The uneven progress of technology -- and the astounding path it will take us down -- were strikingly displayed by speakers at the 21st annual International Distribution and Supply Chain Specialists meeting held last month during the Frankfurt Book Fair.
At its meetings, the group, representing many countries, focuses on technical and logistical issues surrounding the book business, which includes everything from new warehouse picking and packing systems and electronic data interchange standards to the latest developments in on-demand printing and online bookselling.
On one hand, keynote speaker Mike Shatzkin outlined what he called "the inevitable future of the book business... when the printed book will be an artifact or a rich person's toy." This should occur within the next two decades: "By 2005, we'll still have the printed book, but everything surrounding the book will change more than it has since 1905. By 2020, the book will probably be gone." On the other hand, some speakers described situations that were far removed from a high-tech future. For example, Peggy Yu Yu from CNBIP in China lamented that she felt like "an antique" following Shatzkin's remarks because she is struggling with such old-fashioned transportation issues as "sending a book from the west side of China to the east side in 30 days."
A Bookless Book World
In Shatzkin's brave new world, there will be no printing except for, say, art books, which will be printed one copy at a time. The new "book" world infrastructure, which has yet to be fully invented, will put "printers and shipper in peril, and others will have to change form to serve the same purposes as they do today."
The changes will come about because of the expansion of e-book readers and related electronic readers (a current example is the Palm Pilot). Within 10 years, cultural barriers against the e-book will be weakened, in large part because schools and corporations will spread the use of e-books by giving them to students andemployees as a cheaper way to facilitate communication. At a certain point, there will be more material available on e-books than in print, leading to what Shatzkin called an "e-book flip."
The next five years, as the book business prepares for this "inevitable future," will "not be highly profitable." Costs will include digitizing existing texts and investing in new systems and technology while maintaining the old. For the moment, there are many challenges: to send digital files faster, to improve the quality of on-demand printing, to make e-books cheaper, better, and lighter. The business has "no idea how to handle [e-books] pricing and rights," Shatzkin added.
He predicted, among other things, that on-demand printing will soon become routine; that there will be more cross-border commerce; that more titles will be "in print"; that the sale of English-language titles will grow in non-English-speaking markets while more non-English-language books will be sold in pockets of the English-speaking world; and that most book business transactions, including editorial and marketing functions, will be made on the Internet.
The East Is Ready
Yu Yu, whose company has the largest Chinese-language online bookstore, outlined the state of the Chinese book market and pointed to certain opportunities for international companies. Total book sales in China are estimated at $4.8 billion, 60% of which are texts. There are 565 state-owned houses and some 10,000 private publishers, a number that continues to grow. Publishing is highly profitable although cyclical, with growth ranging from 5%-50% a year, and averaging more than 10%. (Oddly one strong source of revenue for the state houses is the sale of ISBNs to the private publishers.)
While Xinhua was the only bookstore company before the reforms of the 1980s, there are now approximately 77,000 bookstores in China, 12,000 of them state-supported. There are comparable diverse numbers of wholesalers, with some 30 state wholesalers and more than 1000 private ones. The largest wholesaler sells books to just 9% of the market.
Yu Yu said that while there are limits on foreign ownership of bookstores -- which are "loosening up," however -- there are opportunities for international book retailers in China, which d s not have the kind of superstores that are so popular in the U.S. Likewise, any international wholesalers who set up shop in China could probably take a good piece of the pie.
Return to Returns
Iain Burns of the U.K. Book Industry Supply Chain Steering Committee and Andrew Hodder-Williams of the KPMG consultant firm discussed a study of how to reduce the cost of returns undertaken by KPMG. The report estimated that returns cost 13% of sales for the British book industry, compared to a cost of 6% for general retail, and each returned book costs publishers £1 and booksellers 50 pence. One especially horrible statistic: there are 60 weeks of stock in the book chain.
With a flow-chart lover's precision, Hodder-Williams identified several problem areas in returns, particularly when compared to other industries. He recommended improved technology and systems, which would allow, among other things, standardization of returns authorization and the elimination of many steps, including today's painstaking negotiations, from the process. Sharing information about sales and stock is also key, he said.
A Chip in Every Book
Karl Lawrence of HarperCollins noted that chip technology is improving to the point where radio frequency identification tags -- in plain English, a tiny chip that can transmit information -- will soon be cost effective to bind into books. It is something like a bar code but more versatile because it can be "read" through boxes, and many of them can be read simultaneously. The chips can be used for inventory and receiving purposes as well as for security tags. One example of its use: an entire carton of newly arrived books can be scanned in an instant and identified immediately.
The Demands of On-Demand
Michael Holdsworth of Cambridge University Press reviewed the press's experience with on-demand printing, which Holdsworth characterized as "no longer a new technology. It's proven, been around for 10 years, and is better and faster all the time." His key point: even books that go out of print under traditional measures still have a market, which on-demand printing makes economical.
Holdsworth said that of the press's 13,500 titles in print in 1998, 8200 were backlist and had sales of less than 100 units a year. In fact, the average backlist title sold just 32 copies in the year. Still, altogether the backlist had sales of $8 million. Moreover, the 1000 titles discontinued in 1997 had sales of $3 million in the previous year, an amount that on-demand printing should be able to recoup.
One of the interesting difficulties of instituting on-demand printing is that it comes up against the prevailing publishing culture. People in the business believe, for example, that books have "a life." But that "life," Holdsworth emphasized, is determined by the cost systems of old print technology.
Xtra, Xtra, XTML
Sandy Paul of SKP Associates made the case for setting standards for electronic data interchange via XTML, a highly popular, easy-to-use and flexible graphical text display that is superior to HTML. "Get ready," she said. "It's not the strongest who survive. Rather, it's those who adapt to change who survive."
Fulfilling Online Orders
Jim Ulsamer of Baker & Taylor discussed how wholesalers fulfill orders for consumers on behalf of retailers, usually Internet sellers but also some catalogue companies and a few bricks-and-mortar stores. Until the advent of Internet bookselling, such one- and two-book orders were something "we tried to stay away from," he said, but now "we want to pursue them."
Wholesalers offer many advantages to online booksellers by providing such services, he continued: full-service wholesalers such as B&T have an extensive database or license a database; they can pick in bulk and sort later in the warehouse; they can provide sales and co-op reporting; they can do account management; they are transparent to customers; they can ship orders in one box. Usually for e-tailers, wholesalers are cheaper, faster, more flexible and more dependable. They also can deal with the cycles of the business. Internet retailers who do their own order fulfillment generally do so because they want a sense of control and security, although, he stressed, companies such as Baker & Taylor keep all information confidential.
Info G s Global
Richard Knight of Whitaker Booktrack commented on the company's expanding global book sales reporting capability. Expanding on Booktrack in the U.K., Whitaker is now beginning to take sales information from 114 Australian shops and should have reliable data from that country by mid-2000. It is also testing in South Africa and even obtaining some data from China. Bookscan in the U.S., owned by Whitaker's owner, BPI, is collecting data from 1600 stores, or about 35% of the general trade.
PubEasy Stays E-Z
Several users of PubEasy. com attested to the usefulness of the system, which has more than 1500 registered booksellers from 60 countries and more than 1660 U.K. publishers and imprints and some 290 U.S. publishers and imprints. Arild Jacobsen of the Olaf Norlis Bookstore in Oslo, Norway's largest bookstore, reported that 25% of the store's business is import orders -- it places approximately 50,000 orders a year, about a third of which are customer orders.
One of the largest users of PubEasy. com, Olaf Norlis Bookstore has, over the past 15 years, dramatically reduced ordering and delivery times, in large part because of PubEasy. In 1985, the store ordered books from abroad by mail, with the average delivery time from the U.S. taking three months by sea; it now fulfills orders from the U.S. in nine to 21 days by air. "PubEasy has improved the business, saved lots of time and sped up delivery," Jacobsen said. He also asked for certain improvements to be made, particularly the ability to place orders centrally, handle backorders, track orders, give discount information, offer shipping options and give e-mail confirmation of orders.
Speaking for Little, Brown U.K., Charlie Viney added that PubEasy.com was an "ideal tool for customers to place orders."
