Managing a bookstore is similar to managing a conventional retail store. The process is similar but the merchandise and the customers are different.
Choosing a bookstore location
In retail management textbooks, we are taught that location plays very important role in determining the success or failure of a retail stores such as supermarket, department store and of course a bookshop. Big companies tend to hire a trading-area analyst when they want to open a store in a new location. Most often a shop will be opened in a location where the number of population is high or crowded or in a well planned business district.
If you are somebody who is thinking of opening a bookstore for your lifetime business, you need to carefully analyze the demographic condition of the town city dwellers where you live.
- How many elementary schools are there in your town?
- How many junior and senior high schools?
- How many colleges in your schools?
- Are there any universities in your town?
Identifying and Understanding Potential Consumers for my Bookstore
Although my bookstore is located near the elementary schools, it does not mean that I only sell books for elementary school children. My main target actually is the parents who always come to bring or pick up their children. Why? Because parents also need books and they have money to buy them. After choosing the target buyers, I then analyze the occupations, educational background or professions of these parents. Potential customers for my Xavier bookstore (university and high school students) who live far from my bookstore can be reached through advertisement of my bookshop in local newspaper, or brochures that I regularly distribute through the regular visitors of my bookstore. Do you understand what I mean? I will explain more about this in a section about promotional strategy.
Information Gathering and Processing in Bookselling Business
Retail information system should be adopted by bookstore owner even when the business is still small. What type of information should a bookstore business collect to perform its functions? Depending on the scale or size and type of your bookstore, the information that your gather can be as simple as book titles and their selling price to as sophisticated as book titles, authors, synopsis, publishers, purchase price, selling prices, shipping cost, regular buyers, monthly order volumes and location of the books in the bookshelves that have been numbered.
POS and Inventory Control Software for a Bookstore
My bookstore only uses a simple point of sale (POS) and inventory control software which only collects the number of stocks, the title of the books, the inventory number, the purchase and selling prices of the merchandise. I bought the POS software for less than 6 US dollars through an online store named Bamboo media that is based in Bali. The POS software operates on Microsoft Access platform and can give me quick report of daily selling of books including the amount of money, change, and number of books.
Chain bookstores that have branches in several towns or cities will need a more comprehensive inventory management system that can provide OLAP (online analytical processing) capability. CEO or decision makers of the bookstore enterprise can analyze the performance of all the bookstore operating in various different locations in real time and immediate solution or supply to branches without conducting business meetings. So, the database management system of a bookstore should be learned and studied by a bookstore owner or manager when the business is still small.
Promotional strategy of bookstore
The simplest form of promotional strategy is advertising. It is a kind of nonpersonal communication delivered through mass media such as newspaper, radio, TV, the web. I personally have stopped paying a lot of money for buying an advertisement space in a local newspaper's page. Instead, I regularly print brochures containing the title of newly arrived books and put them inside the plastic tote bags together with the books that my customers buy. So, I don't have to spend a lot of money for the promotional campaign, only around 10 US dollars per month for buying A4 size paper and ink for printing the book info brochures. Newly arrived book info brochure is one of the most effective and highly targetted promotional tools that I frequently use every month.
Pricing in Retailing and Profit margin of a bookstore
I have been running my bookstore for nearly four years now. Its annual selling is increasing 100% even during this economic downturn at the moment. This small home based bookstore sold books worth about 44,400 US dollars. For people in Europe or in the US, it might be a small amount of money for a business. But for average Indonesian people who could make 100-200 US per month, it is definitely a lot of money. So, what is the average profit margin of a bookstore? The determinaton of profit margin should be based on the purchase price of the books. If I buy or order books in large quantities from a publisher or a big discount bookshop, I will get discounts. The discounted price will then be added with shipping cost. When the books and other merchandise (such as school supplies goods) arrive in my bookstore, I will have to unpack them and attach price label on each books. The final selling price = purchase price + shipping cost + profit margin. The profit margin = operational cost of a bookstore (salary of the employees, electrical, telephone and internet bills + government tax + monthly rental cost of the building) + 10% to 15% revenue. It looks complicated to calculate them but if you know how to operate a spreadsheet application such as Microsoft Excel, then it can be done in just a few clicks and presses of computer buttons. On the average, the selling price of a book is 30% to 40 % higher than its purchase price. Don't charge too high profit or your bookstore will not be competitive anymore. For larger bookstore chain company, the overall after-tax profit can be as low as 2.6 percent of sales! Very low isn't it? by Charles Roring