is it worth selling books to bookshops?
Back in the 1930s Depression publishers started to put books into shops on sale or return, as the shops didn’t have the cash to buy stock to sell to customers. This time around, seems to me that the publishers are going to run out of cash to put the books into the shops.
It’s tough for the shops, I know. We stopped using a freelance sales team in the UK this time last year. They were running out of accounts they could call on and sell to. We publish a lot of titles in the religion/spirituality area; most of the few dozen SPCK shops in the UK closed down a couple of years ago. The more evangelical Wesley Owen shops were never quite our market, but they’ve mostly gone as well over the last couple of months. Borders closed down before Christmas, though we always found it difficult to get a foot in the door there anyway. So we visit Waterstones (the equivalent of B&N), some independents, wholesalers like Bertrams, Gardners (equivalents of Ingram, B&T etc), – for a dozen accounts you don’t need a sales team taking 15% of the margin. Our sales haven’t noticeably dipped in the UK as a result. Would they have done better with the sales team? Doubtful.
There hasn’t been the same relative level of closures in the USA. Maybe they’re better run, maybe book sales are holding up better – but I suspect it’s mostly a question of scale. With 600 or so superstores you have more room to cut and manoeuvre than you do with 60 or 6. In this case, perhaps what’s been happening in the UK is in front of the US.
More worrying though are the tactics used to stay afloat. Buying space is one thing, but you can take that or leave it. What is hard to affect is the rate of returns. And here, the hurt is probably headed more from the US to the UK.
From what I hear returns in the US average well over 30%, significantly higher than in the UK, and have done for years. With some accounts often running at 60% or more. When the returns come back to the warehouse, the big publishers tend to just put them to one side for pulping. Others give options, you can choose to send them for pulping, at about 15 cents per book. Or you can have them returned to stock, which is 45 cents per book, or 60 cents, or more. Some have a minimum charge of $3 to $4 to put a book back into stock. The books are inspected individually to see if they’re OK to go back into stock, and some are “improved” to get them back to their original condition – a smear touched up, a bit of glue added.
All books can be returned, often after a few weeks, even bestsellers, if that month’s stock levels in relation to sales need to be hit. It doesn’t hurt the bestsellers too much, because there’s enough “pull through” on the sales for the returns rate to be relatively low. For new authors, it’s different. People buy names they know.
I don’t blame the shops here, there are too many books for them to stock, the sales have to turnover fast enough to cover their costs. It’s just that the system seems unworkable.
It’s a downward spiral. The less likely a customer is to see the book they want in the shop, the more likely they are to order it online. Unless they want to browse a relatively small selection of fiction and feel the books by hand (and maybe then still order online to get a better discount) they get out of the habit of visiting the shops. Most sales come through word of mouth anyway, and if you’ve heard of what you want, you don’t need to browse for it. Whether ebooks (and their successors) get to 10% of the market in a decade’s time, or 50% (the most common estimate), or more, it’s going to further contribute to declining shelf space. And they’re going to push the price of printed books down, which increases the relative unit cost of handling them in the warehouse.
In the town where I grew up and first started buying books 40 years ago, there was one small independent that had been there for a century. New books on the tiny ground floor, second hand books on the four rickety floors above. Then came the new large airy malls, and the bookshps with them; one that later became Waterstones, Ottakers (which later became a second Waterstones), and what turned into Borders (now closed). The space given to selling books in the town was multiplied by factors of 10. I can see it going all the way back down again. There will be the occasional quality book that you buy off a shelf, but there will be more browsing of books online to see whether you really want to invest the time in reading; you will buy more, but at half price or less, you will read more, but put half of them down unfinished.
In the meantime, for the publisher, it gets harder to justify the cost of trying to get the books into the shop in the first place.
Our own returns rate in the USA has been relatively steady at between 27-35%. The steady overall rate has been disguising widening variations amongst the accounts. I realise that with a relatively specialist list we’re not representative. But Amazon as a % of our sales have gone up steadily from around 12% a few years ago to approaching 40% today, and they have no returns.
On the other hand Barnes & Noble have gone in the other direction, despite the efforts of the sales team. And the returns rate has gone up to 80%.
So for every 10,000 books sold in, 8,000 are coming back.
For a sample $100,000 worth of initial sales, or 10,000 books at $10 ($20 retail), the costings look like;
Distribution +sales cost at approx 25% of $100,000; $25000
Returns at 45 cents a book, for 8,000 books; $3600
2000 books sold; Revenue $20,000
Authors royalties $2500
Print cost of 10,000 books (some of which can be sold again); $20,000
Which leaves a loss of $31,000, before catalogue costs, marketing costs, pre-print costs, overheads etc.
It’s a lot of work to put in to achieve such a negative return. Particularly if authors then complain you’re not working hard enough to get books into shops. In fact, the harder you work, the quicker you go bust. At 50% returns it’s still unworkable. At 30% it’s marginal, and pushing trolleys in the supermarket car park looks like a good career move. OK, that has its problems, occasional wobbly wheels, rain, but less stressful, healthier, and leaves you time to read what you want.
There’s an obvious answer of course. Publish more commercial books. Fewer of them. Market them harder. Only bring out those you think there’s a chance of being picked up for store promotions, and invest everything in that.
20 years ago, 10 years ago, even 5 years ago, that would have been the right answer. Though then why not work for one of the Big Six publishers who has the clout to do it properly? Now, I can’t see it. It’s locking you into the downward spiral. Readerships are expanding, fragmenting, communicating differently. They’re more international, more local. More online, more diverse. With more choice, at more prices, in more formats. They can even publish their own book in the time it takes to read one. Why would a publishing company invest its future and that of its authors in single 3 for 2 or half-price promotions in one bookshop chain in one country that is struggling to keep its own head above water?
So, paradoxically, we’re better off not trying to sell books into (a lot of) shops.
So, given that an author can put a book up on Amazon themselves, what’s the point of a publisher?
Going to have to leave that for a future post.
John Hunt
February 2nd, 2010 at 11:30 PM
Well that was a bright and cheery read: thanks! I’m looking for a new job right now — the supermarket trolley job sounds more and more attractive…
Seriously, though, food for thought: thank you. There’s way too much trash being churned out by publishers, which is why so much gets returned. My policy in my bookshop is to try to identify a buyer for each title I take: if I can’t think of anyone amongst my customers who’s likely to want it, I don’t order it. Mostly it works, which is why I don’t do much by way of returns: as a general rule I only return stuff that I’ve bought in see-safe for a specific promotion or event.
But my customers are getting fewer and further between and there are far too many who do seem to think we’re just a showroom for the likes of amazon … I guess they’ll wake up one day, like the people who complain when churches become cafés or whatever and aren’t there for their weddings because they were never there for the services… by which time it’s too late, of course…
February 3rd, 2010 at 1:38 AM
Well there’s nothing like positivity in the face of adversity is there!
If all booksellers turned around and used the same argument for stocking books (given returns do cost booksellers too!) we’d really be in a pickle wouldn’t we.
Amazon makes up 40% of your sales and no returns, now I can’t talk for the big chains etc as I run an indie that sells quite a few of your books (and does no returns, like you say might be a UK Indie Bookshop thing!), indeed one of my latest in shop best sellers is one of yours, having sold over 60 copies in the last couple of months – though admittedly given it’s by a local author it was bound to do well :0)
Hmm and I review and handsell a fair few of your titles as well – and yes I know that definitely contributes to some of your sales going the Amazon way!
Indeed here’s a question, do Amazon Marketplace Sales count as Amazon Sales?? and I know for a fact that Ashop based affilliate sales run by indies who can’t afford their own direct shop websites contribute to the Amazon figure – ohh and how many indies use Amazon to order your books for their customers or just for stock given they get 40% discount that way instead of only 35% through Gardners/Bertrams etc?? worth thinking about perhaps.
So one question I would ask is what level of discount do you give to Amazon? because I’m pretty sure some of your increase in sales with them is due to them offering the books at a lower price than most of us in bookshops can buy it in at, and that surely is due to the disparity of discount given enabling this promotion.
You see you seem to think people don’t shop bookstores but they do – but it is true they then go home and buy from Amazon etc, but then that’s because of the devaluation of the book on Amazon – so though there’s no return aspect there is the increase in offset discount.
Tell you what, have you thought if you offer the same level of discount to bookshops we might be able to sell more of the books and thus not have to return any because we can then devalue the books for you on our shelves like Amazon have?
But if you offer us only minimum discount then you have to accept we can’t carry the levels of stock we would like to when we know we can’t sell them at the same price as you let Amazon sell them at when you give them their 55% standard discount.
It’s a basic matter of economics. Get rid of the disparity of terms and I bet the bookshop sales will go up – heck you can even offer a two tier rate to us!
30-35% standard with returns (and you could even put a cap on the level of returns if you really need to), or 50-55% with no returns facility ala Amazon.
Watch your sales grow then, I’d snap your hand off as I’m sure many others would too.
Be interesting to see what that does to your Amazon figure at the same time wouldn’t it! By how much would the sales depreciate if lots of indies weren’t having to use Amazon as supplier of choice too, let alone being able to offer the books at the same price as Amazon!
But given you don’t seem to want to support bookshops whats the point in bookshops carrying your stock? The question works both ways!
But you know at this rate we’ll both lose out to the mighty idol Amazon – after all why will the authors or public need either of us when Amazon can do it all for them anyway, with you and me subsidising them as they make us obsolete.
Just my thoughts, but ahh pessimism is such a contagious milaise – and the answer to it is not a shot of rum to go with the cynicism :0)
February 5th, 2010 at 4:45 PM
Appreciate that Melanie, thanks.
Being a relative newcomes to trade publishing, I’m baffled by it. We’ve tried a number of things over the last few years since we started. The one thing that has remained constant is that we’ve maintained a heavy, regular investment in our internal systems, to bring out relatively large numbers of titles effectively at low cost. But with the trade, we’ve swung here and there. At first for instance we put amazon links on our website. Then bookshops (independents) complained, we took the links down and promoted a few independent stockists, but that kind of fizzled out, and we ended up putting the online links back up there again. We’ve tried with reps, without reps, etc.
Our problem with returns is far greater in the US than the UK, and with the chains rather than the independents. My sympathies are all with the independents – we’re independent ourselves, don’t have expensive shareholders or return-on-investment demands etc…, and just want to do a good job for the authors. I can’t remember off the top of my head if our discount with amazon is 50 or 55% – and it probably varies between US/UK etc. So – OK, I agree. I’ve flown in our executive directors for a conference, we’ve met around the board table, seen various presentations, run it by the accountants and lawyers, had dinner, talked through the night, and come to a decision. Our PR department will probably phrase this more suitably, when they get around to it, but basically we’ll offer the discount that we work on with amazon to any independent bookshop that will move to firm sale. Will have to check with the US distributor that they can handle that, so at the moment it’s just for the UK. Just need to know which bookshop you are, and I’ll put it through, and happy for you to spread the word around.
John
February 5th, 2010 at 6:06 PM
Now that is cool – and the best result i’ve had on a blog yet probably :0) (oh and I won’t moan at you about Amazon Links as my own webshop is Amazon powered to my shame, thats why I admit it’s as much my burden as yours as I contribute to them becoming a market force and helping them make us obsolete).
My bookshop is Unicorn Tree Books, 35/40 Lincoln Central Market, Sincil Street, Lincoln. LN5 7ET. T:01522 525557
I’ll pass the news along – I am pretty sure there will be many happy happy indies who will take up the offer, and who know’s perhaps you’ve started a positive trend and we can get a few more publishers to do this too! This way maybe we really all can come out and ahead (or at least not slip backwards and into the red!) and increase sales playing on a level pitch now with Amazon et al.
Thank you for this – You just rocketed right back up on the scale of favoured publishers (not that you really slipped that far as you do publish exceedingly interesting books :0)
February 5th, 2010 at 7:55 PM
Sign me up too, please, John: I’ll let you know which bookshop I’m with when I know…
February 9th, 2010 at 6:09 PM
This is very interesting. We are an online bookseller in the USA that has been looking at expanding into the UK market. I can share that typical return rates for us are around 1% of all sales. Which is much lower than return rates from physical boosktores.
The real problem with the bookstores is that its very difficult to stock a wide variety of products to appeal to all tastes. Having a coffee shop inside definately helps, but then you are making money from selling coffee and not books. However, money is money and if you have to make it on lattes then so be it. We opened a physical retail store in the USA and we’re still evaluating it. The big challenge is that rent for retail space is so much more expensive than rent for office space. The other major issue in the USA is that i can buy books cheaper at Walmart than i can from book distributors or even publishers. These sweetheart deals for selected book retailers are killing off the indy retailers. If smaller retailers could co-op purchasing it drive better discounts, or if we could get a 60% discount and free freight we would be fine. Even if free freight meant non returnable.
My general assessment is that in the long term the industry is going to have to go through a major overhaul. It will probably take a stack of bankrupcies for it to happen, but it will eventually happen. At that point, once most of the retailers in any given area have gone under, there will suddenly be a market for a local place where you can buy books. Its one thing to be able to buy online, but browsing and flipping through pages and even reading a few chapters – thats never going to be as great as if you do it in person.