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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Apr 24

What kinds of distributors are there?

Distribution No Comments »

In my last post, I talked about distribution being an equalizer in the publishing industry.

In the CBA (Christian Booksellers Association/ and publishers) market, the terms ‘distribution’ and ‘wholesaling’ are used interchangeably to describe a supplier, or middleman, who buys books from publishers and manufacturers and then resells them to retailers. And while the supply-chain function of the distributor and wholesaler are similar, there are some important differences suppliers need to know to make their businesses more profitable.

Wholesalers bridge the gap in the supply chain between the supplier and the retailer. Wholesalers provide a service for retailers. The strengths of the wholesale model are the tens of thousands of titles that can be purchased from one source, in one box, on one invoice – many times shipping with free freight. The most important factors in determining whether to use a wholesaler or which wholesaler to use are:

  • Selection (or fill rate – plenty of titles to draw from and the inventory available to fill them)
  • Speed (how fast you can get your selection form order time – wholesalers average 2-3 days, publishers 7-10 days)
  • Service (low minimum orders to qualify for free freight)

Distributors provide an additional important service to the industry by representing product lines. Here are some benefits to look for with a distributor, or company that handles a publisher’s third party logistics (3PL):

  • Distributors take publishers’ and manufacturers’ product lines and combine them with the best services of a wholesaler. (speed, selection and service)
  • Discount (all of the above at a publisher discount)
  • Direct representation (may include a sales team calling on retail clients)

Both types of supply chain companies are important to a supplier’s success. Suppliers/publishers need to consider the costs of trying to do their own distribution and juggling all that it entails, against the benefits of partnering with professional distribution companies. Sometimes, you can find both a wholesaler and a distributor under the same roof, which can be a huge benefit.

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Jul 22

Distribution can be an equalizer

Distribution, publishing 2 Comments »

I don’t subscribe to that many blogs, but lately, I have been getting some good stuff from some talented publishing insiders. A recent post by Joel Friedlander, who writes about book design and self publishing, got me thinking about the distribution issue that can be one of the toughest challenges for independent, small micro publishers to tackle.

In his post, Friedlander says that distribution can be a great equalizer, and I agree with him. The larger publishers have direct distribution relationships with retailers, where they ship directly from their own warehouses to a retailer. This works well if the publisher has a large list to present, or well known, best-selling authors. The retailers feel like they don’t have a choice, but to order direct for the extra discount that they perceive as more important than broader product breadth.

The large publishers also use wholesalers to ensure that their retail partners can get rapid replenishment on titles, and to stock the ‘long tail’ product where a store may only want 3-4 units per year.

A small or micro publisher can usually get access to a wholesaler like Ingram or STL Distribution, but this doesn’t mean they are being ‘distributed’. This simply means that a book might be sitting on a distribution shelf, and listed in the database. Many times, it means that the major retailers have the title listed on their own databases and can order the title, even if they don’t have it in stock. But the books has never been ‘distributed’ so that the end consumer can find it and pick it up.

I spent two years as the Senior Vice President of STL Distribution, the largest Christian wholesaler and 3PL (third party logistics or contract distribution) distributor in the country, if not the world. At the time, they had a huge European operation that has since been sold. STLD purchased FaithWorks in 2005, which at the time, was one of the first 3PL distributors in the industry. This is the model that helps the small publisher get closer to closer to the true distribution that Friedlander talks about.

Successful 3PL operations have true sales and marketing components and represent the services that most large publishers have internally. I know the team at STLD Publisher Services pretty well. I hired some of them. If you think that is a fit for you, let me know and I will make an introduction.

In my next post, I will talk about the differences between wholesale distribution and contract distribution. Each is a good model, but built for different purposes. But, they both become really powerful when combined, as with what STL Distribution is doing.

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