In a hyper-competitive industry like bookselling, ThriftBooks’ recipe for success lies in its approach to loyalty.
The company has applied sophisticated technology — like generative AI and data warehousing, among others — to secondhand bookselling. Its robust tech capabilities have allowed ThriftBooks to develop a loyalty program, called ReadingRewards, with a total membership count that the company says is in the millions. Additionally, the company has developed its ability to recommend books, which drives customer retention.
Bookselling is a tough industry, with many independent and national chains declaring bankruptcy over the years when competition from Amazon took hold. Despite the industry’s intensity, ThriftBooks managed to stay profitable every year since it has been in business. Its investments in tech and customer retention tactics have led ThriftBooks to sell over 235 million used and new books since its founding.
“We have very, very few one-and-done shoppers,” said Ken Goldstein, CEO of ThriftBooks. “Most of the customers that join us join our ReadingRewards loyalty program, and they stay with us for a very long time.”
Founded back in 2003, ThriftBooks has about 13 million SKUs that include used books (with varying conditions) and new books as well as hardcover and paperback. Goldstein, who has been on the company’s board of directors since 2013, said that ThriftBooks has had double-digit growth and double-digit earnings “for as long as I’ve been with the company.” ThriftBooks is private and does not disclose financial figures.
ThriftBooks started out as an Amazon seller before launching its own standalone site in 2007. As part of its effort to migrate traffic from the Amazon marketplace to its own website, the company released its loyalty rewards program around 2015 — initially offering a $5 coupon off shoppers’ next order when they reach a certain amount of points. In 2018, ThriftBooks updated the program so that customers can get a free book for every 500 points they earn. The free books they get now can be worth either $5, $6 and $7 depending on their tier.
Its top-tier membership program has grown over 30% year-over-year, while the middle-tier program has grown in the mid-20% range. The “Reader” tier is free to join and will give shoppers eight points for every $1 spent, while the middle “Bookworm” tier is awarded to shoppers when they spend $75 annually and gives readers nine points per $1 spent. The top “Literati” tier is awarded to shoppers that spend $150 annually and gives them 10 points per $1 spent.
“The response has been so positive,” said Barbara Hagen, vice president of sales and marketing at ThriftBooks. “We have a Facebook group out there, called Book Love Hub, and our members out there are talking with each other and talking about the free book prize and what they’re going to use our free book credit on.” The Facebook group has over 11,500 members.
Dan McCarthy, assistant professor at Emory University’s Business School, said that it can be hard for booksellers to gain a competitive advantage from their competitors because they’re selling essentially the same products. Through loyalty program perks, he said that booksellers can drive behavioral changes and convince shoppers to choose them over other players.
“The ultimate challenge of a loyalty program is actually being able to construct one that alters customers’ behavior in a way that exceeds the cost of the incentives that you’re providing to them for their loyalty,” McCarthy said. He added that “if it doesn’t change their behavior, then essentially the company’s giving money away for free.”
During the pandemic, a wave of support for independent booksellers also came when the American Booksellers Association coordinated an effort to call out Amazon for the power it has over the industry. Online independent bookstores like ThriftBooks and Bookshop.org were positioned to benefit from shoppers looking for alternative places to buy books that aren’t Amazon.
Goldstein said that ThriftBooks’ investment in technology has also allowed it to stand out from the pack. He said that ThriftBooks has an engineering department and was an “early mover” to Cloud Computing and data warehousing. It also has a sophisticated pricing model based on supply and demand. The company is also leveraging generative AI tools like ChatGPT to recommend books to shoppers that might not be in the same genre as their previous purchases but have similar underlying elements.
“We’re able to understand all the data associated with our customers and their buying patterns,” Goldstein said. “If you have a category that you’re interested in, you’re buying [or] surfing patterns will tell us that and we will look for something that you might not have known that we had and get it in front of you.” Shoppers can also add unavailable books to their wishlist and once that product is in stock, they will be notified.
This year, Goldstein said that the company plans to continue developing recommendations on SMS and MMS. He added that the company also has more tech initiatives lined up this year.
“We’re now one of the market leaders,” Goldstein said. “It’s a little bit more about staying ahead of the pack and making sure that we’re being smart about how we make the market and pricing.”