Wednesday, August 08, 2007

The Real Price of Cheap Books

I am a big fan of It is a great resource for finding recommendations, obscure books, and of course, for getting substantial discounts on the books you buy. Yes, yes, many PF bloggers out there recommend borrowing books from the library rather than buying them, as a method of saving cash, but what can I say? I just love books and don't mind spending the cash to buy them. I keep my books and don't sell them. It gives me pleasure to look at my book shelves and see all the books that I have read over the years. You could call it a hobby, I guess.

Anyway, on with the story. I live on the Peninsula in the San Francisco Bay Area. In my town there are several independently owned bookstores, all within walking distance from each other. On weekends I often find myself spending a couple of hours in one of these stores, leafing through magazines, browsing the book shelves and generally enjoying the atmosphere. Periodically, I buy something, but more often than not, if I find a book I like I write down its name and later purchase it on Amazon.

A couple of years ago, completely out of the blue, the largest and most established of these independent book stores suddenly announced that it was closing down after 50 years in business. This took the whole community by surprise, since the store is known throughout the area. The reason that was given for the shut down was that owners could simply not make ends meet. Pressed by the large book sellers - such as Barnes and Noble and Borders - on the one hand; discounters such as Wal-Mart, Target and Costco on the other; and of course facing a massive number of customers defecting to Internet book stores such as Amazon, it turns out that there was just not enough business to make things work for an independent book seller.

Getting a book online or at Costco may be substantially cheaper than buying it at your neighborhood independent book store, but I realized that by enjoying my visits to my local store while giving my business to lower cost competitors, I was essentially free-riding. I was enjoying the experience of the independent book store, but not paying for it. When you buy a book at a small neighborhood store there are essentially two elements to the price you are paying. One of them is the cost of the book - that is the price you would pay at Wal-Mart or at Amazon. The other component is the price you pay for the "book store experience". That experience comes at a cost to your neighborhood store, and since the discounters don't offer you that pleasure they can afford to reduce the price of the book.

Let's take this example one step further. Do you know how everybody is complaining that there is no longer such a thing as customer service in America? For example, when you go to Best Buy to buy a computer or a television and ask for advice, typically you get a know-nothing sales person that can barely read the product description from the sticker next to the product. If you need more information, tough luck for you. Well, it turns out that we have only ourselves to blame for this lack of service. Since we always choose the lowest cost product, and choose to not give our business to those retailers that invest in service, those high-service retailers are going the way of the Dodo. Hooray for us, we've saved a couple of more Dollars. Welcome to the desert of no-service. Think about that next time you are on the phone holding for some call center in India for 30 minutes while hearing a recording saying that "your service is very important to us".

Thankfully, in this specific case, there is a happy ending. When the book store announced it was shutting down, the whole community came to help. Private donors and investors quickly stepped-in, and after only a couple of weeks out of business, the store came back from the dead. It is still open and now appears to be doing brisk business. As for me, I have decided to not try to save any more money on my books. I enjoy my Sunday afternoon visits to this store, and am very willing to pay for the pleasure I am getting. I still buy the occasional book on Amazon, but I no longer look for books in the store only to buy them online. You could say that I realized the error of my ways, and have decided to jump off that free ride to no-service land.

This post was inspired by an article I read on MoneyNing yesterday, and although MoneyNing was basically recommending the lowest cost places to get books, I don't hold that againt them... soon they too shall see the light... :-) Seriously, check out MoneyNing, it's a really cool blog.


Moneydork said...

It's pretty cool how the community came together and began to value the store after it nearly shut down. I have always wanted to get in to find a rare book store and shop there but they are as rare these days as the books they sell.

One Frugal Girl said...

Great post! I love how you accept partial responsibility for the financial demise of your town book store.

Over the years I have become more and more aware of the repercussions of bargain hunting. In my area a lot of family owned furniture stores have gone out of business. The owners simply couldn’t compete with the Internet and cheap, discount stores. Now my husband and I find it nearly impossible to find new furniture. It's either entirely too expensive or shoddy and cheap. It really is a shame. As time continues I think we’ll continue to see more franchises and chains and fewer and fewer mom and pop stores.

Shadox said...

Moneydork - our community really appreciates that specific bookstore. It is a fixture of our town. Still I agree, the way people pulled together to resurect this store is pretty amazing.

One Frugal Girl - a while back I went to Chicago on business and people told me I had to visit miracle mile for all the great shopping. When I got there, pretty much all I found were large national chains and vary few unique or local retailers. The thing about the free market is that it is really good at finding out what people really want and giving that thing to them. It seems like modern society does not value quality and service as much as it values low cost.

Brip Blap said...

OK, just to be contrarian, I'll ask this: if you're an investor, do you want to buy stock or the quaint little bookstore who need community help to continue? I love bookstores, but yes, Americans have clearly indicated again and again that they prefer the mega-capitalist Wal-Mart approach to consumerism. Most of us, who invest in the market or try to be frugal, will go for the lower cost alternative. It is a difficult balance to strike between quality and cost, and I imagine if you are careful with your money you often pass up the $19.99 book at Local Bookstore for the $14.99 version at amazon, regardless of service. It's a tough choice, but usually most of us personal-finance-blogger-types will go for a lower price, I think. We just all have our own personal limits - mine, for example, is quality foodstuffs.

Thought-provoking post.

Shadox said...

Brip Blap thanks for a thoughtful response. I agree with you completely that most of us PF finance bloggers go for the lowest cost alternative - we have entire blog carnivals dedicated to saving a few pennies. Clearly, I agree that the American public has also spoken - they prefer the lowest cost option and that is exactly why independent book sellers and the like have financial difficulties and are largely a vanishing breed. I also agree with you that as an investor, I would not put my money in independent book seller stock. Essentially I agree with all the facts you describe.

My point is that those facts are creating a bad outcome for the American nation as a whole. I mean, if you truly enjoy a visit to your local book store, why aren't you willing to pay for that pleasure? How is that different from a night out on the town or an evening at the movies?

If you find knowledgable customer service to be useful in selecting new products, why are you not willing to pay for that useful service? By not paying for the service you are hurting your own interests in the long run, i.e. next time you want advice on prodct selection, or want to hang-out at a fun little book store, you will not be able to do so.

To put a different way, I think that as a society and as individual consumers, we should start to look at cost not just as the dollar value that we pay at the register. Cost can be a larger concept,that includes non-direct elements which are much harder to put a dollar value on.

Grace said...

I agree with you, though I don't know what the final answer should be. I blogged about this dilemna in a post entitled Frugality, Morality & Harry Potter". Ultimately, because I'd already budgeted for it that month, I bought the book at the local feminist bookstore. But next time, when I want a book that's not in my budget? Who knows.

Thanks for thinking about the ethical issues surrounding frugality.