The recent decision by Consortium Book Sales & Distribution to offer free freight and Chronicle Books' similar move at the beginning of the year are part of a second, smaller wave of free freight terms being offered by publishers and distributors. Now small independent presses like Seven Stories and Coffee House Press can compete with big houses on price. Although the initial free-freight bandwagon ended three years ago, when the last of the major trade houses—Hachette and Macmillan—joined their competitors, the question still remains: is it worth it?
Obviously, it's still too soon to tell for Consortium, although president and COO Julie Schaper is optimistic, especially about the potential for promoting backlist. “Based on the conversations [Consortium sales and marketing director] Jim Nichols and I had with booksellers, basically, they weren't purchasing a lot of backlist.” With the incentive of free freight, she projects an overall increase in sales of close to 10%, which is good news for Consortium's publishers, who have to absorb much of the increase in shipping costs. In addition, bookseller discounts have been reduced from 45%—47% to 44%, with free freight on orders of 20 copies or more; orders can be combined with those for Perseus Books and PGW.
But some find flaws in Schaper's reasoning. “Our view is that free freight is really a misnomer, because most of the free freight programs are built on the backs of our [clients],” said National Book Network president Jed Lyons. Alluding to the fact that wholesalers and big-box stores like Ingram and Barnes & Noble send their own trucks to pick up their orders, Lyons added, “Our largest customers don't want free freight. They know they'll get lower discounts and less margins.” Other independent press distributors, like Atlas Books, are still mulling their choices. “This issue ultimately affects the fee structure between AtlasBooks and our publishing partners. Shifting to free freight is really not a decision I can make alone,” said AtlasBooks COO Dave Wurster, co-owner of BookMasters.
For some houses, free freight's competitive advantage outweighs other considerations. “Free freight has been very good for Hachette Book Group, and is definitely a valuable tool,” said v-p, communications director Sophie Cottrell. Although not all Hachette clients have moved to free freight, when Chronicle switched to Hachette, it also switched to free freight. By picking up the tab for shipping, said Chronicle president Jack Jensen, the company is looking to satisfy both its bookselling and gift and specialty market accounts, which have come to expect vendors to pay the freight. “Going to free freight is the right move,” Jensen said. “Still, I always worry that once it happens, it's forgotten about. It's our responsibility to continue to use it as an incentive.” He acknowledged that another long-time Chronicle purchasing incentive, keeping prices low, could be affected if transportation costs continue to rise.
When Macmillan moved to free freight in 2005, it reconfigured its publicity and promotion and timed them to an on-sale date. “This is a big improvement over shipping F.O.B. [where booksellers pay the freight], when we had less control and might not have full distribution of titles in a timely way,” said Alison Lazarus, president of the sales division. “We feel we see higher first-week sales, which in some cases can make a difference in getting a book onto a bestseller list.”
Last year Chelsea Green used free freight coupled with a higher, nonreturnable discount to launch its Green Partnership program. So far 42 bookstores have signed up. But the White River Junction, Vt.—based publisher has no plans to offer free freight across the board, said president and publisher Margo Baldwin. “There is no way of capping this cost, which will only continue to grow as oil heads toward $200 a barrel,” she added.
Many small bookstores rely on free freight to make shipping costs manageable. “I've moved to a place where I hardly think about freight,” said Tom Holbrook, owner of RiverRun Bookstore in Portsmouth, N.H. He estimated that he orders as much as 90% of his inventory free freight, either direct from publishers or through wholesalers. And he is willing to wait for free freight promotions from smaller houses, even if it only means ordering from them twice a year. Similarly, Susan Mercier, manager of Edgartown Books in Edgartown, Mass., said, “Free freight is definitely something I take into account when I'm buying.”
In today's tough market, Allison Hill, president and COO of Vroman's Bookstore in Pasadena, Calif., can't afford to make free freight her sole criterion when placing an order. “We definitely prefer a greater discount,” she explained, “since we can manage our own freight costs by negotiating with shipping vendors and combining orders. Last year our 'freight in' cost for books was less than 1% of our book sales, and the free freight offers by publishers helped keep that number low.”
The troubled economy coupled with rapidly rising shipping costs are problematic for publishers as well. As Macmillan's Lazarus pointed out, “Free freight is a very costly undertaking, and the additional costs come right off the bottom line. We have no plans at this time to make a change due to rising freight rates. But it is something we continue to monitor.” Just how publishers will pass on those costs could determine whether more small to mid-sized publishers jump onto the free freight wave.
