fulfillment
now browsing by tag
Do You Have a Book Distributor? Are You Sure?
I had so much fun talking with the authors and indy publishers at AuthorU earlier this month. Here is a snippet that explains in detail the difference between Wholesalers, Distributors and Fulfillment Houses.
Too often I get calls from authors/small press owners who tell me that they “have a distributor”… then they mention Ingram or Baker & Taylor. CLOSE! But no…. check out this 2 minute video to see why:
Book Distribution vs. Book Wholesalers
What Are Book Store Buyers LOOKING For?
A client recently asked me. What the %$#@! are book buyers looking for? He went on to say “My book is priced right, well-designed and exactly what older American’s are needing… what more can I do?”
I thought I would share my answer in the hopes that it might answer other questions out there.
If the book is well written, has a topic and message that will appeal to their customers, and is well designed, it has a good shot of getting a test order from a bookstore book buyer.
Keep in mind, there are more books published each year than could fit in 7 totally empty bookstores. (And as you know, bookstores are not empty!) Because of this, the buyers can only take a teeny fraction of what is presented to them. Also, the buyers are judged (read: get to keep their jobs) by how many times their section “turns” a year. The sales rate of their choices is closely monitored. So they will pick books that they feel have the best chance to selling off the shelf several times a year.
That is where demand and platform comes in. If an author has a good platform, is reaching out to thousands, or tens of thousands of readers, is showing sales online (seen in Nielsen Bookscan reports) and has a strong PR plan with potential for a lot of media – the buyer will be far more likely to take the book in.
If the book does NOT have all of those things, then the buyer needs to see some other proof that the well-designed, beautifully-edited, fantastically-written, much-needed book won’t just sit on their shelves. There is a chance that someone will see your title on the spine on a crowded bookshelf and pick it up. If they pick it up, there is a good chance that they might buy it. (If they need or want a book like yours). But a book buyer would much rather sweeten the chances of a “turn” by stocking books that will have browse-friendly qualities AND great press. There are enough books out there that have great demand AND are great books to choose from.
Does your book have everything it needs PLUS good PR? Is your book “All That” AND a bag of chips?
Math Lessons For Small Presses – Part 3
Lesson #3 – DISTRIBUTORS
Bookstores buy books from wholesalers and distributors. The major difference is that a wholesaler is publisher’s customer (wholesalers buy books from a publisher) and a distributor is a publisher’s employee (distributors sell their services to a publisher).
A distributor handles all of the après-production elements of getting a book onto a store’s shelves. Publishers agree to funnel all of their sales, warehousing, shipping, and billing through the distributor. They do this work for a percentage of the billing generated by the sale of the publisher’s books.
Like publishers, distributors sell a book to a wholesaler or bookstore at a discount of the retail price. That discount is usually between 45 and 55 percent.
So, if bookstores get about the same terms and about the same schedule, why do they go to a distributor instead of directly to the publisher? Some bookstores (especially bookstore chains) are not interested in setting up new, small, or regional publishers in their ordering and accounting systems for just a few books. They rightly weigh the benefits of a publisher’s book against the time and trouble necessary to order it, and if the balance does not come out in the book’s favor, they skip it. How do new and small publishers avoid this terrible fate? They sign exclusive agreements with a distributor.
A distributor’s cut varies from 25 to 35 percent of the net billing of each book. Just about every distributor has additional monthly fees, and most require an initial deposit for new clients.
Before you balk, keep in mind that it is very difficult, expensive, and time consuming to handle your own warehousing, purchase shipping materials, and learn how to ship exactly how each store wishes their shipments to arrive … and everyone is different. (It’s a little joke they like to play on publishers. I am convinced that bookstore owners get together every two years to devise slightly altered yet completely incomprehensible trafficking instructions.) Then comes the billing, monthly statements, handling claims for books damaged in transit, taking in returns, and reconciling the amount due with what the bookstore believes is due.
After that, consider the money and time it takes to tell the country’s thousands of buyers about your books. The sales reps working for distributors have long-standing relationships with the book buyers in your hometown, across the country, and in the major chains. You would not be able to start a fledgling relationship on your own with these buyers. What an experienced sales rep can often do with a phone call, you could rarely accomplish with six months and a great deal of research, e-mails, flyers, catalogs, paperwork, and free samples.
Back to the math!
A book priced at retail is $16.95
A distributor sells it to a wholesaler for $7.63 (55% discount)
The distributor will charge the publisher on average $2.15 to handle that order.
Shipping and other fees will cost about $1.30 cents a book (give or take)
The publisher gets $4.18 for the book from the distributor 6 months later when the payment comes in.
After the productions costs of $3.25 are taken into consideration, the end profit is about .93 cents a book.
(AND the distributor does most of the work)
So there you have it. Math by an English Major for Publishers. Let me know if you have any questions!
Math Lessons for Small Presses – Part 2
Lesson #2
WHOLESALERS and how they sell books:
Book wholesalers are companies that buy books from publishers at a deep discount and hold them in their warehouses so that Internet and “brick and mortar” stores can order the books from them. Bookstores like to use wholesalers for a number of reasons: namely speed, convenience, and less financial exposure.
Book Distribution is not easy!
When a bookstore orders a book from a wholesaler, they will usually get their order in twenty-four hours. Next-day service is the standard from the top wholesalers. The discount a store can usually expect to receive off the retail price of the book from a wholesaler is 40 to 45 percent. What the bookstore loses in profit margin, they often make up in convenience and risk reduction. A book ordered from a wholesaler can be combined and shipped with hundreds of other books.
Some stores hire wholesalers to stock, manage, and handle all aspects of their book departments. There are large “big-box” chains that happily hand their title selection and discount negotiations over to a wholesaler that will manage the entire department for them. The same can sometimes be true for libraries. There are many U.S. library systems dependent upon wholesalers for all their new books. People at the chain or library office work with the wholesalers and oversee the choices, but how closely that is managed depends upon each individual situation.
The difference between a wholesaler and a distributor is this: A distributor works FOR the publisher. A publisher hires them to handle the warehousing, shipping, order processing and sales of their book. A wholesaler does not work for a publisher, they are the publisher’s customer. They buy books from the publisher and resell to THEIR customers.
Most wholesalers have the word “distributor” in their name. This is to identify them as companies that distribute books to bookstores and libraries, but they are not the same sort of distributor that you need when B&N sends you a letter telling you to “get a distributor”.
If you want your book to have a chance at a bookstore chain like Barnes & Noble or BooksAMillion, and if you don’t want to hire a distributor, a wholesaler is your next best bet.
The two biggest book wholesalers for the book industry right now are Ingram and Baker & Taylor. You can find their application processes on their websites. Send your books in with the proper paperwork and try to get your titles into at least one of these wholesaler’s warehouses. Ingram and B&T do not usually take small presses, but B&T will sign up a small publisher if they have enough marketing and sales plans to support the book.
Ingram has recently partnered with IBPA and through them, a small press CAN get listed in Ingram’s system. However, only a very small fraction of those books get ordered and stock at Ingram. Only the books with strong demand get stocked, the rest are just listed and Ingram will order a book from the publisher when a store backorders one. (and the kicker? Most bookstores will not back order.)
Remember, if you get an order, you will be selling your books to the wholesaler at a discount of at least 55 percent. They will usually order only as many as they need to fulfill the demand coming in from their customers … stores and libraries. If they are overstocked or books come back from the stores, they will return those books to you for a full refund. (Having fun yet?)
So, back to the math:
A book priced at retail is $16.95
A publisher sells it to a wholesaler for $7.63 (55% discount)
The wholesaler has paid $7.63 for the book.
They then turn around and sell it to the bookstore for $9.83 (40% discount off of the retail)
The wholesaler pays for the overnight shipping and packing materials. The profit for the wholesaler is $2.20
Many of my clients want to know why they have to give so much of the profit to distributors and wholesalers. The short answer is: they don’t. It is possible to convince your local stores to stock your book on consignment or to sell them directly on Amazon yourself. However, the shipping costs, time spent and number of venues that will not take your book often turn out to cost publishers FAR more than a wholesaler’s cut….
Math Lessons for Small Presses
Lesson #1
PUBLISHERS and how they sell books:
If a publisher wants to get their books into a bookstore or library, they will have to sell their book to a store or a wholesaler at a deep discount. That discount is usually between 40 and 55 percent off of the retail price. It can sometimes be 60 percent or more if the store is part of a chain or a wholesaler that has a central warehouse and has extra costs associated with getting the books to THEIR customers.
The book buyer for the wholesaler or store will contact the publisher, place a purchase order for books, and expect to receive them in five to seven days. They expect to be billed for these books, but will usually require at least ninety days to pay.
If you want to become a publisher, here are a few things you should think about. You have to plan and budget carefully. Small presses usually aren’t paid for three to four months or longer. Plan for not getting paid for 6-7 months.
You will have to pay to ship the books to them. They rarely will pay a small press for shipping. If you want to take a stand, I applaud you! But it will cost you some sales.
Now, are you ready for the big hit? Publishers may not even see the money they think they are owed because the books are bought on a returnable basis. Fully returnable. One hundred percent. (Or as we used to say when we were kids: backsies!) After a publisher has shipped a book to a store, the bookstore has the right to ship it right back for any reason.
So, a book priced at retail is $16.95
A publisher sells it to a wholesaler for $7.63 (55% discount)
The publisher then waits sometimes 6 months for the $7.63 or for the book to be returned.
If the book’s printing and design/editorial costs are in line with what they should be, each book should have cost the publisher approximately $ 3.25 per unit to produce.
The shipping and distribution costs of GETTING a $16.95 book to the wholesaler is usually around $3.50 a book. (this factors in calls to stores and wholesalers, sample copies or flyers sent to buyers, shipping of books, materials, returns… it assumes that you are doing everything yourself.
That leaves the publisher .88 cents a unit in profit.
Where does all the rest of the money go? Why does a wholesaler take so much? That leads us to next week’s Lesson #2
Distributors vs. Wholesalers
What is the difference between WHOLESALERS and DISTRIBUTORS?
A Distributor will sell and promote your books to the bookstores and libraries. They will have reps contact the stores and wholesalers who are most likely to want your book and pitch them the merits of your title.
A wholesaler has a warehouse and is a passive company that will purchase books from you, and then resell the books. They do not pitch your books, they wait and handle incoming orders only.
A distributor also has a warehouse. But they are not passive. They will store, pick, ship, invoice and collect on your behalf as well as handle customer service and most likely offer sales and marketing services as well. They are not your customer, they work for you. You give them money in exchange for the services they do for you.
A wholesaler is your customer. They buy books from you. Some of the bigger ones are called Ingram, Baker & Taylor, Bookazine, Brodart, New Leaf and Quality.
Ingram and Baker & Taylor are two of the largest book wholesalers in North America and they have warehouses all over the US. These warehouse hold book and when a retailer (bookstore or library) asks for a book, Ingram or B&T will send it to them. Both Ingram and Baker & Taylor offer distribution services as well, but only to a certain group of publishers and even though they have the word DISTRIBUTION in their names, they are most likely not distributing your books.
When a bookstore asks who your distributor is, you should be using names like NBN, IPG, New Shelves Distribution, Atlas Books or Book Hub. Ingram and B&T are not your distributor, but the bookstores will be happy to know that your book is available at those wholesalers.
Distribution… The Good, The Bad, The Ugly
Not all distributors are created equal. There are good and not-so-good distributors.
The good ones will keep the books in their warehouses, send their reps out to bookstores to present the books to the buyers, take orders, ship the books, negotiate the cost, bill the stores, and after taking their cut, hand over all the profits paid back to the publisher. When possible, the reps who sold the books to the book buyers will give the publisher feedback as to the reaction the books received. Direct, front-line, market-driven feedback is the key to a good distributor. They can help you keep your determination and focus when books are taking a long time to sell. More often, the feedback can teach a publisher about the changes necessary to the next print run of the book to increase the salability.
The not-so-good distributors will warehouse a publisher’s books and wait for a bookstore to order them. Once the order comes in, they will ship, bill, and handle the accounting, but there will be no follow-up, no creativity, or marketplace-driven marketing or feedback.
Be careful when choosing a distributor. Make sure you do your research. Contact a few of the publishers listed on the distributor’s Web site and ask how they like working with their distributor. Call your local independent bookstore and ask if they carry that particular line of books.
I recently asked Greg Snider of Blu Sky Media Group, a well respected distribution company, to offer some advice about what to consider when researching distributors:
Some questions to ask a prospective distributor:
1.) How long have you been in the distribution business?
2.) How many publishers/companies do you distribute?
3.) How many titles/products do you distribute?
4.) What genres/categories do you distribute?
5.) How many sales reps does your company have? (In-house or outside commission?)
6.) What are your set-up/cataloging fees if you were to accept me as a client?
7.) What percentage of net sales do you take as your distribution fee?
8.) Are there any additional monthly charges that I might incur? (Warehousing, order fulfillment, returns processing, administration, etc.)
9.) How far in advance of my release date do you need to properly sell my title?
10.) What is the length of your agreement?
What you should expect from a distributor:
1.) To correctly list your title data for ordering with all the major brick and mortar, online retailers, and wholesalers.
2.) A thorough presentation of your title to the major retailers and wholesalers in their territory.
3.) Inclusion into the distributors catalogs.
4.) Inclusion of your title in the tradeshows the distributor exhibits/attends.
5.) Timely processing of your title’s orders and returns.
6.) Monthly printed or online sales and inventory reports.
7.) Monthly communication via phone or e-mail to discuss progress.
8.) Access to marketing and advertising opportunities with wholesalers, retailers, and/or consumers.
9.) Continual sales of your title even after the first season.
What you should not expect from a distributor:
1.) Miracles! Your books will not magically appear on every bookstore shelf.
2.) To do all the work. Without a solid, well-planned advertising/marketing campaign geared toward your audience, the distributor will not be able to sell your title to the retailers and wholesalers. This is the publisher/author’s responsibility and not the distributor.
3.) Guaranteed sell through. Once a distributor gets your books onto a bookshelf, it is the publisher’s job to make sure that they fly off the bookstore shelf.
Getting into a distributor’s catalog is a difficult task. It is a very competitive segment, and good distributors are careful to only take on clients whom they feel will be successful. Every successful publisher increases a distributor’s reputation; an unsuccessful publisher can drive a distributor’s reputation down.
What you can do when approaching distributors to improve your chances:
1.) Have your book/advanced reader copy professionally designed. Packaging is key to all products including books, so a professional design is a must.
2.) Have your book professionally edited. Do not use your cousin Susie who’s an English teacher at your local high school as your editor. You need a professional to help you make your book the best it can be from a content standpoint.
3.) Have a detailed plan for your marketing, advertising, and PR. Also, include your budget of what you intend to spend. We see so many submissions from publishers/authors who do not have a plan to let consumers or their target audience know the books exists.
4.) Be willing to listen to the professional. Distributors, retailers, publicists, book shepherds make their living selling books. If they give you advice regarding your book, take it. It may mean the difference in selling a ton or none.
Distribution contracts usually start at two-year terms. They are taking a big risk by taking you on, and they want to safeguard that decision by protecting their investment with a minimum two-year term. It takes at least two years to launch a program properly and to start to see results. They are well within their rights to ask this of a publisher. However, you are well within your rights to get certain agreements from them as well. You should be able to get out of your contract if you can show that your books did not receive the activities contracted.
A distributor’s cut could vary from 25 to 40 percent of the net billing of each book. Some distributors will claim 15 – 20 % distribution fees, but after the charges, fees and add-ons, the total is back up over 25%. Just about every distributor has additional monthly fees, and most require an initial deposit for new clients, but it is up to you to add up what you are really paying. Don’t be fooled by a lower initial number. So the math.
Before you balk at the cost, keep in mind that it is very difficult, expensive, and time consuming to handle your own warehousing, purchase shipping materials, and learn how to ship exactly how each store wishes their shipments to arrive … and everyone is different. (It’s a little joke they like to play on publishers. I am convinced that bookstore owners get together every two years to devise slightly altered yet completely incomprehensible trafficking instructions.) Then comes the billing, monthly statements, handling claims for books damaged in transit, taking in returns, and reconciling the amount due with what the bookstore believes is due.
After that, consider the money and time it takes to tell the country’s thousands of buyers about your books. The sales reps working for distributors have long-standing relationships with the book buyers in your hometown, across the country, and in the major chains. You would not be able to start a fledgling relationship on your own with these buyers. What an experienced sales rep can often do with a phone call, you could rarely accomplish with six months and a great deal of research, e-mails, flyers, catalogs, paperwork, and free samples.
But nothing replaces a publisher’s drive and efforts. The main thing to remember is that a distributor is often as good or as bad as the relationship between the publisher and the distributor. If yours is one of thousands of books on the oppression of clover farmers in New Guinea in your distributor’s catalog, you will not get the time and attention you desire. If you are not out there pushing your book into the press and media, creating a demand for your distributor to work with, they will not keep you for long.
Take your time choosing a distributor. Make sure you are a good fit and that you both share the same goals for your books. If you cannot find a good fit with the distributors that are willing to carry your book, consider doing your own marketing and sales for the first year. Better to wait and do for yourself than be trapped in a loveless “marriage” with the wrong distributor.
D5 Creation