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Gazing into the Crystal Ball Judith Rosen -- 10/2/00 How e-commerce, e-publishing and print-on-demand are changing the business
Although remainders and hurts flourished in the 1990s, when returns were at an all-time high, today's so-called smarter publishing, which relies on smaller first printings and just-in-time inventory, continues to offer a seemingly endless supply of quality titles. As Mel Shapiro, president and CEO of one of the last full-line bargain book companies, Book Sales Inc., firmly states, "As far as anybody saying that the supply has withered up--it hasn't. There are plenty of remainders around; more than enough." But with the ongoing e-volution of the book business--both the increased availability of e-books and the continued growth of e-tailers, which challenge the livelihood of traditional bricks-and-mortar bookstores, the backbone of bargain books--how long can those supplies last? Shapiro is not alone in questioning whether the Internet will change the basic bargain-book equation of fitting the right customer with the right book at the right price. "So far," he says with a chuckle at the notion of accurately predicting the future, "the Internet hasn't affected us that much."
For other bargain-book vendors with retail operations, the Net is a way to reach consumers. Those who aren't already online plan to launch commercial sites soon. While no bargain-book vendor has an exclusive business-to-business, or B2B, site yet, several are in the works. Moreover, despite the demise of longtime promotional-book publisher Smithmark last year--and rumors about a troubled future for another prominent house--most bargain-book companies anticipate double-digit growth to mark their first millennial year. To find out just what today's technological revolution means for bargain-book wholesalers, PW spoke with vendors of various sizes and years in the business on the eve of CIROBE. A Brick-and-Mortar AdvantageCIROBE president and cofounder Brad Jonas, co-owner of Powell's Wholesale Books and three Powell's retail outlets in Chicago, is convinced that bargain books are a great way for independents to differentiate themselves from their online competitors, even though he sells wholesale to Amazon.com and Barnesandnoble.com. Jonas has his own retail-oriented Web site (PowellsChicago.com) in addition to his retail stores and he believes that not carrying bargain books is as senseless as not carrying paperbacks. "Thirty years ago," says Jonas, "people thought paperbacks would lower the quality of stores. Now a store would be a dinosaur with no paperbacks." Similarly, he adds, stores need to have bargain books to give customers the added value they have come to expect. Despite the popularity of search engines such as BiblioFind.com and AbeBooks.com for rare and used books, no one has yet come up with a comprehensive online tool for bargain books. "Often," Jonas explains, "a customer has to take the book in hand and see why it's a better value." Albert Haug, owner of the 10-year-old Book Club of America, one of the biggest wholesalers of remainders and hurts, counts Amazon as one of his largest customers. Still, he says, "e-commerce hasn't really affected us." Instead he looks at it as opening up new channels of distribution. "The Internet," comments Haug, "is just another sales outlet to make it more convenient for certain shoppers. I remember 15 to 20 years ago when Sam's and the price clubs came up and everybody said, 'Why do we still need Kmart and Walden?'" He attributes Book Club of America's growth over the last three years--up an anticipated 15% in 2000 alone--more to focusing on the basics. This summer, for example, Book Club of America increased its warehouse space almost 30% (from 175,000 to 225,000 square feet) and added two more people to its sales staff. It is also finishing a complete upgrade of its internal computer system to provide better service. For J.P. Leventhal, co-owner of seven-year-old Black Dog & Leventhal Publishers, which d s both trade and promotional books, "e-commerce is still a very small percentage of the book business overall." He sees little impact on the promotional business from cost-conscious Internet shoppers, who pushed up sales of the heavily discounted Harry Potter and the Goblet of Fire at many online bookstores into the hundreds of thousands. There's very little comparison shopping of promotional books online or off because, as he points out, "promotional books aren't advertised." "Book buying on the Internet is still destination shopping. People search for an item, but remainders are an impulse buy. I don't see anybody doing a huge amount of e-business with remainders until we get a culture of browsing on the Internet the way we have browsing in bookstores," comments Robert Wilkie, general manager of Texas Bookman, a remainder house known for its high-quality stock. Nonetheless, in January, parent company Half-Price Books, which operates 65 stores in 10 states, plans to begin selling on its HalfPriceBooks.com Web site, including almost everything that Texas Bookman stocks. "Like anything else that's new, e-commerce's gotten overreacted to," opines Robin Moody, president and co-owner of 20-year-old Daedalus Books. He acknowledges that at first he wasn't sure how he felt about selling to Amazon, given that Daedalus also sells direct to consumers through its catalogues and its Daedalus-Books.com Web site. Like his independent counterparts who offer online sales, Moody has found that "whether Amazon has a book d sn't impact whether consumers come to our site or not. It all trickles down." Wholesale Outlets on the WebDaedalus, which built its Web site in 1995 at the beginning of Web retailing, is poised for another bargain-books first: to be the first remainder/hurts house to set up a B2B site next year. "We're investing a lot in developing a database for booksellers to use," says Moody. "I think that's going to help bargain people a lot. With inventory turning over so much--we have new titles coming in every month--they had to wait for a new catalogue." With the B2B site, booksellers will be able to keep track of inventory more easily. In the interim, he suggests, "Booksellers are perfectly welcome to access our [consumer] site and then order from us by e-mail, fax or mail." In other news, Daedalus is about to enter the bricks-and-mortar retail business to make more use of its warehouse expansion two years ago to 136,000 square feet. This month marked the soft opening of what Moody calls Daedalus's "genuine warehouse outlet." The 10,000 square-foot store is located off Route 95 in Columbia, Md., and sells overstock directly from pallets, not tables. Moody is aware of the importance of the Internet for both sides of his business, but he also knows its limitations, so he d sn't have any plans to give up his print catalogues anytime soon. "One of the myths about the Internet," he says, "is that it replaces the catalogue. But some people use one and some people use the other." For him, "each one strengthens the other. I wouldn't dream of doing an ad without a phone number and an e-mail address." Twenty-year-old Texas Bookman is also working on a B2B site of its own. For now, the plan is to try to find a way to offer booksellers a connection through the HalfPriceBooks.com Web site. "It will be several years before we go online B2B," says Wilkie. Random House Value, which publishes promotional reprints and handles remainders for all of Random House's imprints, bridges both consumer and bookseller customers through its participation in the RandomHouse.com corporate Web site. Instead of selling direct, it offers consumers a list of online and bricks-and-mortar retailers where the books are available. At the same time, online retailers and other customers can download jackets and bibliographic data directly from the site. "Now," says president and publisher Lynn Bond, "we are in the process of developing a ValueBooks.com Web site, which we hope to have up by January 1." For her, "it's incumbent on everybody in the promotion-book business to stay on top of your game." That translates into creating the first B2B Web site for bargain-book sellers (looks like a race between RH Value and Daedalus), as well as pushing the limits of the bargain-book market. Last year, for example, Random House Value successfully introduced a new Testament Books promotional series for Christian stores and general retailers with strong religious sections. Most remainder and hurt wholesalers that do not already have consumer sites are concentrating their Internet efforts on those first. For example, Bargain Books, which d s about 80% of its overall business through its 20 bargain-book outlets--all within driving distance of Grand Rapids, Mich.--is setting up a site to sell books online. Owner Henry Vander Goot, who currently runs both the wholesale and retail divisions (but will soon handle only the wholesaling side), regards the Web as "an important channel. I hope to get our site done within the next year."
Whatever Will Be, Will Be: E-Books & Print-on-DemandWholesalers and their retail counterparts may be rushing to capture sales on the Web, but that d sn't mean that they see a bright future for one of its most high-profile products, e-books. Nor do they worry about fallout from print-on-demand. For specialty bargain publishers like Federal Street Press, the value-publishing division of Merriam-Webster Inc. that launched its first list in spring '99, neither book forms pose much of a threat. "I don't think print-on-demand is a natural match with the dictionary business," says publisher Deborah Hastings. Although Merriam-Webster has licensed its dictionaries to Internet operators like AOL, in addition to a number of e-books, Hastings believes that there are still plenty of opportunities for bargain dictionaries. "Sometimes it's not convenient to use a dictionary on a computer, and people still like to go to a book," she notes. "Maybe it's an age thing. Certainly dictionaries in book form still have a good long run in front of them." Referring to another computer-age myth, the paperless office, she remarks, "It's like saying, once we use computers we won't be using paper again. Now we use three times as much paper." At Courage Press, the promotional imprint of Philadelphia's Running Press, publisher Don McGee regards the rise of e-books and print-on-demand as "very, very gradual things." Of more immediate concern to him is the fact that sales of promotional books have been flat industrywide, and Borders and Barnes & Noble continue to sell a large portion of bargain books that they have produced themselves under their own proprietary imprint. "A lot of people have gotten out of the promotional-book business, Smithmark being one," says McGee, who is pleased that despite everything, "we're managing to have the biggest fall season ever this year." To ensure long-term stability, Courage has put much of its energy into finding ways to continue to cut costs. Instead of turning to packagers, for example, "we're doing most of our books in house," says McGee. This means that Courage shares Running Press's editorial and production staff. Bond at Random House Value d sn't see print-on-demand or e-books making inroads into her business anytime soon either. "The real fact is cannibalization [of sales] is very minimal. Promotional books are an impulse purchase," responds Bond, one of whose bestselling promotional titles, John Kennedy Toole's A Confederacy of Dunces, is also a popular trade paperback. On the remainder side, she's been in the business long enough to know that no matter how carefully publishers set reprint quantities, "there's always going to be a situation with excess inventory." Book Club of America has yet to see any decrease in the availability of remainder titles. And as far as e-books are concerned, notes Haug, "Look at the books that are being published as e-books. They're by big-name authors. A regular cookbook and a coffee table book and a children's book, they're not being published as e-books, and that's where our strength lies. As a remainder, I can sell 5,000-10,000 copies of a second-tier author, which is more than an e-book could sell." E-Books vs. P-BooksMany bargain-book vendors bristle at the notion of an either/or situation between e-books and print. "It's certainly within the realm of possibility that e-publishing could have a major effect," says Texas Bookman's Wilkie, "but I tend to doubt it." He stresses the physicality of going into a bookstore and holding a book. "The tactile side of things g s from a customer picking up a book to the other side in the remainder industry where we price books on how they feel. We say, 'It d sn't feel like a $5.95 book, it feels like a $4.95.' The book as object; it will take quite a bit to get past that." "E-books are not going to take away print books," says Daedalus's Moody. "Publishers are always going to need to put books into bookstores. You can't grow the book business and take away its best marketing tool." He adds, "Books have remained remarkably the same for centuries, because they're a perfect form. I don't think people's happiness sitting back in a chair with a book is going to be superseded by holding a computer." As for print-on-demand, Moody remarks, "Once a book's major sales are done, rather than go back for that third printing, the publisher will do print-on-demand. It's a really important way to keep books in print, and is a fabulous way for people like Westview to keep all their books in print. But I think print-on-demand is going to be too expensive to be the major way of printing." Borrowing from Franklin Delano Roosevelt's inaugural address, Bargain Books' Vander Goot comments on the future of the remainder business, "The only thing we have to fear is fear itself. Buying books on a retail level is a form of entertainment. People are not going to give that up. Furthermore, if you add to that that people like bargains, I don't think these new technological forms of publishing are going to make a dent." For him, bargain booksellers are facing a much more serious problem: competition is everywhere. "Everybody sells books," says Vander Goot. "We really have experienced the 'Wal-Martizing' of the book industry. It's easy to add books to your inventory. It's not very risky." On top of that, Vander Goot points out that booksellers have been hit by a double whammy of high real-estate costs and high employment. "I don't see it as easy to start a bargain-book business as I did 12 years ago," he remarks. "When I started I couldn't do anything wrong. Now you need to really know the business. One of the biggest challenges is getting real estate, and one thing that's killing retail in general is finding good help." Both Jonas of Powell's Wholesale and Wilkie of Texas Bookman view new formats as new opportunities. "Stylistically print-on-demand is going to change what kind of overstock publishers have," says Jonas. "What is clearly true is that there is not any shortage of bargain books and there's no shortage of good books." Similarly, Wilkie notes, "Print-on-demand creates more used books, which just puts more things into circulation and benefits everybody. I don't think it's the end or the apocalypse." Instead his company has already turned to other options to augment its stock, which Wilkie characterizes as selective. "We tend to be a little bit more specific in what we're bidding on," he says. "We like to think that we have lists we create." Last year Texas Bookman began doing a limited number of academic reprints with Sutton Publishers in England. So far the company has only done 10 reprints, versus the 1,200 remainder titles that are available at any given time, but Wilkie has been pleased with the results. Taking a more philosophical approach, as befits the oldest company in the business, Shapiro at Book Sales comments, "E-books at this point are not going to make a difference. I don't know how they're going to create a great big art book." For now, at any rate, the Internet has done little to cloud bargain books' rosy future. In fact, if anything, it is contributing to the growth of the retail side of many bargain vendors' business. At the same time, by controlling costs, expanding into related markets and investing in infrastructure, bargain-book companies are continuing to grow their business one book at a time: selling the right book at the right price. Or as Marcel Proust once observed, Plus çça change, plus c'est la même chose--which roughly translates as: The more things change, the more the bargain-book business stays the same. | ||||||
Gazing into the Crystal Ball
Oct 02, 2000
A version of this article appeared in the 10/02/2000 issue of Publishers Weekly under the headline:
