Bookstore Distributors, Ordering and Stocking

Book Distribution Costs for Publishers

Small publishers often publish books without giving much thought to where those books will eventually be sold or how much distribution will cost. The majority of new titles issued by self publishers will never be stocked by the chain superstores, not even for a three-month tryout. Only a tiny number of small publisher titles will ever be selected by discount merchandisers or the local supermarket for ordering and stocking in their book sections, yet these outlets actually account for a hefty percentage of industry book sales. It pays for a publisher to be realistic about the prospects for a new title to be stocked on store shelves, not only in terms of choosing between offset printing and print-on-demand, but also in terms of book design and production. There is always a limited amount of money available for the production and marketing of a new title, and the efficient allocation of that money to the different facets of the business can determine whether the publisher will live to publish another book.

Managers at chains have some leeway in determining bookstore ordering and stocking decisions in their local store. However, with the new superstores featuring up to 100,000 books at a single location, it's obvious that the majority of stocking decisions are made by the chain buyers and subsequent sales results. The buyers sometimes depend on the trade publishers themselves to determine which books to give a chance on the shelves, and despite the huge capacity of these stores, most titles in stock will be backlist or editions of older books, making competition for the remaining spots fierce indeed. On the other hand, trade publishers are very attentive to the demands of chain buyers and will sometimes change the design of a book to ensure that the chain will give it an opportunity on the shelves. A small and ever-shrinking number of independent bookstores will stock books from local authors or small publishers on consignment in a special section for the sake of community relations.

The term "modeling" is used to describe how many copies of a particular title a store will stock. A book modeled for two copies means the store software is continually re-ordering to keep two copies on the shelf. For a chain to continue modeling a book, it needs to achieve average sales of more than one copy per store per year. However, that doesn't mean a chain will give a new title a whole year, or even six months, to start generating those sales. Bookstore chains use sophisticated computer models to analyze sales and predict stocking requirements on a continual basis, so a title that fails to show significant sales early-on will disappear from the shelves within a few months. A chain with 500 superstores would want to see at least 10 copies per week sold across the chain to justify ordering the title for stock. Less than that, it's back to the chain's distribution center and from there a return ticket to the publisher. Some people are surprised that the superstores will stock a title that only sells a couple of copies per store per year, but part of the attraction of a superstore to consumers is the huge number of titles they stock. The chains may prefer to stock strictly fast-moving bestseller titles, but the slower-moving books provide "wallpaper" that's necessary for the ambiance. The best independent bookstores turn over their inventory more often than the chain stores, perhaps three times a year as compared to twice, but those numbers are inflated by bestsellers.

Publisher Book Distribution Cost

Distribution is a critical piece of the publishing puzzle, yet most new publishers seem to think it will magically open up to them once they publish a book. The only thing that will magically open up is the publisher's wallet. We talked a little about the two largest distributors, Ingram Books, which Lightning Source publishers get access to, and Baker&Taylor, with whom almost any publisher can sign up. However, Baker&Taylor doesn't automatically stock books for small publishers. When talking about the publisher's cost of book distribution, it doesn't mean much unless the distributor keeps the publisher's books in stock. Some bookstore ordering software won't process an order unless the title shows as "in stock" at the distributor. While in-stock status at a national distributor is essential to selling books in quantity through retail outlets, it can carry a heavy price. Book distributors who deal with small publishers usually require a discount between 65% to 75% off the cover price. In other words, they pay the publisher between 25% to 35% of the cover price on books they actually sell. The books must be returnable, and they will often be returned in beat-up condition that renders them unfit for sale elsewhere. Smaller distributors sometimes go out of business, at which point the publisher's stock may end up at a remainder house, regardless of legal agreements to the contrary. Book distributors may also play musical chairs with books, returning them all before payment is due and then accepting them again under a new payment schedule. Some distributors, whether or not they will actively promote the publisher's books, require a sizeable number of books for stock. Although this seems positive at first blush, it's a big risk for a small publisher if any of the bad scenarios described above play out or if the book simply doesn't sell.

Most bookstores have direct computer access to the Ingram catalog, where they can find any book distributed by Ingram by the ISBN, title, author, without referring to Books-In-Print. Many independents make Ingram their first stop, since there are benefits to bookstores ordering the maximum number of books from a single source. It's still critical for publishers to update their Books-In-Print record on Bowkerlink when adding or changing a distributor, since this is the only way some customers can find out who distributes the book. One mission that all small publishers should undertake is to visit their local bookstores and find out which distributors they prefer and which distributors they don't work with. Many distributors really serve as consolidators for Ingram, who prefers not to deal directly with small imprints and even offers a list of the smaller book distributors they deal with on their website. Almost all distributors offer paid marketing programs to publishers, ranging in cost from a few hundred dollars for a small ad in direct mailing or magazine, to thousands of dollars for a large space ads or other special treatment.

Another option for small publishers is to get a larger publisher to handle their book distribution, even a multi-billion dollar trade press. One offer we received from a publisher who releases thousands of their own new titles each year was to distribute our books for a 70/30 split (the distribution would cost us 30% of net). Since our books are designed from the outset for print-on-demand, we weren't even tempted, but the economics are interesting. If the books were redesigned for offset printing and purchased in quantity, the printing cost would drop to around a dollar a book. However, what looks like a pretty healthy split is based on the net proceeds the publisher would receive for the book, selling it at the trade discount or a little higher. So, the book would be sold for 55% off of our $14.95 cover price ($6.72), and then we would receive 70% of that amount ($4.71), minus returns, shipping costs, and the cost of money for the big print run. Making only a minor allowance for the overhead costs, we'd actually earn around half as much per book as through POD publishing, and be running a financial risk in the bargain. While we have a direct mail operation for retail customers, we don't partcularly like bookstores ordering direct from us, as it entails extra paperwork. We'd prefer if they purchased the books through Ingram distribution, which costs us nothing extra since we use Lightning Source as our printer.

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