Sale of Remainders, Review Copies and Deep Discount Books on Amazon

A couple years back there was a big stink made by various authors’ organizations about Amazon selling used books through Marketplace. In the end, it's the marketplace (small "M") that's spoken, the number of items sold by third party sellers has soared to over 25% of total item sales, and my guess would be that the majority of those item sales are concentrated in books. I hope to run some math later to come up with a Marketplace contribution estimate for the Long Tail analysis, but I wouldn't be surprised if the number of books sold by third parties on Amazon has passed one in three.

Many of the books sold through Amazon Marketplace or Z-shops are not available as new books on Amazon, or through any other new book retailer for that matter. These books may be out of stock, out of print, or suffer from poor distribution. I don't have any way of quantifying how much activity the otherwise unavailable titles generate, but there are more than ten million of them listed, approximately three million of which have actually sold at least one copy. One especially popular type of out-of-print books are previous editions of new titles that are available at a deep discount. These days authors have pretty much given up complaining about used books on Amazon, but the sale of new books on which the author earns little or no money is still a serious irritant. This includes remainders that used to be sold only in second hand or specialty stores, review copies sent out free by the publisher, and in some cases, books sold in quantity at a deep discount by the publisher.

Ignoring third party item sales that are taking place because no new books are available, the factor that drives Marketplace book sales on Amazon is price. I never paid much attention to sales of my titles by third party sellers because I use short discount distribution, and the new copies of my titles offered on Amazon sell for more than the cover price. However, I also author a title for McGraw-Hill, for which a large quantity of remainders flooded the market, despite the fact that the book is still stocked new at Borders, Barnes & Noble and the online retailers. I suspect the remainders either came from a specialty retailer unwinding a deep discount position or raft of poorly managed publisher remainders. I checked enough other titles of the McGraw-Hill / Osborne imprint to determine that it's not a normal situation.

I promote the title aggressively through my website, and over the past two month, 60% of the customers I've sent Amazon have purchased the book from third party sellers. That's 3 out of 5! The number of sales was in the mid double digits, which I believe is high enough to offer a little statistical significance. The bulk of these sales occurred at a price point a little under 50% of the price for a new copy direct from Amazon. People love a bargain. If history is any guide, at some point the third party sellers will run through their stock of remainders and the Marketplace price of the book will actually rise, pushing more sales back into new sales. In the meantime, I'm not changing anything about the way I promote the book so I can compare the third party vs Amazon item sales relation when it happens.

As an author, I earn a fraction of my regular royalty on deep discount sales from the publisher, nothing on review copies (though Osborne isn't known as a big distributor of these), and an indeterminate amount on remainders, depending on where they come from. Remainders can be publisher overstock books that are sold directly to liquidators, but often they are books that were purchased on a nonreturnable basis by a retailer who decides to dump them. The worst case is when they are really being credited as returns by a publisher who doesn't actually process returns, counting on the distributor or retailer to put on a remainder mark and dispose of them. If such a book is counted as a return, the author gets no royalty, and the book goes on to cannibalize a new sale.

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