of independent bookstores have shied away from ecommerce. Even those that had websites weren't particularly reliant on them. Raven Book Store in Lawrence, Kansas made just 2% of its sales online, according to owner Danny Caine. Oakland's East Bay Booksellers did 5% online "on a good month," proprietor Brad Johnson told Protocol. For many stores, it just wasn't a priority: Why even bother when you're going up against Amazon?

In March, that all changed: Just like every other sector of retail, bookstores were forced to move online. But unlike other sectors, bookstores had an intriguing new option at their disposal: Bookshop.org. The startup, which launched in January, offers bookstores a way to quickly set up an online storefront, with Bookshop handling all the logistics and fulfillment.

Pre-pandemic, Bookshop was an interesting idea. Come March, it seemed essential. Setting up a Bookshop page costs nothing, and takes under an hour. "There's actually no reason at all not to experiment," the site's founder and CEO Andy Hunter said. "There's nothing to lose." But that, it turns out, is a controversial opinion.

One way to think of Bookshop is as Shopify for books, on steroids. Like Shopify, it makes setting up an ecommerce store quick and easy. Booksellers create an account, fill out a profile, and bam: They've got a link that customers can shop on. But unlike Shopify, Bookshop doesn't just handle the online experience. When a customer orders through a store's Bookshop page, the order is fulfilled by Ingram, a book wholesaler partnered with Bookshop. That means customers can buy virtually any book in print from any bookstore on Bookshop, because the stores don't need to own any inventory: Ingram owns it. Ingram picks those books from its warehouses and ships them. The bookstore the customer bought through gets 30% of the cover price, with around 10% being applied as a customer discount, 10% going to payment processing and Ingram, and 50% to the publisher, Hunter explained. Bookshop, he said, doesn't make any money on those orders.

But Bookshop is a for-profit organization, so it has to make money somehow. It does so via orders made through Bookshop.org: orders where a customer visits Bookshop directly, rather than going through a bookstore's portal. On those orders, 20% of the cover price goes to Bookshop, with 10% going into a profit pool that's distributed to bookstores on the platform. The company also has an affiliate program, compensating sites like BuzzFeed for linking to Bookshop, and 10% of those orders go into a profit pool as well. "I would say 65% of the sales have been bookstore [site] sales, about 20% have been affiliate sales and about 15% have been direct sales," Hunter said.

Bookshop's key innovation isn't the website-builder: Shopify and others have had similar, if not better, tools for years. The logistics platform, however, is new. It's crucial, Hunter argued, because it allows independent bookstores to offer an online inventory selection that rivals Amazon's, leading to higher customer retention. And once the stores do get an order, it's much easier for them to fulfill it.

"They don't have to worry about customer service, they don't have to worry about the overhead costs of fulfilling online orders," Hunter said. As an example, he pointed to Chicago's Semicolon. The store had an antiracist reading list that went viral over the summer, bringing in a "very healthy six figures in revenue for [Semicolon]," Hunter said. That translates to about $1.5 million worth of books, Hunter said, which would have required Semicolon to have about $750,000 worth of available credit with a publisher or wholesaler. "Most small stores do not have that kind of credit," he said. And even if they did, they would have had to then figure out how to store, pack and ship 50,000 books.

"It's true that they would make more money if they sold the book directly," Hunter said — likely around 45% of the cover price instead of 30%. "But the hidden costs of the overhead are such that I think it nets about the same." In an interview with The New York Times in June, Semicolon owner Danielle Mullen said that Bookshop was crucial. "It meant we could stay in business," she said. (Semicolon wasn't immediately available to comment for this story.)

Roberge, Caine and Johnson — none of whom use Bookshop — conceded that March brought its challenges. "The hardest part for us was at the beginning," Caine said, "where every week we were trying something new." There were hurdles both big — Caine's team had to physically reconfigure the store so staff could safely process online orders — and small, like figuring out which envelopes are best for shipping hardback books. For Roberge, the early weeks involved a lot of phone calls and emails to customers, who had to directly contact the store to place an order before being manually invoiced. And for Johnson, it was just a matter of dealing with the sheer volume of it all. "We were just overwhelmed with orders," he said. "It was about a 60-fold increase in web orders."

And yet, they all managed, even without the help of Bookshop. (Caine and Johnson use the American Booksellers Association's IndieCommerce, while Roberge ended up using BigCommerce.) "We just handled it," Johnson said. "We just did the work." Roberge concurred, saying that after that early period, "it doesn't feel overwhelming." Shipping, he said, is not a big deal: "It's not like there's anything else for me to do here." Also, it's less of a logistical nightmare than you might think. "Most of my customers live here, and so they've been happy to get out of the house to run down to the store and pick up a book, say hi for two minutes and then leave," he said. For locally-focused businesses like independent bookstores, customers can basically do the fulfillment for them.

That gets at something else that led Roberge to avoid Bookshop. "I wanted to maintain some level of interaction with my customers," he said. Handling orders "gives me the opportunity to flip bookmarks in, and flip notes in when it's people I know" — something he couldn't do if all his orders were being fulfilled by Ingram. "I'm glad I still have that tiny little opportunity to interact with customers."

Though Bookshop might not be right for every store, Hunter is adamant that it's a good thing for the industry. Addressing concerns some have raised that Bookshop will just become another internet giant for independent stores to compete against, he said "bookstores need to understand this is about making a bigger pie." Amazon, he argued, sells around 500 books for every book sold through an independent bookshop. "It's not about us competing for that one out of 500 customers — it's about changing that to one out of 100," Hunter said. By enabling small stores to sell online, Hunter said he thinks Bookshop can do that. "We need an industrywide solution that works for everybody, not just for the small group of digital-savvy stores."

But whether it will work for everybody is an open question. "We simply would not be able to be profitable at all, with our current staff makeup, with a 30% cut of anything," Johnson said, noting that if that happened he would have to lay people off to stay in business. That, he said, isn't an adequate solution to the industry's problems. "I appreciate the intent of Bookshop, and it's clearly designed to not hurt bookstores," he said. "But my question ... is just the degree to which it actually helps."

As bookstores figure out their new normal, that question isn't going away. Roberge, Caine and Johnson all said they plan for ecommerce to play some role in their business post-pandemic, even if it's not quite as dominant as it is today. Caine was particularly bullish: He's just signed a lease for a new, bigger location that has the space to run both an ecommerce operation and a physical bookstore at the same time.

Hunter, though, thinks there's no need for conflict. "The message from Bookshop is always 'support your local bookstore,'" he said, whether that means buying from them through Bookshop or buying from them directly. "We're okay either way," he said. But Johnson is concerned about the repercussions of Bookshop's overall framing. "I worry that there is an allure to Bookshop because they 'make it easy,'" he said. "[They're] perpetuating the story, in many people's minds — no matter how many times independent bookstores try to change it — that we cannot do ecommerce. And it's just not true — it's not necessarily true."

The Retail Resurgence

The future of food is being farmed in a warehouse down the road

The pandemic has forced us to reconsider our supply chains, and the lettuce of tomorrow might be grown in your neighborhood rather than in a neighboring state.

Rows of kale being grown at Eden Green.

Photo: Eden Green Technology

Do you know where your lettuce comes from?

Before the supermarket, I mean. It would've been on a truck from a distribution center, or some other warehouse. It probably flew on a plane from Arizona or Mexico or somewhere else more temperate, where it also was probably processed before it left the farm. Even outside of a pandemic, that's a lot of touch points.

Keep Reading Show less
Mike Murphy

Mike Murphy ( @mcwm) is the director of special projects at Protocol, focusing on the industries being rapidly upended by technology and the companies disrupting incumbents. Previously, Mike was the technology editor at Quartz, where he frequently wrote on robotics, artificial intelligence, and consumer electronics.

The Retail Resurgence

The sales rep and show floor are unavailable. Meet their digital stand-in.

How Amazon is thinking about Alexa Shopping in the middle of a pandemic.

When you can't get to the store, or know exactly what you want, Amazon wants to make sure Alexa is there to help.

Amazon

Your hands are probably a bit more full than they were this time last year. Perhaps you're trying to squeeze in emptying the dishwasher between work Zoom calls, or make dinner while keeping your kids focused on their remote learning.

Going to the store is now a more frightening prospect than it used to be, and the pandemic has pushed many more consumers into the world of ecommerce. But that means far more than just going to a website these days. Amazon has been pushing new ways of buying, getting deeper into your daily routine with its Alexa assistant. That could mean automatically reordering your detergent because it knows you usually reorder around this time each month or talking you through which new exercise weights to buy because you just bought a new Peloton (like everyone else on the internet).

Keep Reading Show less
Mike Murphy

Mike Murphy ( @mcwm) is the director of special projects at Protocol, focusing on the industries being rapidly upended by technology and the companies disrupting incumbents. Previously, Mike was the technology editor at Quartz, where he frequently wrote on robotics, artificial intelligence, and consumer electronics.

The Retail Resurgence

Now is the perfect time to upgrade your home office

Spending your days on Zoom doesn't have to be so bad.

WFH doesn't have to be WTF.

Photo: Old Scarff/Getty Images

The most important thing you need to know about Black Friday is that pretty much everything's on sale. Given the pandemic that's upended your life, and the entirety of the retail industry, you're likely not doing much of your shopping in stores this year. So you're not limited to whatever's on sale and in stock at the local Best Buy. Want something? Google it.

While you're shopping for needlessly large and needlessly high-res TVs, upgrading your mattress and buying something for your office's virtual Secret Santa, you should also spend some time updating your home office setup. For the first time in months, most things are back in stock (for now), and it's looking like we're all in for at least a few more months of taking Zoom calls from home offices/kitchen tables/the top of the dresser next to the crib.

Keep Reading Show less
David Pierce

David Pierce ( @pierce) is Protocol's editor at large. Prior to joining Protocol, he was a columnist at The Wall Street Journal, a senior writer with Wired, and deputy editor at The Verge. He owns all the phones.

The Retail Resurgence

The pandemic has ravaged grocery chains, but tech is helping Ocado thrive

The British grocery logistics company is expanding around the world and continues to invest in robotics, aiming to have robotic pickers within three years.

Ocado's robots in one of its warehouses.

Photo: Ocado

When historians are looking for images to illustrate the U.K.'s COVID experience, they could do worse than this Ocado screenshot:

At the height of the pandemic, with the entire country in a strict lockdown and supermarket shelves stripped bare, virtual queues to access the online grocer's website stretched to over 200,000 people. After years of slow but steady progress, Britons were finally adopting ecommerce en masse, and the providers were struggling under the newfound burden.

Keep Reading Show less
Shakeel Hashim

Shakeel Hashim ( @shakeelhashim) is a growth manager at Protocol, based in London. He was previously an analyst at Finimize covering business and economics, and a digital journalist at News UK. His writing has appeared in The Economist and its book, Uncommon Knowledge.

The Retail Resurgence

Checkout-free tech is coming sooner than you think

Standard, Grabango, Mastercard and Caper all said COVID-19 has accelerated the tech's adoption.

Cashierless tech is poised to have a big 2021.

Photo: Standard

"I wish that we were further ahead," Jordan Fisher said. As CEO of Standard, formerly known as Standard Cognition, Fisher has found himself in a strange position this year. The startup's checkout-free shopping technology, which lets customers grab items from shelves and walk out without interacting with a cashier, has the potential to eliminate many of the most COVID-unsafe parts of retail. But the tech just isn't prevalent enough yet.

"Realistically, we're not going to make a major dent in the safety profile of retail as a whole during COVID," Fisher told Protocol. But that doesn't mean checkout-free tech is stagnating: anything but.

Keep Reading Show less
Shakeel Hashim

Shakeel Hashim ( @shakeelhashim) is a growth manager at Protocol, based in London. He was previously an analyst at Finimize covering business and economics, and a digital journalist at News UK. His writing has appeared in The Economist and its book, Uncommon Knowledge.

Latest Stories