How Books Are Sold
The journey from publisher to reader can take many paths. Intermediaries include distributors, wholesalers, sales reps, bookstores, specialty stores, book clubs, and direct marketers.
Returns A defining characteristic of the book trade is that most books are sold on consignment. In other words, wholesalers and bookstores, as well as most other retail outlets, are generally allowed to return unsold copies of books to the publisher for credit. The result is significant risk for publishers. A big chain's advance orders can lead to a larger print-run; but if the title sells badly and is returned in large numbers, the publisher is left holding the bag.
Bookstores and publishers traditionally operate according to a spring and fall season. The publisher or distributor produces a new sales catalog for each season. The catalog promotes new titles and authors, and it provides book price, ISBN, and cataloging information. Most catalogs also include a backlist of previous in-print titles. The catalog can also be found on the company's Website.
Traditionally, books are sold to a bookstore by a sales representative who either works for a publisher as a salaried "non-commissioned rep" or with an independent sales group as a "commissioned rep," who works for a distributor or a group of publishers. A sales rep's responsibilities include:
Although large publishers often offer their sales and distribution to smaller publishers, the term "distributor" is used here to designate companies that distribute exclusively.
A distributor sells books on consignment, and generally pays publishers 40% of the list price for each unit sold. In exchange, the distributor acts as marketer, warehouse, and shipping department. It sells books to libraries, wholesalers, and bookstores by means of catalogs and its own sales force. The distributor handles storage, fulfillment, invoicing, collection, etc., freeing the publisher from all these worries.
Distributors generally represent independent publishers who can't afford a sales force. Distributors tend to insist on exclusive distribution in one national market.
Wholesalers serve as one-stop shopping centers for bookstores and libraries. They stock a large variety of titles from all kinds of publishers, simplifying the purchase process for buyers.
Wholesalers do not employ sales reps. They are passive sellers, relying on their catalogs, warehouse displays, and microfiche--as well as the marketing efforts of publishers--to make their sales. For self-publishers without a book distributor, getting a book listed with a wholesale catalog is one of the few ways to achieve nationwide exposure and access. Ingram and Baker & Taylor, which dominate the national market, generally ask publishers for a 55% discount, 90 days net, all books being returnable.
Today it's easy and inexpensive to put up a Website where the publisher can both promote book titles and take orders. One common approach today is to refer your readers to Amazon.com or any other online retailer. The retailer will invoice the buyer, ship the book, and pay the publisher a commission.
Online booksellers are a small but rapidly growing segment of the retail market.
Included in this category are mass merchandisers such as Kmart and Target, warehouse/price clubs such as Sam's, discount stores such as Dollar Stores, and food and drugstores. These outlets were responsible for 19.2% of retail sales in the U.S. in 1998, according to the Book Industry Study Group (BISG). They tend to stock titles with popular appeal and offer large discounts. They also tend to demand large discounts from publishers.
This category common department stores, gift shops, newsstands, and specialty shops. Together they were responsible for 10% of retail book sales in the U.S. in 1998, according to BISG.
Book racks in drugstores, airports, etc. are serviced by "jobbers," also known as "rack jobbers" or "IDs" (independent distributors). Jobbers have exclusive control of what is put in these racks, and though newspaper and magazines take up the majority of rack space, books are an important item. They tend to be "mass-market-sized" (4.25" X 6.75") paperbacks with popular appeal.
Unlike bookstores or mass-market outlets, specialty shops (e.g., map stores, organic groceries, hobby shops) are centers for people with shared interests. As such, they offer a very attractive venue for niche publishers, who can assume that their books will be (1) of particular interest to customers, and (2) displayed more prominently than they would be in a bookstore.
A premium sale occurs when a corporation or organization decides to offer a book as a gift to its clients or as a promotional tool. Wells Fargo, for example, might buy 5,000 books on stage coaches. Generally, the books are sold at a steep discount and are not returnable. These deals can be lucrative for the publisher, and are best arranged before printing, so that print-runs can be adjusted accordingly. The sale also has the benefit of providing free publicity for the book.
Most book clubs operate in the same way: the member is offered several free books in return for a commitment to purchase a certain number of books over a specified period of time. Periodically, a title is offered for purchase, and unless the member actively declines it, is sent to him or her, at which point it may be purchased or returned. After the member's commitment is fulfilled, more books are offered at lower prices.
Book clubs are a major player in book publishing: in 1998, they accounted for 18% of book sales nationwide, according to BISG. There are general book clubs (e.g., Book of the Month Club), more particular clubs (e.g., the History Book Club), and narrow-focus clubs (e.g., The Detective Book Club).
Most book clubs prefer to act as auxiliary publisher rather than distributor. In other words, rather than sell books on commission, they typically buy a part of the publisher's initial print-run at or near cost, or even print copies themselves, sometimes with a modified cover. They then pay the publisher a royalty on their sales (usually no more than 10% of the club's retail price, which can be significantly lower than the publisher's). Book club deals are rarely very lucrative for publishers, who generally split that small royalty with the author, but are considered highly desirable because (1) they entail little or no work, financial outlay, or risk on the publisher's part, and (2) they add (sometimes enormously) to the exposure and prestige of the title.
When demand for a title has subsided and the cost of maintaining inventory exceeds sales, publishers remainder or recycle the remaining copies. At that point, the title is generally considered out of print.
"Remainder Houses" buy books in quantity, at cost or below, on a non-returnable basis, and sell them wherever they can. Other companies specialize in recycling the paper books are made of.