May 17

What does a book distributor look like?

Distribution, Retail, Sales No Comments »

The ABA (general market booksellers and publishers) has long embraced the distributor as an important way to supply books to the bookstore market. Some of the leading players in this sector include Publisher Group West (PGW), National Book Network (NBN), and MidPoint. Publishers large and small are using these ‘consolidators’ to sell and distribute their books.

Consolidation can eliminate overhead

This phenomenon is increasing for three reasons:

  1. Retailers want to use fewer vendors, not more.
  2. Retailers are free to spend more time with their own customers rather than more time receiving product, paying invoices, and processing returns.
  3. Publishers can consolidate their sales and distribution to drive costs from their own supply chain management.

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The CBA (Christian market booksellers and publishers) has been slower to see the benefits of the distributor as a long-term solution although there have been spurts of activity in the past. In more recent years Send The Light/Advocate Distribution Solutions has become an important vendor of this supply chain solution.

Wholesale replenishment business is key to a healthy retail business. Leonard Shatzkin, in his excellent book, The Mathematics of Bookselling (Sun River Press), shares his own research of booksellers who buy into the wholesale replenishment model and see their turns go from two or three times to six or more times per year. The result is a healthier business with more choices for customers, more staff time devoted to helping the customer find what they want/need, and more cash flow.

Shatzkin spends considerable time talking about the importance of inventory and the importance of measuring how quickly a store can turn the inventory dollars on the shelves into cash flow for increased investment opportunities. He says that inventory in the average store represents more than 65% of the store’s investment, or more than four times more than any other investment a store makes. It makes sense to maximize the turns by using the supply chain to do so.

The new paradigm combines wholesale replenishment with publisher distribution. This concept brings the best of both worlds to retail – selection, speed and service – along with discounts and freight options, all combined in an easy, one-source solution. Retailers can conveniently place one order with one supplier, receive one shipment and one invoice, and are provide one address for returns. Retailers can order many types of products including products from the largest publishers in the industry at competitive wholesale discounts along with some products at publisher discounts, while always receiving the maximum discount by publisher or manufacturer. Finally, the entire order combines to give the retailer the best deal on freight and payment terms.

Send The Light (STL) Distribution offers both the wholesale model and the distributor model in one-source to retailers. Some distributors offer only a handful of publishers in one box, which doesn’t allow booksellers to conduct supply-chain management across the wide range of products they need to source. In addition, other wholesalers offer order consolidation, but don’t offer replenishment on the wide range of product that retailers need (i.e., gifts, remainders, homeschool products, etc.). And most wholesalers will go to great lengths to match discounts offered by other wholesalers.

In the end, the difference will be the best combination of selection, service and speed. For authors and publishers, this is an important part of the supply chain management strategy that needs to be deployed to help booksellers be more profitable with your books.

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Jan 10

How do I price a POD book?

Distribution, Printing, publishing, Sales 2 Comments »

Pricing a book that is printed digitally, whether print-on-demand, or short run, can be challenging unless you understand how sales channels work.

In traditional publishing, a book might be printed for a dollar or two (using long run offset), and because of the high overhead (buildings, staff, marketing and sales budgets, etc), the retail prices might be five, seven, or even ten times the print ‘cost’ of the book. So a $2.00 print cost* on a book might land the book at $12.99 to $16.99. (*Print costs always need to be fully burdened with make-ready fees attached.)

It is important for publishers is to make sure they are weighing all of their ‘costs’ when they look at this formula. A publisher can’t just look at the printing cost alone. The financing, shipping, warehousing, damage, obsolescence and remaindering costs also need to be factored into the equation.

Digital printing prices might look higher, but generally they are a lot closer than people might think, when all of the costs mentioned in the previous paragraph are factored in. Digital printing can allow publishers to have ‘virtual warehouses’ and drop shipping off press which can eliminate physical inventory sitting on shelves and the pick/pack expense. Digital printing-on-demand (POD) or micro inventory can reduce carrying costs and increase cash flow, which is an important factor for any business.

I read a recent article in which the author shared the following. “… if I went ahead and had the thing printed up directly through an off-set printer–and ordered a few thousand of them–I could probably cut the cost of the book in half, and maybe even a little more. But I’d have to pay the upfront fee to buy the books and then I’d have to figure out a way to sell them.” This can put a lot of pressure on a new or small publisher…one which has sunk many a publisher.

If you are interested in working in the retail channel, you have to remember that the retailer (and distributor if you are using one…and most retailers will require one) is going to need a margin to live on. If you don’t factor a margin for them into your pricing, they will either not buy the book, or you will lose money on every transaction.

At Snowfall Press, a 200 page book costs $3.25 to print in our POD or print-to-order model. A book this size will generally sell for $14.99 or less in the general market. Retailers generally need 40-50% of this retail in order to sell your book. This means that off the top, you need to plan on grossing only $7.50 on this book – if you are selling directly to the retailer. If you have a distributor in the middle, you might have additional costs (their margin) to also factor in.

In my experience, POD books need to be priced four or five times the print cost, in order to carry the retail margins for your partners, and still be competitive in the market.

A final item to consider: all POD printers are not created equal. It can be confusing in this world of catch-all phrases like POD (print-on-demand). Here are a few questions to ask your printer.

  1. What are your upfront costs? Do you charge for opening an account? For loading files? For changes made to files? At Snowfall Press, the answer is $0.
  2. What is your minimum order quantity? At Snowfall, the answer is only one book.
  3. Do I have to sign any publishing or printing agreements? At Snowfall, we do not require either. You want to maintain total control of your project, and have the ability to move it to any other printer at any time.

What rules do you follow when you price a book?

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