29 Sep 2009
Distribution is one of the hardest tasks in publishing. Getting your book into bookshops and supermarkets isn't easy and - for self-publishers - virtually impossible. So the question is, does it matter? Can a self-publisher ignore physical distribution entirely and opt for a web-only model?
Let's look at some figures. Book Marketing released stats for UK sales for the year ending March 2009. They showed the chain bookstores accounting for 33.5% of sales by volume (38.7% by value), supermarkets took 14.3% by volume (9.4% by value) and internet retailers took 13.9% by volume (16.7% by value). It's unclear whether self-published books appear in those internet stats.
If you track these stats back over previous years, you can see a couple of clear trends. Internet sales are increasing their share of the market. It won't be long before they account for a fifth of book sales - and that's before we start talking about e-books. Supermarkets are also increasing their slice of the pie, mainly in low-cost (ie, heavily discounted) books and with an emphasis on big names and bestsellers.
Supermarket sales are a problem even for established authors. The cut-throat discounting involved means that writers see relatively little from the sale of each book. That may be compensated by increased sales volumes - or it may not. And for traditionally published authors whose books are not chosen by supermarkets, the rise of this channel means reduced sales via real bookshops.
Not that selling via bookshops has ever been easy. The economics of selling books in a bricks-and-mortar store hardly bear thinking about.
The Bookseller has some interesting stats. They’re 11 years old, but give a rough idea of how things work. On average, the author gets 8% of the sale price of a book. That may be a lot lower than you'd think, but the fact is that various special deals and discounting undermine the nominal 10-15% that may be the basic royalty stated in the contract. Some 15% is soaked up by manufacturing costs, another 8% goes to distribution and marketing, 9% in publisher's overheads and 5% as the publisher's profit.
Where’s the other 55%? That's classified as 'trade discount' - ie, it's the margin from which both distributors and bookstores must find their profits. Typically, the distributor will allow the bookstore a margin of 35%, which sounds a lot. But the Bookseller estimates that bookstores' overheads soak up 30-33% of that, leaving a profit of just 2-5%.
No wonder bookshops insist on taking books on a sale-or-return basis. With such narrow margins, bookstores simply can't afford unsold inventory. It's bad enough that they need to waste shelf space on unsold books. Yet the 'sale-or-return' model used in publishing rarely involves the return of unsold books to the publishers - only their covers. The rest of the book is pulped, usually by the distributor. Not only is this bad economics, it's environmentally unsound.
Like I said, these figures are more than a decade old, but it's unlikely things have got any better, either for bookstores or authors. The publishers and distributors are in strong positions to retain their margins - it’s the people at both ends, the writers and sellers, who get squeezed.
The bookshop experience
Selling books via shops might be a dodgy business model, but we all love bookshops, don't we? For one thing, we love to browse. I can't think of a better way to kill time than ambling around a bookshop anticipating that serendipitous moment of discovery - a book you hadn't heard of by a writer whose name is unknown to you.
But not everyone wants that. Plenty of people know which book they want and simply want to buy it. And most of us are now sufficiently web-savvy to browse online.
There's an interesting report, by Bookmarketing Ltd, which shows influences on purchasing decisions. When asked whether they enjoy browsing for books, 21% strongly agreed and 37% tended to agree. That's a lot, and confirms that people do, indeed, enjoy the bookshop experience. But it's still less that I'd imagined. And the percentage of people who buy a book based on a recommendation of shop staff or librarians? Just 2%.
When asked what made them buy the most recent book they'd read, a Daily Telegraph survey found that only 16% said they'd found it while browsing in a bookshop. More important are familiarity with the author and recommendations by friends and family (both easily achievable on the net - in fact, user reviews and social networking make this easier and more powerful on the web). And that report was from six years ago. The internet experience has improved immeasurably since then, and the web now plays a far more important role in people's lives.
According to a 2008 poll by Random House in the US, some 77% of respondents said they bought books online, while 76% shopped at chain bookstores and 49% at independent bookshops. Many of these are the same people, of course, but it shows that the internet is now established as a channel. In fact, when asked where they shop most often, the internet came out ahead - 43% head there first, compared to 32% for chain stores and 9% for independents.
April Hamilton had some interesting thoughts about how these figures conflict somewhat with the persistent perception of the importance of chain stores and how it might turn out to be false - soon, if not now.
In the UK, the Bookseller has statistics from 2007 which show that 71% of people currently buy books online, and 88% would do it in the future. As online shopping goes, books were the second most popular category, just behind CDs. We can probably assume those numbers have risen at least a little since then. This doesn't mean that those people buy all their books online, but certainly three-quarters of the buying public see online sales as a normal way of buying books.
Amazon, of course, soaks up most of those sales - Amazon.co.uk getting 76% of the market and Amazon.com just over 9% (among UK buyers).
It's a web world
None of this alters the fact that, right now, if you choose not to distribute via bookstores and supermarkets, you cut out four-fifths of the book-buying market. Does that matter?
It matters a lot if you want the success of a Dan Brown or JK Rowling. However, I would only ever recommend self-publishing to people with more modest ambitions. And in that case, 20% of a large market may be more than enough. The profits you lose by not distributing through traditional retail outlets are likely to be more than compensated by avoiding the costs (marketing and distribution) associated with those channels. And you'll certainly lower your risk.
The web combines marketing and distribution channels. I'll blog soon about how self-publishers should place their websites at the centre of their business - in effect, the site is the business.
Of course, all this will change again when e-books really get some traction in the market. And it will change in favour of self-publishers. (I find it interesting that Borders is to stock more e-book devices, including Sony Readers: after all, it's easier and more logical to buy e-books for the Reader online than through bookshops.) But more of that anon.
I often hear publishers, and others who have secured their places in the traditional book publishing industry, proclaim that self-publishing is a bad idea because "you'll never get your book into bookshops". Increasingly, the answer to this is, so what?