Forums: Discussions for entrepreneurs and small business.

Hi, my name is widianto, and i`m new in this forum.
i live in indonesia, and i would love to have advices from you guys.
i`m about to build a book rental business here.
why book rental?
in indonesia, libraries are dead and bookstores selling book at premium price, which most of us were reluctant to spend money on books.
i think i`ve seen a window of opportunity here, and i think that book rental can be the answer.
you don`t have to spend a lot of money to read books, and you don`t have to go to anywhere. just call/email us, and we`ll send the books.
the business model would be similar with booksfree.com, subscription-based revenue model, with postal-delivery changed to door-to-door delivery, so we can build relationship with our customers, besides we often lost a delivery using indonesian postal service, and regular domestic delivery service here were expensive.
i`m also thinking about that huge startup capital needed to buy books and to fill out our inventories, then i found a solution that i think may work.
what if you have neglected books stacking on some corner of your room, and you don`t know what to do about it?
just send it to us, and we`ll rent your books. thus if someone rent your books, you`ll have a share of the profit taken.
this will grow someday to all types of medias and stuffs rentable.
one thing i can`t figured out: what if stuffs you rented broken?
how to cope with this?

how about it guys?
can you tell me will it works?

thank you for your advice.

First question: Why are libraries "dead?"

I`m thinking about Cuba, where gov`t. control over what the citizens may or may not read has shut down the libraries. Although there are private libraries, those get raided periodically and broken up. Is this a possible situation in Indonesia?

If so, what sort of books would you be keeping in stock as your rental inventory?

yes, there is a governmental control over what may or may not be read in Indonesia, but it`s loosen up a lot since a couple of new presidents replaces the old restraining governmental system, and president.
nope, the government here did not shut down libraries, the better term is to "let it die slowly."
there are private libraries owned by schools, universities and other educational institutions, but those are closely guarded for private use only, and most of them were heavy-to-read textbooks that none want to read except for study purposes.
some say that Indonesian don`t like to read, and that`s what made us stupid. playing games, yes. watching movies, yes. clubbing, yes. hanging out, yes. reading, no.
but the fact is: if you go and check out bookstores in my city, there`s a lot of people standing there reading, sometimes courted by the security not to sit down on the floor or the cabinet while reading. and it`s at midday!

i think we`ll provide all kinds of books; a combination of community`s private collection and books that we bought for this service.

what do you think?

(thank you craig, i admire your clarity)

I think it is a good idea.  It seems Netflix would be a good model for your site and business.  (Call it Netboox. ha ha.)

One issue you will run into is the cost of shipping books to people`s homes.  Books are various sizes and weights and the costs will change from book to book.  Then again, I don`t know what the postal service is like in Indonesia.  It also makes packaging a challenge.  What are your thoughts on shipping?

I agree, it sounds like a good idea. If it`s not going to run against the State, being illegal, then it sounds to me as if it`s a classic market opportunity. There are books, but they`re *scarce* at an affordable price.

If you can`t sell them cheaper, renting would distribute the cost, in which case you fulfill the need for the product---affordable books being scarce.

I`d make sure there`s a good business plan, then go for it. :-) You`ll find there are a whole lot of used books here in the US. So what with cost of shipping, you`d still be able to stock up fairly easily, I think. AND, it`s possible you might be able to set up a not-for-profit foundation somewhere, that would allow people to donate old books from places like Europe or the US, gain a tax advantage.

Then you could rent out the books later. I`m not sure on the ethics or legality of that, but it`s a thought.

thanks guys
the business would be named: INSULINDE, it was said that the name meant "a beautiful lady" in Dutch. i`m still looking for the reality of it :)
i get the name from a newspaper article. the story says that long time ago, when indonesia still under the colonialism of the Dutch, a Dutchman go around lending books to villagers here so we`ll get educated. what he did sparked a revolution in education, which finally led to the independence of my country.
it`s a very noble mission.

the situation don`t change too much here; that`s why i want to build this business.
i`m dreaming of people may be able to read all the books they like, wherever they like, and whenever they like it at a low-cost fee; a community of booklovers.

About packaging, i think that i`ll hire people to deliver and pick-up the books on a basis of commision, a steady rate of fee per book delivered.
say a book delivered will cost me Rp 20,-
if we deliver 1000 books per day, the cost of delivering it would be Rp 20.000,- per day and Rp 600.000,- per month.
if one individual rent 10 books per month, that`s 100 members, the profit would be 100 members x Rp 50.000,- per month of subscription fee = Rp 5.000.000 - Rp 600.000,- = Rp 4.400.000,- per month gross income.
that`s still not included the cost of back office salaries, promotion, equipments, internet and communication, etc.

my biggest fear is that this dream would not be feasible enough to run, because the cost may outpace the income. a thing i could do is to change the business model: from subscription-based to per rent-based, means you pay as you rent; another thing is to raise the subscription price and sign a contract with local mail service for low-cost delivery.

then again, i wonder how booksfree and netflix did that?
is it because of the low-fee near-zero cost of delivery?
is it because of their revenue model?
is it because of the shark-cut on book prices because they buy in bulk?

what do you think?


PS: can you tell me how to put a tagline below your posts?
such as:

 Craig Landes
---
Defining the undefinable. "There are 10 kinds of people in the world---those who understand binary numbers and those who don`t." - Unknown

once again, thanks guys.

I`m not sure if you`re aware of it, but here in the States we have what`s called "mobile lending libraries." In a nutshell, local libraries in rural areas, where people live widely spread apart, have a large truck or sometimes a bus. They set the inside to look like a library, then drive around to all the various small towns.

They`re on a schedule, so each town knows ahead of time when to expect the mobile library. It coincides with the typical borrowing time (e.g., 3 weeks to borrow a book).

Perhaps instead of paying delivery drivers you could take the rental company store to the villages?

One reason to avoid drivers is their unreliability. Again, around here we use delivery people for things like pizza and other take-out food. They`re paid minimum wages, and quit at the drop of a hat. So the pizza place is constantly having to look for drivers. They end up with mostly high-school kids and people with no skills.

If your initial truck succeeds, I could see franchising it, or hiring someone with a better understanding of books and library systems. They would be paid a decent salary, and drive a different route. Because these are rentals, you likely could modify the schedule to better suit the income revenues you want.

So it seems to me that either you put money into an inventory warehouse, or to hire drivers, or to buy a vehicle large enough that you can drive your store around. Each way probably costs somewhere in a similar range?

"mobile lending libraries" have ever being launched as an initial movement to enrich our education by the ministry of education of our country.
the initiave were launched in major cities with a non-successful result, and i think the program failed because time and culture of the people had changed.
people in the past love to get out and hang around in their neighborhood, meeting and chatting with their neighbors, but people in the present day prefer mostly to stay at their homes, for issues of security and sort.
plus, traffic in most major cities, especially in my city Jakarta was frustrating, and traffic jam happens almost anytime and anywhere.

therefore, it`s a tough call to deliver the books by using the mobile lending libraries; it can`t reach the people it was meant to serve at the proper time and place, and even if we can, it won`t generate much revenue because of the costs it spent. guess i have to stuck with delivery drivers on bike.

this may become a niche business, competing between  upscale bookstores and dead libraries with their dust-gathering collection, or it may become a huge chain of rental bookstores, i don`t know.

but one thing i have in my mind, is that someday we`ll open chains of book cafes, where people can come and hang around reading books as much as they want and as long as they want it, at a fraction of cost, an entry ticket. their entry ticket can be used as a buying coupon if they buy any book inside, and monthly subscription members can come for free; they don`t have to buy any ticket.
we`ll also rent spaces for other complimentary business to enrich our book cafes, such as coffee stores, snack stores, etc.

just a dream,but i`m working on it.

The key here is no different than any business. Is there a demand for your product (reading and books), how scarce is that product, what does it currently cost, and how can you deliver in a better, profitable way.

ALL businesses begin as a dream.

thank you everybody for your advice; my questions answered.

a friend of mine (www.coaching4impact.com) said that a good coach didn`t tell you what to do, but rather help you find the answer yourself.

that`s what you guys do.

i`ll come back again when things are running.

once again, thank you very much for your insights.