Two days trundling around the Pacific Northwest in a rented Nissan Sentra, hunting mass market ("pocket") paperbacks. How many books fit into a Sentra? If there are no other passengers beyond the driver and his backpack, approximately 2600. A pretty tight pack job; the Canadian customs guy at the border actually called two of his pals out to the booth to have a look. Oh Christ, I thought, they're going to tear the car apart. But they just wanted to admire my handiwork, books stacked up inside like planks in a Tadashi Kawamata installation.

Corporate Thrift Store, above, used to be a great book scouting resource, but is now sadly no longer. For those not in the know, Corporate Thrift Store "partners" with local charities, paying a bulk rate for materials delivered by the charity to CTS' stores. CTS then re-prices the merchandise and makes a killing off shoppers laboring under the impression that all, or most, of their retail dollars are going to the charity, and not to Corporate Thrift Store.

I have some problems with this business model as a business owner, and as a citizen. But let's think dialectically for a moment, like a CTS PR flack. CTS obviously has expenses. Rent (the stores are huge, and sit on valuable urban properties); wages (lots of staff); storage and transportation (someone has to move all that merchandise from distribution center to individual store). And common sense suggests that most of what is donated to a charity -- any charity -- will be unsaleable crap. The charity will say, "Thanks," because it doesn't want to offend donors, but accepting used merchandise and being able to do anything with it are two entirely different things. I encounter this problem every day in my own business. "Why won't you take these out-of-date textbooks?" Well, because they're unsaleable, and if I fail to sell them, I incur a disposal cost in making them go away. So taking unsaleable merchandise for "free" often ends up being "not free," once the material goes to the landfill or the recycler, who charge for their service on a per-pound basis.

Let's be charitable and assume that 50% of what the "charity partner" delivers to CTS is unsaleable crap, which CTS must dispose of at a net cost. CTS still makes a killing when they negotiate the supply agreement. As CTS is a privately held business, the supply agreement is a trade secret. But having done more than a little research, my educated and not totally impartial guess is that it goes something like this:

CTS: We can offer you 10 cents a pound.

CHARITY PARTNER: Woo-hoo!

Notice how the supply agreeement detaches quantity from value. The charity partner doesn't really care about the total dollar value, because they have no economic investment in the goods they're supplying. After all, the goods are "free goods," collected by a staff of volunteers.

CTS, on the other hand, is now positioned to make out like a bandit. Do the math:

10 pounds of paperback books = approximately 50 books. Cost to CTS, $1.

Throw out 50% of the total as "unsaleable junk." 25 books remain.

Price those 25 books at CTS retail. Say 15 books are nothing special. $2/each. 5 are better quality. $3/each. 5 are "collectable" or rare. $5/each.

$30 + $15 + $25 = $70!

Don your CTS flak hat again. "Not all those books will sell. Some will sell at a discount (seniors' day; discount coupons; 'special promotions'). And we've got disposal costs, wages, rent..." So, let's be charitable and say that that $1 laid out returns not $70, but $50 to CTS' coffers. A mark-up of 5000%! Ka-ching!

These margins are insulting to CTS' "charity partners," and to those few CTS customers who still believe that CTS is a charity, or that the majority of CTS' profits go to charities.
- posted by cjb @ 8:34 PM