Used Bookstores: The Economics of Shelf Space and Human Connection

When Francisco Hernandez told bankers and lawyers he was opening a physical bookstore in Brooklyn, the reaction was blunt. "They were so skeptical," he recalls. "They kept asking me, 'You're not gonna really sell books, right? You're gonna sell coffee, you're gonna sell wine or beer or sell drugs or something to make this viable.'" Hernandez's store, Leaves, sells none of those things. It sells used books—and the central economic puzzle of his business is how to make that work in an era dominated by Amazon, which now sells more than 50% of all print books.

The Inventory Problem: Unlimited Supply, Finite Shelf Space

Used bookstore owners face a peculiar economic challenge: they have access to a virtually unlimited pool of inventory. People are constantly trying to offload books they no longer want, and Hernandez acquires them through multiple channels. Customers walk in with cardboard boxes. He visits estate sales, Goodwills, thrift stores, and even dumpsters—libraries and schools sometimes fill entire dumpsters with discarded books. He has bought single books and collections of 10,000 volumes, spending twelve hours over multiple days in someone's apartment after they passed away.