Each of the retailer’s stores act as a mini warehouse that receives and distributes e-commerce inventory.

Stores are the lifeblood of Half Price Books as they not only account for the majority of its sales, but they also are the linchpin for its e-commerce inventory.

Half Price Books, which sells new and used books at a discount, sells on its own site HPB.com, as well as on marketplaces, including Amazon.com Inc. (No. 1 in Internet Retailer 2017 Top 1000), Alibris Inc. (No. 289), eBay Inc. (No. 4 in the 2018 Online Marketplaces database) and AbeBooks.com, an Amazon subsidiary. In total, online sales are about 14% of overall sales, with sales on HPB.com making up a few percentage points of that 14%, says Kent Hedtke, vice president of online sales.

The challenges that we are having is making sure what you say you have, you actually have.
Kent Hedtke, vice president of online sales

About 75% of Half Price Books’ merchandise is products it purchases from consumers and then resells in that store or to online shoppers. This makes the retailer’s 120 stores double as mini warehouses that receive and distribute inventory.

Half Price Books has three warehouses; however, more than half of its e-commerce sales are fulfilled from stores, Hedtke says. The retailer began fulfilling online orders from its own stores in 2010, he says.

“We are not a company that is on the technological edge. It’s not a part of our corporate culture. And, oddly, we were one of the first people shipping from store,” Hedtke says.

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Half Price Books has about four or five million SKUs, and because the retailer never knows what books a shopper will sell to it, it may only have one unit of a SKU. But that doesn’t prevent Half Price Books from listing the product online.

“The more inventory you have the more of a chance you have to sell,” Hedtke says.

Each book Half Price Books acquires gets scanned into its Monsoon Inc. inventory management system, which monitors inventory across its website, marketplaces and stores. There is little to no inventory sitting in a back room, Hedtke says. When an employee scans a book, the book is simultaneous placed on a store’s shelf and listed online for sale if it meets certain criteria. Not every book sold in stores is sold online. The retailer has rules in its inventory management system, such as the cost of the book, to determine if the book will be listed online. For example, if a book costs $1 in stores, Half Price Books will not sell that book online because it would lose money to ship it to a customer, says Hedtke, who would not disclose the price threshold for selling online but says it factors in fees, labor and postage.

Knowing the SKUs available, and where they are available, in real time can be challenging.

“The challenges that we are having is making sure what you say you have, you actually have,” Hedtke says. “That’s a challenge we are dealing with still today.”

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For example, a shopper could buy a book from HPB.com at 11 a.m. and the Dallas store nearest to that shopper is tapped to fulfill it. At 11:15 a.m., a shopper goes into the Dallas store and buys the same book. At 11:30 a.m., the Dallas store employee goes to the shelf to fulfill the e-commerce order and the book is gone.

If this happens, Half Price Books will look up the next-nearest store to the shopper to fulfill the order. If the store sold the last book, then the retailer would have to cancel the online order. This doesn’t happen often, Hedtke says. He estimates that 5% of online orders will have a fulfillment complication like the one described, however, 2.5% of the time the problem is solved with another store fulfilling the order, and 2.5% of the time the retailer cancels the order, Hedtke says.

“It’s definitely a challenge making sure you are meeting the expectations of all of your customers, whether they are sitting in their bedroom shopping online or walking into the store shopping the shelves,” Hedtke says.

At stores, employees pull online orders off the shelves for shipping about three or four times a day, on average, and more frequently during its busy back-to-school months in August, September and January, Hedtke says.

Although it may sound like a headache to have stores fulfill online orders, it’s worth it, Hedtke says.

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“Sometimes you might have a really great text book that’s worth $200 bucks online,” Hedtke says. “We want to sell it but it might be so obscure that nobody in Orland Park, Illinois, may want it, so we throw it out to millions of people online, and it’s going to be super desirable.”

Initially, Half Price Books sold on marketplaces because of the large amount of traffic and shoppers the websites attract. As Half Price Books built its brand awareness, it started selling off its own site in June 2016, as a way to cut out the “middle men” of marketplaces, which take a commission on each sale.

“As much as we love selling on Amazon, we don’t love the fees,” Hedtke says. “If we can cut out fees and some of the costs associated with third-party websites, that would be desirable for us.”

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