Latest / Small Business Success with Fexingo: Local Companies, Main Street Stories, and Community Commerce / How a Local Bookstore Used a Rare-First Model to Beat Amazon
Transcript
- Lucas: So earlier this week I was in Portland, Maine, and I walked past this little bookstore called The Novel Neighbor. Cute storefront, hand-painted sign, the whole Main Street vibe. But what caught my eye was the window display — it wasn't showing the latest bestseller. Luna: What was in the window? Lucas: A signed first edition of a 1980s sci-fi novel I'd never heard of, priced at two hundred and fifty dollars. And next to it, a handwritten note that said, 'We don't stock what everyone else stocks. We stock what lasts.' Luna: That's a bold statement for a store that's probably a fraction of the size of a Barnes & Noble. Lucas: Exactly. So I went in and talked to the owner, Sarah Jenkins. She told me the store is doing about one point two million dollars in annual revenue, which is impressive for a 900-square-foot space. And her gross margin is around 55 percent — compare that to the typical independent bookstore, which runs around 42 percent. Luna: How is she pulling that off? Lucas: She calls it the 'rare-first' model. The idea is simple: instead of trying to compete on price or selection with Amazon, she competes on scarcity. She focuses on books that are genuinely hard to find — signed first editions, out-of-print gems, local authors who only print small runs. She told me that about 60 percent of her inventory is rare or limited-edition. Luna: So she's basically turning the disadvantage of limited shelf space into a moat. Lucas: Right. And the economics work because those rare books have much higher margins. A typical new hardcover might cost her $12 wholesale and sell for $28 — that's a 57 percent margin, but after overhead, it's thin. A signed first edition might cost her $40 and sell for $200 — that's an 80 percent margin, and the customer isn't price-comparing because there's no Amazon listing for it. Luna: That makes sense. But how does she get customers in the door? If you're not stocking the latest Colleen Hoover, people might not think to come to you first. Lucas: That's the clever part. She uses the rare books as a loss leader — not in price, but in attention. She puts one or two high-ticket items in the window every week. People stop, take photos, post on Instagram. That builds a reputation as a destination. Then once they're inside, they browse the regular sections — which she still carries, but curated tightly. She told me her average transaction is $47, which is well above the industry average of $28. Luna: So the rare books are basically marketing. They create the story that pulls people in, and then the regular books generate the volume. Lucas: Exactly. And she's disciplined about it. She doesn't carry more than 2,000 titles at any time — compare that to a typical indie store that might have 10,000. Every title has to earn its shelf space. If a book hasn't sold in 90 days, it's out. That keeps inventory fresh and capital efficient. Luna: And I imagine she sources the rare books through auctions, estate sales, and connections with authors. Lucas: She's built a network of local collectors and used-book dealers. She also attends small press fairs. And here's the thing — she's not trying to be the biggest rare book dealer in the country. She's just trying to be the most interesting bookstore in Portland. And that's a defensible niche. Luna: You know, this reminds me of something we talked about a few episodes back — how a local toy store used a play-membership model. The common thread is that small businesses can't win by being cheaper or bigger. They win by being different in a way that matters to a specific community. Lucas: 100 percent. And this is actually a good moment to mention something about how we think about this show. We deliberately don't run ads on Small Business Success. The whole point is that you get these stories without interruption. If you find value in that — if you've ever taken an idea from a conversation like this and used it in your own work — the best way to support that is through listener contributions. It's at buy me a coffee dot com slash fexingo. Luna: Yeah, it's a small way to keep it independent and ad-free. And we really appreciate it. Lucas: So back to Portland. I asked Sarah what the biggest challenge was when she started three years ago. She said it was convincing customers that a small selection wasn't a weakness. She actually put a sign near the door: 'We have fewer books so you can find the right one faster.' Luna: I love that. It reframes the constraint as a benefit. Lucas: She also runs events that play to her strengths. Once a month, she does a 'rare book night' where collectors bring in items for appraisal. The first one had 40 people. The most recent had 120. She charges a $10 entry fee, and that alone covers the cost of the event. Plus, people buy books while they're there. Luna: So the events are profitable on their own, not just loss leaders. Lucas: Exactly. And she's careful not to overdo it. She does four events a month max — a book club, a rare book night, a local author reading, and a children's story time. Each one has a clear purpose and a specific audience. She's not trying to be everything to everyone. Luna: What about the digital side? Does she have an online store? Lucas: She does, but it's not a full e-commerce site. It's more of a catalog. She lists the rare books with photos and prices, but you have to call or email to buy. That way, she keeps the transaction personal. She told me about 20 percent of her sales come through that channel, mostly to collectors outside Maine. Luna: That's interesting — she's using the web as a lead generator, not a replacement for the physical store. Lucas: Right. And she's very intentional about not trying to compete with Amazon on convenience. She says, 'If you want a book by tomorrow, go to Amazon. If you want a book you'll remember, come here.' Luna: That's a great positioning statement. And it's honest. Lucas: The results speak for themselves. Her revenue has grown about 25 percent year-over-year since she opened. And she told me that her repeat customer rate is around 65 percent — which is huge for a small retailer. Most independent bookstores hover around 40 percent. Luna: So the rare-first model isn't just about margins. It builds loyalty because every visit can yield a discovery you can't find anywhere else. Lucas: Exactly. And that's the lesson for any small business, not just bookstores. You can't out-Amazon Amazon. But you can create an experience that Amazon can't replicate. Luna: I think the key is that she's not just selling books. She's selling the thrill of the hunt. And that's a much harder thing to commoditize. Lucas: Exactly. For listeners who want to see how she does it, The Novel Neighbor has a pretty active Instagram feed — they post their window displays every week. It's worth a look if you're thinking about how to make physical retail feel special again. Luna: I know I'll be checking it out. And maybe I'll make a trip to Portland this fall. Lucas: Do it. And when you go, bring cash — she doesn't take credit cards for rare books over a hundred dollars. That's another small quirk that keeps the experience unique. Luna: That's a detail I wouldn't have expected. It's like every part of her business reinforces the same message: we're different on purpose. Lucas: And that's the takeaway I want to leave you with. You don't need a bigger budget or a bigger space. You need a clearer idea of what only you can offer. For Sarah Jenkins, that's rare books. For your business, it might be something else entirely. But the principle is the same. Luna: Well said. Thanks for the story, Lucas. Lucas: Thanks, Luna. And thanks to all of you for listening. We'll be back next week with another Main Street story.