Alone or in Numbers?
Bridget Kinsella -- 3/27/00
Today, more than ever, small presses must carefully calculate the pros and cons of using a distributor or going it alone
With everything seeming to change at lightning speed in all areas of commerce, one thing remains the same in publishing: no matter the size of the house, as long as a book is still primarily ink on paper, it must be physically moved from publisher to customer. For the small and independent press, how best to distribute its books is a perennial consideration.
In fact, the question of distribution is so important in the small-press world that the Publishers Marketing Association decided to make it the topic of its first white paper, published last fall. "So many independent presses just don't know where to go," comments Jan Nathan, executive director of PMA, which has a membership of more than 3,400 small publishers.
There are two basic models of distribution. A publisher can sign an exclusive agreement with a major publisher or a distribution company, such as Publishers Group West or National Book Network, whereby the larger company handles all sales to the book trade (and a roster of other optional services) in exchange for a fee. Or the press can go it alone and try to maneuver its way through the meandering maze of national and regional wholesalers, both bricks- and clicks-and-mortar booksellers, and the endless realm of nontraditional markets. It all comes down to questions of economics and control.
At the same time larger publishers have been merging and creating a smaller pool of companies at that end of the industry spectrum, there has been a surge in the independent-press market, meaning more people than ever are weighing their distribution options. "As the 800-pound gorillas put on more weight, it is getting tougher and tougher for the rest of us to elbow our way into shelf space," says Robert Alberti, publisher of Impact Publishers in San Luis Obispo, Calif. "So why not use a distributor?" he asks. "That's a very good question, and the one we've been looking at very closely for the past few weeks."
For 30 years, Impact Publishers has produced mostly self-help and pop psychology titles. In the '70s, its books were distributed by Price Stern Sloan, a publisher based in L.A. and later bought by Putnam. In the '80s, Impact went with Publishers Group West. When PGW wanted Impact to sign an exclusive deal, according to Alberti, the company decided to go it alone. "We've been barefoot ever since," he tells PW.
Historically, the impetus behind using an exclusive distributor was to gain access into the book trade that a small publisher might not otherwise attain on its own. Aside from handling the drudgery--the pick, pack, ship and accounts management--the distributor employs a sales force that sells to the bookstores and wholesalers. Distributors also provide valuable publishing advice, from tips on everything from cover design to marketing strategies that a growing press might need. All of this for a fee of about 25%.
Publishers who opt to go the solo route, either by warehousing themselves or using fulfillment companies, hawk their own wares to the book trade--or not, as is the case with many niche publishers who find success in nontraditional markets. For the bookstore and library markets, publishers can hook up with national wholesalers, such as Ingram and Baker & Taylor, through their small-press programs. Even so, it is still up to the publisher to promote the books. Some small publishers say they like this control and see it as a challenge that fits their entrepreneurial spirit. But, with more and more independent presses and books to chose from, making a book stand out is becoming increasingly difficult.
Tracking the Numbers
"It all comes down to servicing the customers, and the [bookstores] prefer to go through somebody that has a lot of titles," notes Mark Suchomel, president of the Chicago-based distributor Independent Publishers Group. In his experience, Suchomel has found that most booksellers think it is too costly to set up every small publisher as a vendor. "That means they have to place an order, cut a PO, cut a check, all that kind of stuff," he explains. "If they do that for everybody, the whole day is taken up."
It is a matter of numbers. To illustrate, Suchomel uses a hypothetical example. "If it takes the bookstore $1,000 to set up and manage a new vendor, it makes a lot more sense for them to do it with Company A with 300 titles than Company B with 30. The saddest part about that," Suchomel continues, "is that someone with a really good book won't be successful with it just because of the economics and not because the book isn't any good."
Marcella Smith, director of the Small Press and Vendor Relations department at Barnes & Noble, agrees with Suchomel: "Our rule of thumb is that we prefer to deal with a small press either through a wholesaler or a distributor." In fact, while B&N policy d s not require independent presses with whom it d s business to use a distributor, it d s "strongly request" that the books be available through a wholesaler.
Both in her B&N capacity and as a past PMA board member, Smith has traveled the country to discuss small-press issues."I find that whether I am on a panel with a large bookseller organization like Barnes & Noble or with independent booksellers," she says, "booksellers almost unanimously agree that it is so much more efficient for their business and for the business of the publisher to get their books either through a wholesaler or distributor."
On the publisher's end, Smith explains, it means shipping to one location where the books are then available to any bookstore that d s business with that wholesaler or distributor with- out the press having to set up a multitude of accounts receivable. For B&N, getting small-press books from a distributor or wholesaler is efficient because the bookstores receive larger shipments from fewer sources. "It's easier for our stores to receive 100 cartons from a single supplier than 100 cartons from 100 different suppliers," she tells PW. "So it provides efficiency on both ends."
Naturally, distributors are amazed that any publisher would try to take care of all the messy parts of the business. "To me--of course I'm a little biased--I can't imagine anyone in their right mind doing it," remarks Jed Lyons, CEO of National Book Network. "There's just no good reason to do it." Lyons lists three key reasons why independent publishers should use a distribu-tor: professional sales representation, sophisticated distribution capabilities and guar- anteed accounts receivable, i.e., getting paid on a monthly basis.
For some independent publishers, however, the benefits of exclusive distribution do not outweigh the costs. "Our profitability began when we got rid of the distributors," recalls Martin Shepard, who cofounded the Permanent Press in Sag Harbor, N.Y., with his wife, Judith, 22 years ago. "For at least the last 12 years, we've done our own distribution, and it's much more lucrative to do it yourself if you can get your own warehouse space." Of course, having a 22-acre farm, as the Shepards do, conveniently resolved their warehouse problem. "We just expanded andconverted a building," Shepard notes.
Between Shepard, his wife and three part-timers who add up to one employee, the Permanent Press publishes about one book a month. The press's list, which won the LMP Best Editorial List Award in 1998, is comprised mostly of what Shepard calls "artful fiction."
Generally small presses have a hard time distinguishing their fiction with bookstore buyers--one reason a publisher might choose to make use of a distributor and its sales force--but Shepard says the Permanent Press gets good and frequent reviews, which helps with sales. "It d sn't cost us anything to warehouse our books, and it d sn't cost us anything for sales people, because we don't have any," he explains. "The sales go directly through the wholesaler. Then we get the reviews, and there are some independent [booksellers] we call directly, but we never have to leave Sag Harbor to do that."
Denver is not exactly at the center of the publishing universe, but sales have only increased for MacMurray & Beck since it left NBN to distribute its own books three years ago. "Sales increased because it's our bread and butter, and if we don't sell the books our company folds," says Melanie Mitchell, sales director. "It's amazing how focused you become."
Independent booksellers became a major area of focus for MacMurray & Beck. "It is amazing how just a nominal amount of effort per store can bring results," says Mitchell. But she said M&B might not have had such huge success with titles such as Girl in Hyacinth Blue by Susan Vreeland (nominated for a National Book Award) and Hummingbird House by Patricia Henley, if it had not created an infrastructure that allowed the press to better concentrate on its sales and marketing efforts. As a distributed publisher Caitlin Hamilton handled all the sales and marketing. Mitchell joined the press last year to manage sales so that Hamilton could focus solely on marketing.
Stepped up marketing efforts, particularly to the independent stores, seems to have paid off, particularly with Girl in Hyacinth Blue. "The success of that book is attributable to the independents and to the Book Sense program," says Mitchell. And it should not go unnoticed that for a press that produces eight books a year, MacMurray & Beck certainly received its fair share of reviews last year--again, the result of targeted marketing.
"We did not have the time to concentrate on each title per bookstore," according to Mitchell. "So we aimed to build a name for ourselves as a small publisher of quality fiction."
By way of marketing, the Permanent Press publishes a newsletter to stay in touch with review editors. Shepard points out that the authors help get the buzz going about their titles as well. For example, for a recent title, Bloodlines, author Bruce Ducker, who lives in Colorado, arranged a signing at the Tattered Cover in Denver, and the bookstore ordered 120 copies for the event. Since print runs at the press hover around 2,000, Shepard tells PW he considers that a pretty effective marketing plan. "We do the marketing that way, as opposed to a sales person going into a store and saying, 'You have to order 700 copies of this book because it's great,' and then getting 600 copies back because nobody notices it," he adds.
Managing returns is a major reason why the Permanent Press prefers to handle its own distribution. "If you do it yourself, you might sell fewer copies, but your return rates are much lower," says Shepard. "You might have 20% return rates because you are not overstocking anybody and you let people play catch-up. And, of course, you also save 25% of your income."
The Case for Getting Help
Not far from the Permanent Press, in Bridgehampton, N.Y., another small publisher g s about distribution in an entirely different way. When Warren Phillips cofounded Bridge Works Publishing Company eight years ago with his wife, Barbara, they knew they didn't want to work without a distributor, and they are happy to leave all the pick, pack, ship, sales and collections to NBN. "We did that primarily because we want to focus on the books themselves," Phillips notes. "We value the one-on-one relationship with our authors, the editing of the book and the promotion and marketing of a book."
While Philips says, "We're small, and we wanted to stay small," he adds that Bridge Works also wants to have wide entree into the book trade, which NBN makes possible.
Like the Permanent Press, Bridge Works uses a few part-time employees and freelancers to produce "artful fiction," but it also publishes books on public policy, memoirs and even essays. Phillips tells PW that he works closely with the sales staff at NBN. "They have a sales force of about 50 people. They deal with the chains and wholesalers and independents--and cover much more ground than a small publisher can hope to."
Deciding whether to use a distributor or not largely depends on why someone went into publishing in the first place. "If you are an entrepreneurial editor then you want to focus on the product creation side," says PGW's CEO, Charlie Winton. "If you are shipping books and worrying about getting paid, then you have less time to spend on editorial development."
Winton calls the publisher/distributor connection a "mutually self-interested creative partnership." He points out that PGW d s a lot more than just handle the mechanics. "What they are getting is a creative partner who is just as interested in growing their company as they are."
A publisher's size plays a major role in what distribution model it chooses. Even Randall Beek, CEO of Consortium Book Sales & Distribution, renowned for successfully selling independent fiction to the trade, will admit that an independent publisher with sales of about $2 million might be able to go it alone, although he d sn't understand why it would want to. "It is tremendously expensive to have a warehouse, to have the shipping that you need, to have the technology needed to handle things like EDI transfers and to meet all the needs of Barnes & Noble and Ingram," he notes.
Who's Minding the Storage?
David Godine, publisher of David R. Godine in Lincoln, Mass., decided to bring the distribution in-house when the company hit that $2 million sales level about seven years ago. While Godine never signed with a distributor, he did use Publishers Storage and Shipping Corp. in Pittsburgh for fulfillment. "I think you have to be of a certain size and have a certain volume to be able to do your own distribution," says Godine. The company publishes roughly 40 new titles and 40 reprints a year, with average print runs of 4,000.
According to Godine, "The biggest advantage of having your own warehouse is that you don't have to worry about your carrying costs too much." He recalls that PSSC charged roughly two cents a year to store a book. Those costs add up when extrapolated over a few years for every title. "We were looking at storage charges that were pretty much what we could pay in rent," he adds. "So we're clearly ahead of the game, especially since we have a lot more units than we did then."
Now Godine's books are stocked in an 8,000-sq.-ft. rented warehouse, which he plans to buy this year. "We have a little forklift that runs around and three people working there," he tells PW. "If you keep in touch with your warehouse, you know where the action is and where it is going," he continues. "I get a daily sales report as to what books are moving and what books have died."
Godine handles its own sales in New England and the Midwest and uses three independent rep groups to cover sales in other areas. "Our business has been terrific," the publisher notes, " but it's not necessarily going to the sources you might expect." For example, Restoration Hardware was Godine's biggest customer last year, largely because of a few titles that go nicely with Restoration's retro-chic settings. Knowing your own list is crucial, says Godine, who stopped using Ingram several years ago. "I've never regretted that decision," he claims.
Knowing Your Niche
Many of the independent publishers who successfully do their own distribution seem to have their niche marketing down to as much of a science as anyone can with books. Pfeifer-Hamilton Publishers in Duluth, Minn., had a huge success with the title Old Turtle by Douglas Wood, illus. by Cheng-Khee Chee, which sold tremendously in the gift and children's boutique markets. "When I do a PMA seminar, I tell people the book trade is great, but don't publish a book you think you can only sell there. It's too risky, especially when there's one buyer for a major chain who may or may not like it," Don Tubesing, publisher of Pfeifer-Hamilton, tells PW. Tubesing says he might just have another Old Turtle on his hands with The Quiltmaker's Gift by Jeff Brumbeau, illus. by Gail de Marcken, which has sold more than 120,000 copies since it was published in October. As with every title it d s, Pfeifer-Hamilton considered a secondary market for The Quiltmaker's Gift before publishing and is devising as many marketing schemes as it can imagine.
"If we don't have a hook, then I can't sell it. We don't have the same distribution clout, so we have to have a book that hooks people," Tubesing notes. Obviously, the hook here is the quilting angle. It is clear that Tubesing loves the sales and marketing aspects of publishing, which is why he says he will never sign on with a distributor. "I think like a marketing person, and I love that part of it," he explains. "So why give away some of the stuff that is really fun?"
Pfeifer-Hamilton also tries to target geographic or topical markets. "We haven't tried to sell everywhere, because I am limited, and I don't have people outside helping with distribution," Tubesing points out, "but it d sn't matter because the markets are so big. If you get your corner really saturated and get people talking about it, you can sell as many books in a small segment and in a small geographical area as you could trying to sell all over." Even with more than 800,000 copies of Old Turtle sold, he says the press didn't even try to reach every reader across the country. Tubesing believes that the drive to have its books in every store across the country is a mistake often made by the small and medium-sized publisher. "Their authors drive them to make it," he asserts. "It happens all the time. I got a call from an author on a Saturday night who said she was in a bookstore in Pensacola, Fla., and she wanted to know why her book wasn't there. If I have one book in every one of those places, I'm going to get half of them back."
As reflected in its name, Sports Publishing, based in Champaign, Ill., produces niche titles. The company's president, Peter Bannon, says the press hones the list further by publishing sports titles for specific geographic regions. "We did a book about Hayden Frye, the football coach at Iowa State," Bannon continues, adding, "I don't want to sell that book outside of Iowa." So Bannon prefers not to use a distributor. "If they sent those books to New York for some reason, I'm going to get them back in returns."
In addition to keeping returns down, concentrating on a geographic or niche market makes it easier to respond to the success or failure of a title: "You can cut your losses that way. If it isn't working in a single area, you'd better be certain why you think it is going to work elsewhere."
The flip side of that is managing a successful title. "A major part of my job," notes Richard Croog, marketing director of Johnson Books in Boulder, Colo., "is [making sure] that if an opportunity arises, everyone is prepared for it." Recently, Johnson Books scored its first review in the Wall Street Journal for the title Cutthroat by Stephen Keating. Since the press takes care of everything itself (even the printing, through a separate division of the company), it was able to respond quickly to the increased demand. A first printing of 3,500 is typical for Johnson titles; in this case, the publisher plans to print another 2,500.
With a full-time staff of eight and by outsourcing some editorial responsibilities, Johnson produces roughly 10 books a year and has a backlist of 100 titles, in the areas of history, the environment, outdoor recreation and the West. Croog says the book trade accounts for the majority of sales, although he declined to release the dollar figures for the private company. Johnson uses commissioned reps and national and regional wholesalers to penetrate the bookstore market.
"We evaluated that it would be too costly to work with a distributor," Croog tells PW. "If you produce your own cat-alogue and do your own marketing, then you are the focus, and you give yourself your own attention. You sort of make the world that you bustle in."
Advocates of distribution companies, and the distribution companies themselves, say experienced distributors offer valuable publishing advice that helps independent publishers grow their businesses and their lists in a stable way. Dominique Raccah, who started Sourcebooks 13 years ago in a bedroom in her suburban Chicago home with $17,000 and now finds herself running a company the size of Henry Holt, says she credits her distributor with helping her build the company. Sourcebooks was distributed to the trade by Login Publishers Consortium until last year when Raccah sold her interest in LPC and decided to bring distribution in-house. While Sourcebooks became too large for it to make sense having a third party between it and its customers, Raccah remains a strong proponent of distribution for small publishers. "I think distribution allows you to really focus on the publishing and marketing aspects," she tells PW, "and once you have those aspects nailed, you can conquer the world."
But before small and independent publishers try to take on the world, PMA's Nathan cautions them to do their homework. First, she stresses, publishers need to determine if their books are for the bookstore market. "If you think the bookstore market is in your mix, then you must establish a relationship with a wholesaler, and then go look for a distributor."
Over the years, there have enough distribution disasters, including bankruptcies, to make some publishers justifiably cautious. For this reason, Nathan encourages publishers to investigate a prospective distributor by talking to its clients, both the publishers and bookstores. "When I see a distributor taking on any and all kinds of product, I'm concerned," she says. "Some small publishers are so happy someone wants to carry their books that they do not take the time to consider if their titles are a good fit with a distributor's overall list."
Back To Features
---> |
