With sales and demand climbing, the No. 2 national wholesaler plans to double in size.

If anyone doubted that the world of book wholesaling would change dramatically following last fall's announcement that Barnes &Noble would buy Ingram Book Co., it was put to rest two weeks ago, when Baker &Taylor Books, the country's number two wholesaler next to Ingram, unveiled an expansion plan that will nearly double warehouse capacity and add music and videos to the product mix (News, May 24).

Of course, since the B&N-Ingram announcement, many of Ingram's major customers -- from Amazon.com to thousands of independent bookstores-have reacted angrily, dropping Ingram down on their wholesaler lineup (where it had usually been first), cutting back orders or, in the case of Amazon.com, expanding its own distribution system on a scale that rivals Ingram's.

This has amounted to an unintended gift to Ingram's competitors, which, besides B&T, include many regional wholesalers. If this gift had to be, it was timed well, according to top B&T executives, who express no schadenfreude over the difficulties at Ingram.

B&T Books president Jim Ulsamer says that sales in the past year are up more than 20%, echoing figures and comments from other book wholesalers. He also notes that sales to independents are an increasing percentage compared to other segments of the market. "The independent market for us is a growth market," he declares.

Most important, Ulsamer says, is that after several years of difficulties from a huge computer conversion beginning in 1994, Baker &Taylor is "where it wants to be as a company" and has organized itself "to focus on growth opportunities in the market."

Taking advantage of growth opportunities is the basic reason for the company's big expansion, which will include increasing the size of two of its four warehouses (Commerce, Ga., and Momence, Ill.) and moving the other two (Reno, Nev., and Somerville, N.J.), adding a total of 650,000 square feet, or more than 90%, to the company's warehouse capacity. Three of the four warehouses should be ready to use by September, Momence by November. The New Jersey change will include consolidating the warehouse, offices and the Franklin speed-stock building into one building. (The offices may take longer to move than the book warehouse.)

The number of titles stocked at the warehouses will increase initially by about 50,000, and the depth of stock will also grow. (B&T currently offers some 400,000 titles.)

Among other benefits of the expansion:

  • The company will begin drop shipping from all four warehouses, not just the one in Momence, as is the case now;

  • For the first time, B&T will be able to ship all kinds of product in one box, which is especially appealing to customers who sell books online;

  • The company will be able to expand its customized library services, which needed more space;

  • Perhaps most important, B&T will be able to offer more books.

Other Expansions

Recently, the company has been expanding and refining other areas as well, particularly electronically and internationally. The computer conversion in its four warehouses has reaped major benefits, even though it caused significant disruptions for a time: "We turn orders around as fast as anyone, if not faster," Ulsamer says. The company was back on track as early as 1996, he notes, but "perception trails reality," so it took several years for sales to begin growing again. If the company did the conversion again, he adds, "We would do it in bite-sized pieces."

Many booksellers seem to agree that service is good, according to those surveyed by PW for this article. Richard Klein of Book Revue, Huntington, N.Y., told PW that B&T is its first-call wholesaler, and Book Revue has had "very good luck and good service from them from top to bottom."

In addition, B&T has been "reasonable and easy to work with," he says. "They have showed us they wanted our business."

Tom Leonard of Vero Beach Book Center, Vero Beach, Fla., said that his store relies heavily on B&T, which has a fill rate that's over 90%: "Their service has been excellent."

Leonard's satisfaction increased greatly, he adds, when the company allowed the store's orders to cascade from the B&T warehouse in Commerce, Ga., to the large one in Momence. Besides, "they are stocking the kinds of books we sell."

The company says it has actively stepped up its connections to booksellers. Besides advertising in all media for booksellers, it maintains a field sales force of six who call on booksellers.

The company sells to some special market accounts, but remains focused "on reaching the stores," as Bill Preston, senior vice-president for sales and marketing, retail and international, puts it.

Recent Initiatives

Among the major services and products that the company has added in recent years:

  • TitleSource, the online book database that is expanding the number and depth of entries and is being used by a variety of professionals in the book business;

  • Replica Books, the on-demand printing operation that recently revamped its business model;

  • Online bookseller fulfillment services, including acting as a fulfillment agency for BookSense.com, the American Booksellers Association's Web site for member booksellers that will be introduced this summer;

  • Bolstered international operations.

Of all these programs, Baker &Taylor is perhaps most proud of TitleSource, its book database that began a decade ago in CD form and was introduced online in 1998.

The TitleSource database has more than 2.2 million entries, many of which include jacket and cover images, tables of contents, reviews from a variety of media, more than 500,000 annotations and other pertinent information about titles.

Price and status changes are current, and TitleSource contains availability information from other wholesalers besides B&T, such as K n Book Distributors.

Besides booksellers, TitleSource has developed fans among publishers, literary agents and others in the book business who use the database to compare their titles and prices or proposed titles with competitors' and to do sales and marketing research.

"It used to be that publishers had to come into our offices to get this information, but now they have access to this from anywhere they have a computer," Jean Srnecz, v-p of merchandising, says.

Bookselling on the Internet

Baker &Taylor, which invested early on in Amazon.com, continues to sell regularly to the online retailer. For a time, there were strong rumors that the Seattle company was interested in buying B&T, but Ulsamer says that while Carlyle Group, the owner of B&T, would consider any offer, the company is not in play or for sale. About the continuing rumors, he says, "We would be best served by remaining an independent company." He describes Carlyle as a "financial" investor rather than a "strategic" one.

B&T sees itself as "an enabler in e-commerce" -- both in terms of providing databases and the books themselves. The company offers two business models for online bookselling.

In one, it provides traditional wholesaler services: the bookseller takes an order, transmits it to B&T and B&T ships to the bookseller's store or warehouse and the book retailer ships the book to the customer.

For almost a year and a half, B&T has also offered drop-shipping services for online retailers: the bookseller transmits orders with the customer's name and the retail price for the customer. B&T then prints out the shipping label and invoice, which bears the retailer's name. B&T remains "invisible" to the consumer, as Ulsamer puts it.

"The key difference for us in the second model," Bill Preston notes, "is that the bookseller has to give us an expanded record that includes more than just the ISBN and quantity. Also now we have to know the prices to charge, the customer name and address."

Orders received by noon are shipped the same day. B&T's pricing for books shipped under these programs is identical to its usual pricing, with the exception of the mass market paperback discount, which is a little lower. The bookseller pays an initial setup fee of $250, which is refunded after a certain level of sales is reached. The company charges 95 cents per book, has a drop-ship fee and uses pass-on freight.

Among its better known customers of the service is VarsityBooks.com, the online college bookseller that opened for business last summer and offers booklists from more than 50 colleges and universities. VarsityBooks.com, which has several imitators, has been shaking up the college text retailing world (Bookselling, May 3).

B&T is also one of the fulfillment companies (besides store members themselves) for the ABA's BookSense.com Web site, which can be customized by ABA bookstores.

Some independents also use the online bookselling services. B&T has "several dozen customers for this service, some bigger than others, some niche players," Ulsamer says.

The Web has revolutionized book sales, Ulsamer and his top executives agree. "When Net sellers displayed databases with millions of titles in them and made them accessible worldwide," it changed bookselling, Ulsamer says.

It is online booksellers who are most interested in being able to order music and video titles with books. B&T had been hoping for some time to "bring the different aspects of the company together," Ulsamer says.

With books, music titles and videos "under one roof," the company can now send all products in one box. For example, B&T could ship the soundtrack to Titanic, the Titanic video and books about the Titanic together.

On-Demand

Replica Books, the B&T division that offers on-demand printing services, started a year and a half ago. Like the Internet bookselling operation, it offers two business models.

In the original model, the company focused on producing hardcover editions of out-of-print and out-of-stock-indefinitely titles with libraries in mind. Replica now also prints trade paperback titles, which gives it a broader base of titles and improves turnaround time because the covers are easier to make.

From the beginning of the program, Replica has licensed and published the book, giving it a new ISBN. But in a recent addition, under the Select Plan, it also can publish nonexclusively, giving the original publisher control over the book, including list price and format. B&T also sells to other wholesalers, making Replica a distributor and publisher. Currently, Replica has some 300 titles.

Replica's Web site (www.replicabooks.com) contains the service's searchable catalogue and allows publishers, librarians, booksellers and readers to make suggestions for title considerations.

Some of the process is now outsourced, but B&T intends to bring all printing in-house eventually.

International Opportunities

International business at Baker &Taylor has been "very strong" for the last year and a half, according to Ulsamer, in part because of the growth of sales of U.S. editions of books overseas.

The company has increased the frequency of its air shipments to key foreign markets, shipping to the U.K. three times a week and to Germany, Australia and New Zealand two times a week.

"It used to be that to sell overseas, a publishers would ship a few tons of books via boat. The books would sit in a warehouse, and a distributor would sell them at marked-up prices," says John Bacon, vice-president of international sales and marketing.

Now international customers like to order from one source and get the books quickly. "We can supply books very, very fast and all over the world," Bacon says. Air freight used to be a major expense but is "more reasonable" now, Ulsamer states.

Baker &Taylor International, whose staff members are based in the U.S. but travel extensively (it also has sales offices in Australia and Japan), provides a variety of services to international customers, who, Bacon says, "like to see our reps. Our reps bring lists of important titles and discuss rights issues." The international division supplies books and other products to more than 10,000 bookstores, schools and libraries around the world. The World Edition of TitleSource contains information on more than 3.1 million English-language titles from the U.S., U.K., Australia, Canada and other countries.

The division also works with publishers here, identifying which of their authors do well in which countries and helping others know what's working well in the U.S.

Most international business is to retail accounts, although in some countries libraries are important and in others, such as Germany, bookstores resell to libraries. B&T also has some professional customers.

In Germany, B&T partners with Koch, Neff and tinger, the country's largest book wholesaler, so that KNO customers can buy B&T titles through KNO.Business in Asia, which had suffered as the currency crisis spread beginning in 1997, is "coming back," Bacon says.

The company has also benefited from increased demand for American titles and American editions of titles. "The export market used to be mainly British," Bacon notes.

For B&T, it seems that opportunities abound everywhere. "We think we have an extremely bright future," Ulsamer says. "There's a lot of positive momentum. All of our major business segments are growing."