Jimmy's Oasis

A crazy idea

Jimmy Chen -

I've gotten two types of responses recently when I shared that I'm planning to open a bookstore: people either think it's very interesting, or they have expressed surprise and a thinly veiled opinion that it wouldn't be profitable. Some have simultaneously exhibited both responses.

Meanwhile, none have expressed an interest in investing or partnering with me - with the exception of my best friend. And as for him, I'm not sure if he's truly interested in the idea or if he just trusts me unconditionally. Either way, I've been immensely thankful for his support.

My hypothesis is that there is room even in the future for physical bookstores to thrive. I'm not crazy, but my recent conversations have empirically proven that my idea is. In any case, it doesn't matter how many people dismiss this as a crazy idea, as long as I continue to believe that there's something interesting in this space for me to work on.

That said, if I'm going to do it, the least I can do is to give it the potential to scale, and to employ best practices for starting a new company as written about by Paul Graham and Peter Thiel. Therefore, the bookstore I plan to build must fulfill the following conditions:

  1. It must solve a problem that I have myself.
  2. The solution must be 10x better than anything else available.
  3. The initial market must be very small, and people in this market must have the potential to really love what I build.
  4. Technology must be involved.

Let's discuss each in turn.

A problem I have

I used to visit bookstores almost every weekend in Canada. When my family and I went to the local mall, I would head to the Chapters bookstore while my parents and sister shopped for clothes or groceries. When I stayed in London with my wife while she was completing her MBA, I would sometimes visit a Waterstones when I was bored.

In China, though I can't read books in Chinese, I've wandered into bookstores multiple times. My most visited stores are Sisyphe (西西弗书店), which is in most malls, and Mix Place (衡山和集), which is next to where I work in Xujiahui. I haven't found any English bookstores.

When I asked my friends, it seems that there's just one foreign language bookstore (or a foreign language section in a predominantly Chinese bookstore, I'm not sure which). It's state-owned, and though I've lived in Shanghai for nearly seven years, I've never heard of it.

Why aren't there any English language bookstores in Shanghai? I guess it's because everyone thinks, "If even Chinese bookstores are struggling, the prospects of an English language bookstore with a market that's less than 1% the size of the overall bookstore market in Shanghai would have no chance at all."

10x better

I suppose it wouldn't be hard to make a 10x better English language bookstore, since (most foreigners think) there aren't any in Shanghai. The problem is: how can a physical bookstore (English or otherwise) compete with digital books? There may be no English bookstores in Shanghai, but technologies such as Apple Books and the Kindle have certainly made English books available for any who wish to read them in China. English versions of most books are also available for purchase on e-commerce platforms such as JD.com or Taobao.

Are there any people in Shanghai who really wish there's a physical bookstore with physical books? Is it possible for this store to compete by selling books with lower prices than even digital versions?

Small market

There are slightly over 163,000 foreigners in Shanghai as of the 2018 census. Of these, around 60,000 are from Asian countries (Japan, Korea, Singapore, etc.) and  around 42,500 are from the US, Canada, the UK, or Australia.

Approximately 30% of the population read every day, and these people are the most likely to visit bookstores. Avid readers are overwhelmingly female, and female readers purchase over 80% of all books.

All told, we're looking at a total market of fewer than 15,000 people in all of Shanghai - a very small market by any measure, which is actually a good thing. The ideal scenario is that some percentage of these people desperately want an English bookstore in Shanghai.

Technology

There are some major challenges. For example, avid readers may want to visit a physical bookstore, but they may still buy all their books online. They may want digital versions instead, which are usually even less expensive.

The key question, then, is whether it's possible to leverage technology solve problems like the ones above. Technology also allows for scaling, which is certainly not relevant now - but may lay a valuable foundation for later in the event that my hypothesis proves to be valid.

I think I've formulated an idea that fulfills all of the above conditions. As always, reach out to me if you're interested and want to give me feedback.