Through this blog post, it is my goal to open up a sincere dialogue between everyone involved in the book supply chain from authors, agents, and publishers of all kinds (trade, vanity, hybrid … from the smallest independents to the corporate giants) to the printers, distributors, wholesalers, and retailers that help us create, move, and sell our books to the masses. I want to talk specifically about book returns.
SOMETHING’S GOT TO GIVE
One of the most costly and troublesome practices in the world of book publishing is an archaic book return policy that detrimentally affects net profits for both publishers and authors alike. When a publisher marks its books as “returnable” for wholesalers and retailers, it is giving them the right to return those books, at any given time, for a full refund if they’re unable to sell them—regardless of whether those books are stickered with price tags or a bit scuffed from being handled by various people.
This practice has always bothered me, right back to the days when I worked for a small literary publisher in Canada over twenty years ago. I’ve never understood why things were (and still are) done this way, so I went in search of an answer and came across a well-researched book by John B. Thompson titled Merchants of Culture: The Publishing Business in the Twenty-First Century that provided an answer. Here is what John’s research found:
“The practice of allowing booksellers to return stock for full credit has a long history in Europe but was used rarely and half-heartedly by American publishers until the Great Depression of the 1930s, when publishers began experimenting seriously with returns policies as a way of stimulating sales and encouraging booksellers to increase stockholdings. In spring 1930, Putnam, Norton and Knopf all introduced schemes to allow booksellers to return stock for credit or exchange under certain conditions, and in 1932 Viking Press announced that orders for new books would be returnable for a credit of 90 per cent of the billed cost. …The practice of returns subsequently became a settled feature of the book trade and marks it out as somewhat unusual among retail sectors.“
For decades, by continuing on with this practice, we’ve inadvertently trained the traditional wholesalers and retailers that they call the shots with regard to how (and at what price, in some instances) we should sell our books. As a result, it is next to impossible to convince any bookseller to carry even a small physical inventory of our books in their stores unless those books are marked as returnable and/or priced ridiculously low.
FEEDING “THE GODDAM BEAST”
To be blunt, I won’t play this game. I mark all of PPG’s authors’ books as non-returnable (my own included) to protect them from the crippling financial repercussions that are caused by returns; and, instead, I now teach authors how to sell audiobooks, ebooks, paperbacks, and even hardcover books online so they can better control their net profits. As I read more of Thompson’s book, my own views and policies in this regard were vindicated by the realization that other English language trade publishers, both large and small, in both the UK and the US, share my frustrations:
“…even if the book sells well, they are likely to be faced with high returns, at least 20 per cent, possibly as high as 50 per cent, which will be credited to the retailer and deducted from their receivables by their distributor, though they still have to pay the printer’s bills. ‘We call it “feeding the beast”. You have to feed the goddam beast and it just doesn’t work.’ As the returns come back they undo much of the gain they thought they had achieved with a book that seemed to be selling well… High returns are costly for publishers. Not only is a great deal of time and money wasted in packing up and shipping books that are never sold, and then packing up and returning them to the publisher’s warehouse, but printing books that are eventually pulped is wasteful and expensive, and the cost of writing off unsold stock goes directly to the publisher’s bottom line, depressing still further a profit margin already under pressure. …high returns which put downward pressure on margins is the price paid for adhering to this traditional distribution model. Improving supply chain capabilities and the ability to forecast consumer demand are important steps forward in the struggle to deal with the problem of returns, but they are really tinkering at the edges. ‘The physical side of the business is as broken and inefficient today as it was 15 years ago,’ commented one COO who joined a large house in the mid-1990s and has spent much of his time since then trying to deal with this problem. …there is much about this dynamic that could be regarded as illogical, irrational and inefficient, not to mention wasteful.”
If so many publishers feel the same way as I do about this antiquated book return policy, then why are they still playing the game? Isn’t it time to stop?
THERE’S MORE TO DIGITIZATION THAN JUST EBOOKS
Booksellers, we as publishers and authors need you. And you need us, too. We’re all essential components of this evolving book supply chain that is increasingly influenced by digitization. Thompson discusses this in his book, as well:
“…the same trade house that had seen ebook sales grow by 50 per cent in 2007 now saw its ebook sales leap by 400 per cent in 2008. This was a sudden and dramatic change. … The upward surge in ebook sales both continued and accelerated throughout 2009 and 2010. …Will ebooks become 30 per cent, 50 per cent, even 90 per cent of publishers’ total sales in the next few years? The truth is, no one knows. Most people have an opinion but no one knows a thing. ‘I wish I could give you wisdom,’ said one CEO in 2011, speaking with unusual frankness, ‘but I have no idea. The consumer will act to define this – it won’t be defined by Amazon or Barnes & Noble or Apple or us…”
It is possible that, one day, ebook sales will dominate over paperback and hardcover sales. But it is important to understand that “digitization” refers to much more than simply ebooks … and this will affect traditional wholesalers and retailers just as much as it affects publishers and authors.
The truth is, with the advent of short-run digital printing (SRDP) and print-on-demand (POD) technology, it is less and less necessary for publishers/self-publishers to print large runs of books or carry any physical inventory whatsoever. We can simply offer a link to the digital files of our paperbacks and hardcovers on various ecommerce sites around the world so that, when a consumer clicks on that link to purchase the book in whatever quantity, that triggers the site’s digital printer to print, bind, and ship that exact number of copies straight to the consumer’s designated ship-to address.
Times have definitely changed in the book business, and they continue to change at a rapid rate. Perhaps now is the time to start a revolution to end returnability once and for all by asking our traditional wholesalers and retailers to partner with us in different ways. Change your incentives! Adjust your current co-op programs to encourage consignment book signings and launches for authors inside your stores rather than using these programs for in-store placement of returnable books. Improve your ecommerce sites! Help us sell more of our books through your stores’ websites rather than forcing us to look for other online solutions due to unreasonable return policies.
There are so many things we could do to help each other survive (preferably THRIVE!) in these turbulent times. Because, at the end of the day, the survival and future success of the traditional wholesalers and retailers depends as much upon us as we have always depended upon them.
Related reading (even some traditional booksellers agree that “…Any rational business person looking at this practice would think the industry has gone mad.”): Quest for best seller means lots of returned books (2005)
Related reading: Why All Books Should Be Non-Returnable – By Angela Hoy (2005)
Related reading: Why All Books Should Be Non-Returnable – By Angela Hoy (2015)
Related reading: How to Price an Ebook