Updated: July 24, 2012 9:44AM
Chicago is home to a rare concept: A literacy nonprofit whose technological innovations are enabling it to earn 66 percent of its yearly budget from targeted programs and book sales so it can focus on strategizing the age of electronic readers.
Open Books has transformed its namesake used-book retail store in River North and warehouse operation in Lincoln Park with technology that identifies where the inventory of 90,000 used books will best sell and at what price.
“We’ve created a system where we’re selling all of these items worldwide, letting us raise as much money as we can for literacy projects,” said Dustin Walsh, book director.
Walsh, 29, started Open Books’ online initiative when he decided to post 50 “trendy” used books from the store on Amazon.com. Most of the books sold the night they went online, so Walsh packed them up, walked to the post office and shipped them.
By 2010, just one year after Open Books launched online sales, the number of books selling online skyrocketed to 12,000, and from May 2011 to this May, more than tripled to 38,000.
Open Books, with 12 employees, uses a volunteer-designed software system, Book Pricer, that automates the used books’ prices, taking into account the cost of goods sold on amazon, the best opening price for auction and whether the book would be better sold online or in the store. Most of the books in the retail store sell for $3 apiece but some are priced at $1.
The nonprofit recently adopted the Monsoon software system to automate order management. The system lets Open Books stay competitive with rival online book sellers by figuring the premium price at which a book will sell.
The software also tracks the lowest shipping rates, enabling Open Books to shop the best rates for the book buyer and get credits for discount shipping. The automation has cut postage costs by 25 percent from a year ago, to $30,000 annually.
The innovations have enabled Open Books to realize an estimated 66 percent of its $1.18 million 2012 fiscal budget from earned income, up from 56 percent of its $1.23 million 2011 budget, and to set a five-year goal of counting on 90 percent of its yearly budget from sales of used books and related items.
“If we can give as much as possible back to literacy rather than spending it on overhead or shipping costs, that’s a massive deal for our programs,” Walsh said.
Open Books’ founder, Stacy Ratner, said, “We like having financial independence, stability and some control, rather than operating as a typical nonprofit that is dependent on the annual fund or on seeking grants that are out of our control.”
Open Books runs programs that pair volunteers with elementary-school children to spend an hour reading together; hosts creative-writing workshops for students in grades 4-12; shows teens how to become authors through an immersive reading, writing and publishing program, and matches volunteer mentors with high school juniors to work on professional reading, writing and communication skills.
The nonprofit’s efforts reflect emerging trends in the worlds of reading and libraries: Public libraries facing budget constraints are realizing they can find new revenue by partnering with for-profit organizations to sell their otherwise-discarded books, and financially squeezed social-service nonprofits have found that used books let them stretch their budgets and still help literacy efforts, said Clare Thomas Maher, head of communications for Discover Books, a Tacoma, Wash.-based company that collects used books and sells them online to divert them from landfills and to donate to literacy groups.
The for-profit company, formerly called Thrift Recycling Management, operates a branch recycling center in Hammond, Ind., that employs 57, and has donated hundreds of thousands of books to Chicago-area schools, nonprofits and to Dominick’s grocery stores’ fund-raisers in the past five years.
Mike Ban, executive director of Chicago literary organization Book Worm Angel, said distributing books is particularly critical in low-income neighborhoods where people must cross gang territories to get to a library and where families may have no books in their homes and no history of reading to their children, and among families where both parents work one or two jobs and are hard-pressed to find the time to spend time reading with their children.
Book Worm Angel, which delivers 10 books per student to about half of the Chicago Public School system’s 475 elementary schools, is part of the Chicago Literacy Alliance. The alliance, which counts 53 literacy groups among its members, is starting programs to more directly target resources, such as matching prospective literacy clients with the most appropriate group and working on ways to evaluate each literacy group’s effectiveness.
Ratner, 39, finds herself returning to her entrepreneurial roots in web-centric ventures when she considers the next stage of the business: how to enter the e-reader world.
“We want people to read in any medium, so how do we work with e-readers? Is there a way we can produce or license content for e-readers? Is there a market for used e-readers? Can it be arranged for someone to download a book and at the same time generate a second copy to be donated to literacy efforts?” she said.
Ratner, who holds a bachelor’s in comparative literature from Brandeis University and a law degree from Boston College Law School, jumped into the fast-faced dot-com market instead of practicing law; she helped her brother, Daniel, start Snapdragon Technologies, and played key roles at Internet-access and online used-car marketing companies.
She intends to come up with a tech-literacy plan for Open Books within the next year, and she envisions a way all of the possibilities — selling used e-readers, generating second book copies, producing e-content — could happen, even as paper books continue to play a major role in the operations.
In fact, she foresees the used-book market as stronger than the new-book market in the digital future, since new books may be downloaded immediately upon publication.
“The accessibility of paper books is something people will always want, and people will always have emotional attachments to certain books,” said Ratner, who is known for her green hair, which she dyed three years ago and decided to keep because people easily notice and remember her. “Technology keeps getting better, but a paper book is still nice to have on the train, the plane or on the beach.”