"Independent bookstore. Say it, and the words conjure up a dusty place with a tumble of books, an owner with a passion and a small staff with a love of literature and an uncommon knowledge of it, at times even a snobbishness about what is considered good enough to be displayed in the window, which of course fronts on a tree-lined Main Street." ~ Martin Arnold
"Google is basically doing book marketing; Barnes & Noble is in publishing; Random is in distribution; and Penguin is in retailing. New revenue streams and wider margins are necessary." ~ anon.
"...Books are the leading edge of the transition in shopping that's taking place across the economy...." ~ David Brodwin
"It used to be that book-buying decisions were made by thousands of sales representatives meeting with thousands of booksellers around the country...." ~ Colin Robinson
"Independents are an essential element to getting any serious book off the ground. ... They are the place where you can start a conversation about a book." ~ Morgan Entrekin
"Quite simply, we look for people who love to read, are smart, nice, and articulate. In the words of a bookseller I admire, 'You can teach someone just about everything except how to be nice -- and that's more important than anything else in retail.' " ~ Tim Huggins
"I think it's fair to say that this is a mature industry that is not going to have dramatic growth on an industry-wide basis. It's not projected to. It's going to have comfortable growth. Largely, I think, from inflation on prices." ~ Jack Romanos
"Maybe the shakeout is completed for the time being. It's {independent book stores) an important channel to any publisher. They make books happen, they still hand sell, they still care, they still are owner, proprietor, manager and salesman all rolled into one. And I don't think that any of us could afford to publish as many books as we do if it weren't for the independent bookseller." ~ Jack Romanos
"Publishers really add very little value to the distribution
of book content. They are not terribly good at physical book
distribution, and they are not very good at technology. They will have
a place in the digital world, but smaller than it is today." ~ Leonard
Riggio
"Retailers can use bargain books to create traffic and make
margins. If customers can get a $2.99 book in the front of the store
when they walk in, they are about 80% more likely to get a full-price
item inside the store. You reward yourself for the inexpensive item." ~
Barry Baird
"I choose to think there is a part of the United States that
wants individual, independent businesses, whether bookstores or
anything else." ~ bookstore owner
"You are not booksellers, you are retailers. If you don't like
change, you're going to like irrelevance even less. Independent
bookstores have no God-given right to exist; they will only survive if
they are different and special and shockingly good at what they
do." Tom Peters
"This is a 'gut' business. Agents sell books they believe in; publishers need to love them to buy them. And while we're all in it, to some degree for the money, blind love often takes precedence." ~ anon.
"By the year 2125, Latinos will be the majority in this country, and eventually the United States will be the largest Spanish-language market in the world." ~ Jorge Ramos
"The model where you put a bunch of books in a warehouse and distribute them, that's a dying horse." ~ Bob Holt
"Independent booksellers are kind of in a catch-22. We're in a commodity business and a service business. Our strength has always been customer service and selection. At a certain point, that model comes apart because of price erosion." ~ Chris Morrow
"Used books are becoming mainstream as the Internet provides transparency into the industry inventory and customers become more comfortable buying them." ~ Jeff Hayes
"The ease of selling online is transforming the used book trade from boxes full of tatty, dog-eared paperbacks to a cyber market when unblemished hardcover volumes are hawked just days after they have hit the bookstores." ~ Jeffrey Goldfarb
"With co-op money, slick inventory control, proprietary publishing, and unheard-of financial muscle--Barnes & Noble's latest quarterly report shows no debt and a staggering $375 million in cash--the playing field has precipitously tilted toward chains." ~ Paul Collins
"If print-on-demand technology, though still potty and faintly disreputable, ever achieves the availability and quality of traditional books, the need for overstock returns, remainders, and hugh retail space may evaporate." ~ Paul Collins
"Running a bookstore is like running an insane asylum. ... On one side, are the employees who love books, and on the other are the customers, who love books but who cannot always resist shoplifting them, or spilling coffee on them, or reading them in the store and putting them back." ~The American Bookseller's Association's Manual
on Bookselling: Practical Advice for the Bookstore Professional
[5th edition, but OP] and their Fundamentals
of Bookselling are well regarded and full of useful
advice. A good introduction to opening a bookstore may be found on the ABA
website. There is a Bookselling
for Dummies book, but distribution was limited to those in
the business.
The distribution of books is characterized by a complexity and inefficiency inconceivable in other businesses. The normal way of distributing products to retail outlets is via wholesalers. It is simpler and more cost-efficient to distribute books to a wholesaler such as Ingram rather than through a large number or retail outlets. However, distribution directly to retailers eliminates the wholesaler's discount and may increase publisher profit. The Internet with the ease of selling via a website may further encourage publishers to sell directly to individual buyers [disintermediation].
Especially with book shopping via the WWW, there has been considerable emphasis on getting books to stores and customers much more quickly. Customers want books to arrive in a day or two. This means automated processes and more geographically distributed warehouses. Increasingly, orders and all the paper work associated with it is done online, often via a secure website.
While there are several general book wholesalers, Ingram and Baker and Taylor are the largest and best-known. Ingram is a 25 billion dollar distribution empire that includes the Ingram Book Group (now also distributes music titles) and Ingram Publisher Services, the largest U.S. book distributor, Ingram Micro, the largest distributor of computer hardware and software, and Ingram Entertainment, the largest distributor of videos, DVD players and software, computer games and audio books. In the last few years, the Ingram Book Group has laid off employees in Tennessee and has experienced some financial set backs. Ingram also operates an inland barge unit and an auto insurance company.
Ingram has recently created an alliance with Alibris.com, the seller of used and antiquarian books, to make Alibris titles available via Ingram. Alibris has also purchased a used and rare book service with offices in the UK, Germany and France. Alibris will make Ingram's Lightning Source titles available to its customers. Curiously, Barnes and Noble has also recently partnered with Alibris and will make that database available at the B and N online store. Books In Print will also include Alibris's titles. As more books are sold via chain stores that get books directly from publishers and independent stores decline, large general book distributors face a challenge.
Baker and Taylor experienced some setbacks in the courts with over charging and the outsourcing problems in Hawaii several years ago. Still, they are the number two book distributor and by far the oldest beginning in 1828. Corporate headquarters are in Charlotte. Baker & Taylor distributes books, videos, and music products. Their database contains information on more than 3.5 million titles. With the purchase of Yankee Book Peddler, they are the leading supplier of approval books to colleges and universities. The purchase of the J.A. Major Company, a major distributor of STM titles expands the B&T reach in the medical and scientific market just as its acquisition of Libros Sin Fronteras expanded its reach with Spanish language books. B&T, working with OCLC's netLibrary, is adding more than 80,000 netLibrary books to its inventory.
Niche distributors like D.A.P for art and Diamond Book [comics and graphic novels] do very well with their narrower focus.
If book stores order from a wholesaler, the costs associated with ordering from different publishers are substantially reduced. "Just in time" ordering works best with wholesalers, especially those who provide online access to their current inventory. Paperwork is reduced and there is one representative to deal with rather than many. Wholesalers can also supply useful management information, including recommended titles and help with some sidelines. Independent bookstores rely heavily on publisher's representatives for information on new titles and stocking and are fearful that they would lose this contact and inside information if they no longer ordered directly from the publisher.
Small publishers have difficulty in getting their books
distributed and pay relatively high prices when their books are
distributed. Ingram will not deal with publishers with fewer than 10
titles in print. Instead, these publishers must use a distributor.
Major small press distributors include Consortium Book Sales
and Distribution, SPD/Small Press Distribution, and the Independent Publishers Group.
Although not a distributor, the Publishers Marketing Association,
associated with the IPG, does issue a helpful directory, Alternative
Publishers of Books in North America.
Knoxville-based Anderson
News Company is a major distributor of books, especially mass
market paper editions for a variety of retailers including Wal-Mart,
mass merchants, convenience stores, discount stores, and
grocery stores. It is the largest periodical distributor in the U.S and
also owns Books-A-Million
[the third largest bookstore chain].
Both Ingram's and Baker and Taylor have expanding publication on demand programs to supply retail outlets with out of stock or out of print books not available from the publisher.
Bookworld Services and Christian Distribution Book Services, representing about 100 publishers have recently moved to Nashville because of its centrality. Besides Ingram's headquarters, Nashville also hosts major warehouses for Borders and Walden books.
The larger chains order for hundreds of stores at one time and are able to gain the advantage of economy of scale. Since they act as their own wholesaler, they need not do business with Ingram or Baker and Taylor. For example, one or two buyers might be responsible for purchasing all SF and fantasy fiction for hundreds of stores. Publishers give special attention to such large accounts.
In another case of changing roles, some major publishers, such as Random, have entered the distribution business.
Many independent publishers were substantially hurt by the bankruptcy of Advanced Marketing Services [AMS] and its subsidiary Publishing Group West. Some went out of business with the loss of income owed by this distributor. Publishing Group West was then purchased by Perseus Books Group [a publisher] and Baker and Taylor acquired AMS. Perseus now distributes for about 280 publishers, being the largest independent distributor.
In a 2006 survey, PW identified 11,378 outlets for book stores and book departments [excludes specialty stores]. Of these,
Traditionally, most retail book stores were independent and
they ordered directly from the publisher to get the larger discounts
and to support the sales representatives. Today, chain book stores
dominate retail sales and there are far fewer independents because many
cannot compete with the chains. There is a trend for independents to
order initially from publishers and then restock from wholesalers
(because they are quicker to respond).
While book selling may be somewhat unique, bookselling is
fundamentally about selling. Thus, a variety of retailing and marketing models apply.
For both publishers and book buyers, the traditional distribution model was problematic. Many communities lacked a bookstore. Bookstores were often small with minimal selections. Bookstores were not large enough to be a destination in themselves and were often not located near a major shopping center. To a considerable extent, the large chains dramatically altered the situation, especially as they moved their super stores into medium-sized communities. Internet bookstores, with their extensive stock and value-added services, bring the bookstore close to anyone with net access. Book clubs promise a "bookstore in your mailbox." Still, being able to examine a book in a store is a different experience than reading about it on the web or in a flyer. Mass market paper editions were designed to fit into a rack that created "mini-bookstores" in a great variety of retail outlets.
While the statistics vary from year to year, bookstores sell far less than half of all the books sold in the U.S. Discount department stores (Wal-Mart, KMart, and Target for example) sell a large number of books even though they stock only a few titles. Price clubs like Sams and COSTCO sell large quantities of a few titles. In fact, COSTCO has gone one step further by publishing its own cookbook with recipes from sponsors who paid to be included. Grocery stores sell about 10 percent of all books sold. Drug stores, home centers, airport shops, toy stores, computer stores, and many other specialty stores sell books. For example, hobby stores sell books related to model railroading, airplanes, tanks, and the like. As another example, 1100 Jo-Anne Fabrics and Crafts stores have a book department with books from about 40 publishers in 12 major categories. Non-traditional outlets sell a large number of books and represent a major market for distributors and publishers.
There has been considerable growth in "specialty" sales -- selling books to retailers beyond the book or entertainment business. For example, Chronicle Books sales most of its titles to specialty stores, including high-end food stores, children's clothing stores, and wineries. Gift stores are of growing importance to many publishers.
A 2006 survey found that 68 percent of book buyers shop in bookstores. In contrast, 43 percent bought a book at a department or discount store and 23 percent purchased a book online. People with high incomes are more likely to be heavy readers. Interestingly, 71 percent of people 18-34 bought a book in a bookstore and 73 percent of the 35-44 year-olds so there is hope for the future.
Another recent survey found that about 10 percent of adult trade books were purchased in an independent or small chain book store and about 24 percent in a large chain book store. Other outlets include:
While we focus on the retail book store, a large number of books are sold elsewhere and the trend continues. For example, the new Sears Grand stores include a book department near the front of the store with most books displayed face out. Independent booksellers complain that discount stores receive copies of best selling books more quickly and at greater discount [economy of scale at work?].
Supermarkets, especially as they become more upscale, have gone beyond mass market paper to stock a much greater range of trade books. The number and range of customers is attractive. Women do most grocery shopping and also most book buying. While grocery stores account for about three percent of book sales, they are a growing market. Kroger has been notable in expanding its book sections and moving large numbers of best sellers at discounted prices. This is primarily a front list business.
Discount chains such as Sam's and Costco stock very few titles, but they stock them in large quantities and at prices often lower than the cost to the independent bookstore.
Although still somewhat unusual, there is a slight trend for
major publishers to sell new books from their website. Penguin is the
leader here. Books are sold at full list price and P&H are
added to that price. Online sales are much more important for smaller,
niche publishers.
Primarily driven by the growth in chain stores, bookstore growth outperformed retailing as a whole in the last twenty years. There has been a dramatic increase in the amount of retail space devoted to books. In the beginning, most growth was seen in mall stores as more and more new and larger malls were constructed. In the last few years, the emphasis shifted to free-standing super stores located near a major shopping center. Most future predictions call for book sales to grow at two percent per year.
The general bookstore is most likely to be a chain store, but may also be a smaller independent store. Although few in number today, some large metropolitan department stores still have book departments. A variant of the general book store is the small store that might be found in an airport or a hospital.
The special interest bookstore focuses on a particular subject (travel, SF, cookbooks, mysteries, New Age) or a group of related topics. They offer a deep if narrow stock and subject specialized knowledge. Usually, mail or Internet orders supplement their walk-in trade. Strong back list selections are usually a strength.
The paperback bookstore was popular years ago when many general bookstores had minimal selections and mass market outlets had limited title variety. Today, most general bookstores have a large paperback stock so that there is little need for a paperback only bookstore.
Religious bookstores are important in many communities. Usually, they are tied to a particular religion or to religions with similar views on important issues. Most religious bookstores include more sidelines than books. Inspirational or spiritual bookstores are less popular and often deal with what used to be called "new age" content.
College or university bookstores usually focus on textbooks and sidelines. Still, most will have a trade department where popular trade books are sold. Today, a large number of college bookstores are managed by one of the two large text book chains. Many college bookstores feel threatened by used textbooks on the web which provide deep discounts to students.
"Used" books come in a variety of flavors. Some of these books have been purchased, read, and are now being sold. Some are "hurts" or books with defects from manufacturing or handling, but have never been sold. Some are remainders or new books that are excess inventory in new condition being sold by the publisher. Besides the used book dealers mentioned below, there are several wholesalers dealing in discounted books, usually hurt or remainders, purchased from publishers. Remainders are usually purchased in large quantities. Hurt books may come in pallets of unsorted returns.
Along with the growth of the national bigbox chains, the ease of buying and selling books on the web has been the major change in contemporary book publishing. Used books are a two billion dollar business. with more than 100 million used books purchased last year.Two-thirds of used books sold are sold via the Internet. This accounts for about eight percent of all book sales [not including textbooks]. One study found that about fifteen percent of the time a used book sale eliminates a new book sale.
Antiquarian or used book dealers sell used books and print items. There are 8,000 to 10,000 used and antiquarian book sellers in the U.S., but the number of storefront dealers is declining. "Antiquarian" usually means higher quality and more expensive used books. Used book dealers appeal to those with limited budgets and enthusiasts who seek OP books, often on particular subjects. Many antiquarian dealers specialize in a particular type of book (railroad history for example). The most visible of all the used book dealers are the many "paperback exchanges" found in most communities.
The WWW has revolutionized the antiquarian/used book market.
Prospective customers can search large combined data bases from home or
work. Dealers throughout the world can be as close as your computer.
This has increased competition and lowered prices. Amazon and
Barnesandnoble.com sell many used books as does eBay. There are
dedicated used book services such as Alibris which acquires books,
inspects them and sells them under its own brand name. Other services
such as BookFinder.com
simply provide central access to a wide range of dealers and their
stock. Many buyers of more expensive antiquarian books will want to see
the book before purchase, but that is not the case for many used books.
Advanced Book Exchange [ABE] is a good example of the changes brought by the Internet. Based in Canada, ABE links more than 13,500 used and rare-book dealers throughout the world and lists more than 80 million books with tens of thousands added each day. ABE sells about 20,000 books per day and adds 30,000 to 50,000 new titles to each listings each day. ABE has an agreement with Blackwell to sell new books as well as used ones. It acquired BookFinder.com, the leading comparison shopping service for books. It also has acquired IberLibro.com, the leading Spanish language used book marketplace. This inventory is now part of ABE's database. ABE has recently added BookHints to it's database so that prospective customers find recommendations from LibraryThing.
Alibris is probably number two. It lists more than 10,000 participating dealers with access to about 60 million used and new books. It also carries films and music. Alibris has an agreement with OCLC to provide access to their entire inventory via the OCLC WorldCat Resource Sharing service. Most dealers will list books with more than one of the aggregators.
In the past few years, many "bedroom operators" have entered the used book business. This has increased competition and lowered prices.
Amazon purchased Bibliofind.com and this helps to power their used book sales. EBay and its subsidiary half.com also sells books. The number of used books sold has increased dramatically since the mid 1990s when the market was controlled by smaller, back-street booksellers. Today, many storefronts are virtual and the audience is global. It's relatively easy to convert used books into cash, even without book knowledge. Not all used books are "used." Some are remainders or review copies. Interestingly, ABE began to sell new books in 2004 so new and used book sales have moved closer together.
Those selling used books argue that these:
The critics argue that used books:
Hastings, the number three national chain, is expanding the sale of used books in its 153 superstores. Some independents also sell used books to complement their new book stock. In the future, many bookstores will sell "used" books.
For many years, there has been controversy in the book business about the degree to which new bookstores are really "just book outlets." By the traditional definition, a "real" bookstore must provide:
If well managed, the traditional independent bookstore is most likely to qualify as a "bookstore." The large chain bookstore does not qualify because it cannot provide full service by a knowledgeable staff.
While sidelines may turn a bookstore into a book outlet, they are profitable and more than 90 percent of all bookstores carry them. Sidelines have a higher profit margin than books. "Shrinkage" can be a problem. Typical sidelines include:
Audio books could be considered a sideline or an integral part of book sales like paperbacks.
Periodicals are found in many bookstores. They are a great traffic builder since people come to the store weekly or monthly to look for new issues. Periodical distributors may be difficult to work with and returns are a continuing problem. Many periodicals are available and selection may also be a problem. Barnes & Noble found that 10 percent of their sales were for periodicals. They hope to increase these sales with better display and a larger selection.
In today's bookstore, mass market and trade paper editions
dominate the stock. At one time, some national chains had gone to
nearly 80 percent paper editions, but with the super stores' increased
space, hard bound books are more popular, especially for front list
popular fiction and nonfiction and reference works.
Back list titles have "stood the test of time" and represent a
notable opportunity, especially since many of these books sell
themselves. As one book dealer said, "Front list is always a risk. Back
list is tested [Robert Segedy]." Publishers often reformat and
repackage back list titles to make them more attractive. Thus, back
list titles become front list ones. For most stores, the majority of
stock is back list. Fiction, biography, and history are especially
popular as are children's books. However, many self-help books do
poorly as back list. Sales representatives are often helpful in
selecting back list titles likely to be popular.
Returns are a problem for all who sell books. Discussion
continues on the virtue of price mark downs in the store versus
returning the book to the publisher or jobber. Time, effort, and
expense associated with returns can be substantial. Most stores
attempt to reduce returns by buying fewer copies and relying on
reordering where there is a need for more copies.
Given the success of used book sales on the Internet and buyer
price resistance for new books, more booksellers are considering adding
used books. Profit margins are better as is customer satisfaction. Most
book stores get their used books from customers who "trade" a used book
for another. Trade-ins and a good stock of used book are another device
to create and retain customer loyalty.
While studies appear in Publishers Weekly from time to time, we still do not know as much about book buyers as some other consumer categories. Generalizations appearing below are probably correct, but need to be taken with a grain of salt. Still, there is some agreement that college graduates and people over 45 purchase about 60 percent of the books sold at a super store. Borders has found that:
People who live in the Pacific states buy more adult books while those in the Northeast and Mountain states buy more children's books. Nearly 80 percent of adults had shopped in chain book store in the past month versus 43 percent [seems high] in an independent bookstore and 27 had looked at books at food, drug, or discount store. Adults in the 18 to 24 age group are more likely to visit chains than other age segments. Those who buy books most frequently are likely to purchase fiction. About 10 percent of the buyers account for nearly half of all books sold. More than half of all books are bought by women, especially college educated ones.
Broad selection is the most important appeal element when buyers select a retail book store. Other important variables are:
Women are more interested in low prices than men.
Frequent book shoppers are likely to live within five miles of the store (further in the South). Of those visiting the book store, about 40 percent look for a particular item and about 54 percent are just browsing.
About three-quarters of those visiting a bookstore have decided not to buy a book because of price. Price resistance is stronger among women. Of those who did not buy the book:
Women and older book buyers are more likely to give books to friends, loan, trade or sell books.
About 17 years ago, the national chains began to substantially
discount books, especially best sellers. About five years ago,
Amazon.com began to provide substantial discounts on virtually all of
their books. Today, Amazon has minimal discounts and most chains have
done the same. The days of 50 percent of list price are gone. This
should help independent book stores who have typically been unable to
discount much. However, the elimination of substantial discounting and
a substantial increase in the list price of books is likely to result
in fewer book purchases.
Until recently, little attention has been paid to racial and
ethnic minorities. One example of change is that Barnes & Noble
has a Spanish-language book buyer for the chain and she intends to
increase the number of books in B&N stores likely to appeal to
Hispanics. Barnes and Noble has Spanish language sections in the majority of its
stores.
There has always been some controversy about best sellers. Are they really best sellers? How accurate are the counts of books sold? Are the bookstores sampled representative ones? What about the books sold in other retail outlets? None of these questions are likely to be answered soon. It is clear that the standard lists, especially the New York Times one, do not represent the full range of books sold in the U.S. from a wide variety of retail outlets.
There has been some controversy about the Times best seller list because the paper has attempted to control the use of the list, arguing that it owns the list. As a result, major chains (Barnes and Noble and Borders) and the independents (they are upset because of an exclusive NYT affiliate relationship with Barnes and Noble) have begun to use their own best seller lists instead of the Times and to base price discounts on the local list. For example, Borders no longer discounts NYT best sellers but offers 30 percent off its own top 20 best sellers. Amazon has a particularly interesting best seller list for books sold at its site that is updated hourly and includes ranks into the thousands. Quite a few authors and publishers check this list each day. The American Booksellers Association now has its Booksense best seller lists to reflect what sells in independent stores. There are also regional and local best seller lists from independents.
The large national chain bookstores, especially Borders [more than 400 superstores plus [at one time] more than 700 Walden book outlets and more than 40 foreign stores {now being sold or closed}] and Barnes & Noble, [more than 700 superstores with most Dalton's mall outlets closed] represent a dramatic change in publishing. Borders has done poorly in the last two years and is attempting to improve with a variety of managerial changes. Borders continues to close its Walden stores to reduce the number to about 300. Borders is also selling its foreign stores to concentrate on the U.S. market.. It will trim the inventory at its superstores. Borders has also initiated a proprietary publishing program to provide it with unique content. Barnes & Noble has long had a substantial proprietary publishing program.
For an interesting and different look at Borders, check out the Borders Books Employee Union website. Both of these chains have been on the Fortune 500 at numbers 485 and 405.
Originally, this was a mall phenomenon
related to suburban growth. New suburban malls were being built
everywhere and each one had at least one chain bookstore. Today, mall
bookstores with their relatively high rent and limited space are no
longer attractive. However, the malls brought book stores to
millions of Americans. With access to substantial pedestrian traffic,
the mall bookstore appealed to the impulse buyer with colorful
displays, brand names and dramatic discounts. Besides tables of
remainder books, best sellers were discounted, sometimes as much as 40
percent off list prices. Stores bought at 46 percent off and sold at 40
percent off and hoped for high volume sales. Chain sales have increased
over time with Barnes & Noble doing best.
Since a chain may be any organization that owns more than a
single store, there can be local (small chains), state, and regional
chains in addition to the more visible national ones. Borders
expanded abroad (UK, Australia, Malaysia are examples) so we can speak
of international chains. However, the national chains, especially as
they add stores in smaller communities, are difficult to compete
against. The chains
have sophisticated inventory and sales databases so they know exactly
which titles are sold when and where. Slow moving books are returned
quickly in order to free shelf space. This means that front list titles
have a much shorter time to succeed [perhaps six to nine weeks].
Barnes & Noble has a substantial publishing operation
and is expanding to include more children's and popular general
interest titles in paper and hard cover. The Classics imprint [created
by a book producer] includes about 100 titles. Each has value added
content including introductions and discussion questions. The Basics
imprint includes how-to-do titles much like the Dummies books. The
purchase of Sterling
Publishing has made B&N a major publisher in several
areas. Sterling has a back list of over 4,500 titles and issues about
1,000 books per year. B&N has also strengthened a series of 700
study guides, Spark Notes, competing with Cliffs Notes, that have sold
very well. In a very real sense, B & N competes with the other
publishers although many of its books are public domain classics or
bargain books. A
negative result is that Borders [ other chains too] and Costco no longer sell or stock
Sterling titles because they are issued by a competitor. However, many
Sterling titles focus on how-to-do it and crafts and are sold in
specialty rather than book stores. A few have suggested that
B&N will be the largest U.S. publisher within five to ten
years. Publishing attractive, popular books, "stacking them up front,
and selling them cheap" seems to be a recipe for success. Profit
margins are much higher on books published in-house. The chain expects
that its own products will account for ten percent of bookstore revenue
by 2008. Too, in-house publishing gives B&N an exclusive
product line. Retailer publishing certainly blurs the line between
publishing and retailing.
Note that B&N published books might also be sold in
the Barnes & Noble College Textbook Stores [about 500 stores]. Here's one example of a B&N operated college store.
Remainder or bargain books are important. The chains pioneered extensive, store front use of remainder books as traffic builders. History and transportation books appealed for Father's day, children's books for birthdays, cookbooks for Mother's day, and art books for Christmas. Remainder, sometimes called bargain or promotional, books were usually large format, colorful, and with dramatic price reductions.
Demand for remainder books grew so rapidly that left-over books were clearly inadequate. Remainder houses began to purchase reprint rights and issue their own reprint edition remainder books. The larger national chain bookstores began to publish some of their own bargain books. Barnes and Noble has more than 1500 titles in print and about half of these are reprints. With the decline in the number of independent book stores (fewer retail outlets) and the consolidation of publishers (fewer sources), the remainder or bargain book business has become more difficult for the vendors. There are two major bargain book sales events each year, BEA in the spring and CIROBE in the fall. PW issues a bargain book survey article once or twice each year.
When the national chains began to build their free-standing super stores, they were able to add food, drink, and music along with generous hours and comfortable seating so that the store became a destination in itself.
Automated inventory management systems provide detailed sales information by author, title, series, and publisher for each store, region, and the nation. With this information, the chains can order and return books much more rationally. However, chains still have a high rate of returns [much higher than the independents].
Although few stores have installed them, on-demand book manufacturing machines are available to create trade paper editions from digital masters online. The "InstaBook" or similar machines allow the retail store to offer manufacturing services for local authors in the space occupied by a large photo-duplication machine.
Amazon purchased Booksurge, a major player in the print-on-demand market. Again, this blurs the roles of the retailer and the publisher.
Both Barnes & Noble and Borders now have more than
1000 stores each (does not include the B and N college book stores).
Both continue to open new super stores with B&N aiming for
a total of 1,000 super stores. Some fear that a few chains have an unhealthy
impact on book publishing because they seem to be responsible for a
large number of independent stores going out of business. While the
super stores have had a positive impact on book publishing by expanding
the market, the first super store was created by an independent and
many of the attributes of the super store were borrowed from successful
independents. While the superstores continue to expand in new
locations, mall stores are being closed or turned into "express" stores.
While the national chains have done well over time, the rate of growth has slowed as has profitability. This impacts the mix of products sold. Borders, has done poorly with recorded music sales, is reducing its exposure in this area. The notion of the big box store as a "book lover's cultural department store [Heather Reisman]" still appeals to some executives.
In the last two years, book sales have been flat or slightly down. Borders actually went in the red in late 2006 while B&N made a small profit. Borders has a new management structure, is attempting to increase cooperation between headquarters and the stores, decrease employee turnover, and do better on backlist sales. It has taken back its website from Amazon and has begun a small publishing program to give it unique content.
Borders tried a "category management program" where publishers paid to assist in research about a category such as cook books. Publishers advised on price, space, and display. Focus groups, exit interviews and the like were also used to learn more about buyer preferences. Cooperating publishers would appear to have an advantage in placing their books in a category. While successful in the grocery market, category management was not successful here and has been abandoned.
The greatest strength of the chains has been their ability to
bring books to a new audience. As one chain store executive said, "The
bookstore business was an elitist, stand-offish business." The mall
bookstore was neither elitist nor stand-offish. Besides attracting a
new audience, the chain stores made it easier for the existing book
buyers to purchase more books. Super stores with 100,000 or more titles
expanded the opportunities for medium and smaller sized publishers to
reach a larger audience. A typical super store will have books from
more than 7000 publishers and best sellers will account for only about
five percent of the typical store's business.
Although there is concern that a few powerful buyers will dictate to publishers what should be published, it is easier for publishers to sell books to the chains with a few buyers (B and N has about three dozen buyers) responsible for hundreds of stores. The chains account for at least 40 percent of all hard copy adult books sold in the U.S. For Barnes and Noble, ten publishers account for about 46 percent of all titles purchased. The chains do support smaller publishers, but the small number of national chains buying a large number of books from a small number of publishers may be a problem.
For the last year or so, Leonard Riggio, Chairman of Barnes
& Noble, has been strongly encouraging publishers to lower
their prices since he believes that lower prices would result in more
books being sold. One of his arguments for B&N publishing is to
secure books that are "priced right."
The chains are rational, profit-oriented businesses driven by the bottom line. Brand name authors and best sellers receive considerable attention. Mid-list books and authors receive much less attention than at an independent store. Automated inventory management systems mark winners and losers. Losers are returned to publishers and those authors or publishers will find it difficult in the future. Slotting allowances and co-op money demanded by the chains favor the larger publishers who can afford to spend large sums to promote a "big" book. Barnes and Noble charges at least $3000 [often more depending on location] for an end of aisle display.
Chains are less patient than independents. Typically, a title has about 90 days on the shelf before it is returned if it does not move. This may not be enough time for favorable word of mouth to develop or even for many reviews to appear.
Although the evidence is mostly anecdotal, the chains have put a large number of independent bookstores out of business. Good service, community orientation, and book knowledge could not compete with a much larger selection and discounted prices. The best opportunity for independents is to specialize in an area where their selection, subject knowledge, and service can offset chain advantages.
A handful of book buyers influence publishers to publish more
best selling books. That may discourage the publication of many
worthwhile books that would appeal to a smaller audience.
The first super store was created by an independent (Borders). Today, the typical super store is seven years old. After demonstrating success, Borders was purchased by KMart and the other chains began to launch their own super stores. Today, Borders has several hundred super stores and continues to open more. Barnes and Noble has several hundred super stores with more planned. A super store should have a minimum of 15,000 square feet and at least 75,000 titles. Most B and N stores have 175,000 titles from 10,000 publishers. Backlist titles receive considerable emphasis along with a notable periodical collection. Stores are comfortable and feature food and drink as well as some comfortable seating. The typical super store holds more titles than 85 percent of the public libraries in the U.S.
Super stores have replaced mall stores as the primary sales vehicle for chains. Mall store rent is too high for their sales. Their limited stock and lack of extras makes them less attractive than the super store to most book buyers. However, they continue to attract impulse buyers.
Since most desirable markets already have at least one super store, chains are moving to smaller cities. Some cities already have more super stores than the market will support.
The American Booksellers Association, independents and small
chains, has lost many members in the past few years although their has been some new member growth in the last two years.
Not all independent stores are or were well managed, with a great selection of quality titles, staffed by book experts, and with a variety of rich community activities. Still, there is more opportunity for innovation in a single book store than in a chain of one thousand. The best independents have:
The major negative forces are:
Although the number of independent stores continues to decline, the rate of the decline is slowing. The last two years has seen some improvement in the growth of new stores. Stores in smaller places are more likely to be successful because there is less competition from the chains.
However, Hastings is a national chain with stores in many smaller communities to sell books, periodicals, music CDs, and videos. Hastings focuses on the entertainment experience with music as its largest sales. Hastings rents, sells, and trades products including books. They call themselves the "first new and used entertainment superstore."
The great virtue of a good independent book store is that staff select and hand sell serious books, often by smaller publishers, that are ignored by the chains. As one small publisher said, "Now it's clear it's better to have three books in a store with an advocate than a stack of 10 and nobody behind it." With the consolidation of larger publishing houses, independent stores are often no longer visited by publishing house sales reps and that is likely to effect selection decisions.
A Consumer Reports article on book stores found that independents were ranked highest with more helpful staff and it's easier to order requested books not in the store.
The American Booksellers Association (mostly independents),
has a variety of initiatives designed to make the independent book
store more competitive, like a de facto national
chain. often under the "Book Sense" brand [about 1200 members]. There
are about 1300 participating stores. For example, there is a Book Sense
gift certificate that my be purchased at one store and redeemed at
another. There is a BookSense
WWW portal that represents about 200 book stores and directs
you to the closest independent book store. The site also offers best
seller lists, book lists and recommendations, and some author
interviews. The Book Sense best seller list, Book Sense Picks, receives
some media attention since the titles here are often quite different
from those on other lists. Additional lists are available as "We Also
Recommend" and "Booksellers Are Also Excited About."
The independent book stores have sued, via the American Booksellers Association, Barnes & Noble and Borders for securing "unfair" discounts and subsidies from publishers. A judge dismissed most of their case. Earlier, publishers had been sued for providing "special deals" for the chains and Penguin Putnam paid $25 million to settle. Publishers feel caught in the middle between the chains and the independents. It seems clear that a chain ordering thousands of copies will get a better price than one ordering four or five.
Again, the evidence is weak. Still, at least half of the independent bookstores are not profitable. Since some of these stores are labors of love, the owners may not be concerned with other than a modest profit or breaking even.
The ideal bookstore, whether independent or chain, would be run as a customer driven business using the latest information technology to track inventory, sales and costs. The managers would have current, useful information about customer's wants and needs. Each customer would feel that she is known and valued.
The store would have an event/community relations coordinator and events would be creative and draw well. There would be four to ten events each month. The store would have access to a good sized, attractive meeting room. The meeting room would be available to appropriate community organizations. Some events would be co-sponsored with other appropriate retail stores, for example, a "books and brews series."
The store would have a strong commitment to improving life in the community and would co-sponsor events with compatible organizations such as literary, historical, and educational societies and institutions as well as other merchants. A special effort would be made to showcase local authors in the store and via events. Vigorous contacts with local media would be maintained. Local art and crafts might be exhibited in the book store.
Giving customers a reason to come to the store, an experience, is important. Contests with modest, but interesting prizes can work well besides the events mentioned above.
The store would be in a location near main roads and other destination shops. Considerable automobile and pedestrian traffic would pass the store. Parking would be free and plentiful. The store would be open from 10.00 a.m. to 10.00 p.m. seven days each week. If feasible, there would be an off-site sales program where books are sold in mini-stores established in other local locations such as a hospital or a nearby resort. Attractive window and in store displays would invite and would change frequently.
The store itself would be attractive and comfortable. There would be several places to sit comfortably. Lighting would be excellent. Shelving would be easy to reach by the typical customer.
Store staff would know books, authors, and current developments in the book trade. Staff would also be friendly, social, cheerful, and put customers at ease. Personal attention makes a dramatic difference, especially in contrast to the chains. Staff should be well-paid and consider book selling to be a fulfilling career. Store staff would engage in a considerable amount of handselling or demonstrating the value of a book with the customer. Staff would feel an almost compulsive need to put the right book in the hands of the right person. Connecting books and readers would receive considerable attention. Staff picks would be an important part of this connecting.
The store might offer modest discounts on best sellers. While
the emphasis would be on value rather than price, customers would feel
that they pay a reasonable price for books. A frequent buyer
program would reward regular book buyers. Loyalty
programs reward customers who have purchased a certain amount of books
with additional discounts. Sometimes, these are called membership
programs where payment of a fee results in discounts. For smaller,
independent stores, the record keeping of a loyalty program could be
expensive
The store must be highly visible in the community via
advertisements, store events, its website, book fairs, a newsletter,
and participation in community events. Working with other community
merchants and non-profit organizations on community events often works
well. Co-op money would be used to
enhance advertisements in local print media. Exhibits and displays
would attract people into the store and encourage purchase of
particular items. Publisher fees for stocking and display would be used
wisely. Books of value from less affluent publishers would also receive
appropriate display attention.
Events such as author signings for national, regional, and local authors often work well.
An active, interactive, changing website would be used both to
sell books to those beyond the community and to build in-store traffic.
Providing access to in-store events and hosting an email-delivered
newsletter as well as staff picks in various categories usually works
well.
The book stock would include a large proportion of the items
of interest to the community, including more unique titles about the
community, region, and state. The store might complement its stock with
specialized collections in an area of interest. Such collections might
include imported items difficult to find elsewhere.
These books would also be sold via mail order and the WWW. Intellectual
and physical access would make it easy for the potential buyer to find
any item in stock. The back list would receive particular attention.
Remainders would be thoughtfully selected and displayed. Books not in
stock (so-called special orders might better be called customer orders)
would be easily and quickly ordered and delivered to the book buyer.
Stock would turn over at least six times per year. Independents often
complain that they receive slower service from publishers than the
larger chains.
An effort would be made to learn about customer interests so that they could be notified when a likely new title became available.
A kiosk or computer work station would allow customers to search a much larger database of available titles. This might be the Ingram database for an independent or the comprehensive Borders database using their "Title Sleuth."
Side lines would be limited and appropriate. There would be a strong periodical collection. Audio books would receive considerable attention. Limited food and drink service would be available in the store or nearby.
The owner/manager would have a clear sense of identify and mission for the store. In particular, how the store will distinguish itself from the competition. How will the store provide value for the customer?
The owner/manager would have done, and would keep current, a solid analysis of the local community using appropriate demographic information available from a wide variety of sources. There would be a thoughtful business plan and it would be revised regularly.
The owner and/or manager would have a passion for books and book selling, "a teacher and a student of the community, listening to their interests, relying on the interests of the broader industry and wading through the thousands of choices to expose them to good books that might otherwise be overlooked (Tim Huggins)." The owner/manager would "understand the numbers" involved in the business and financial aspects of book selling. Management information plus a good accountant would keep the owner well informed of how well the business is doing and which product lines are successful and which are not. Book stock is carefully managed so that returns are low.
The owner/manager would be a visible participant in local business and service organizations, especially those that are locally owned or independent. She will develop a network of supporters and advisers who can assist her to grow in the profession. She will be active in regional and national professional associations.
The owner/manager will hire and monitor employees with care. The store should run well when the owner is away.
Thoughtful security would eliminate the "five finger discount"
or shop lifting. The best security device is probably attentive,
watchful customer service, but video cameras can also help. Many
independent stores will not allow backpacks, for example, within the
store or check them on departure. Staff need to receive training in how
to deal with shoplifters and other problem "customers." An interesting
example of a problem is the thief who finds receipts in the parking
lot, finds the books in the store, and asks for his money back.
Many specialty stores carry reasonable selections of topical books. For example, both Williams-Sonoma and Crate and Barrel stores sell cook books. Most toy stores sell some children's books. Museum stores sell art and other books related to their collections. The Nature Company sells nature books. Hobby stores sell books about crafts and hobbies. Arts and crafts stores represent another opportunity, especially for children. Penguin has had some success in selling books in farming supply stores in rural states. Since most general book stores have little depth in a particular area, the specialty store can be a strong competitor for those interested in books on a particular topic.
Starbucks with its 5400 retail outlets and 44 million customers per week has had considerable success with its book promotion program, especially with For One More Day. There were even book break discussions in some stores. Starbucks notes that books and reading are part of the coffee house experience.
Custom publishing is the creation of books aimed specifically at a particular outlet or type of outlet. As Barbara O'Shea said, "we've moved beyond trying to find new places where we can sell a book. We are now spending a lot of time thinking about different ways in which we can produce a book custom-made for the way in which it will be sold and promoted."
Although they purchase relatively few titles, they purchase so many that Wal-mart, Costco, and even some grocery chains can price books below what Barnes & Noble and Borders can afford so say nothing of selling books for less than an independent bookstore can purchase that book from a vendor.
Although they many not yet be substantially profitable, WWW bookstores are popular and constitute a considerable threat to the brick and mortar store with their large stock and freedom from sales tax. However, the end of substantial discounting substantially reduces that threat. Recent surveys indicate that books and videotapes are the only items more likely to be purchased online than in physical stores. Typically, shipping and handling fees balance sales tax elimination for smaller orders.
OCLC has added an online bookselling option for titles identified through Open WorldCat. Baker & Taylor is handling customer service.
Amazon.com is clearly the leader in this category with a database of more than 12 million customers. Its media sales [books, music, DVDs] are larger than those for Barnes & Noble. British and German sites have been quite successful. Amazon was also responsible for the Borders web site until recently. Amazon added used and rare books as well as musical items to its book unit by buying bibliofind.com and Musicfile.com. It has also opened a Christian department to sell thousands of Christian products, including books.
Amazon's business model has based on "four pillars":
Amazon makes it easy for anyone to become a bookseller [Amazon Advantage program]. All that is required is a link from the books to Amazon. Amazon then ships the books and pays a small commission.
Amazon has nearly infinite shelf space and its returns are less than two percent -- a dramatic contrast to the national chains. Selling the long tail books can be profitable, especially with many opportunities to recommend relevant titles.
Amazon.com has become a department store (acquiring Drugstore.com and Pets.com ) rather than just a book store. Amazon has lawn and patio, kitchen, computer hardware and software stores. There is an Amazon travel store in conjunction with Expedia.com. It is not clear if the move to selling a wide range of products diminishes the appeal of the Amazon book department. Based on sales, Amazon is the largest book store in the U.S. and is rapidly expanding in Europe, especially the U.K. and Germany.
Stocking fees (money paid to book retailers to make certain
books more visible) are also paid to WWW bookstores including both
Amazon and Barnes and Noble. Amazon received notable criticism for
recommending books without telling viewers that publishers had paid for
those recommendations. Publishers can pay substantial fees to have a
new book placed in a highly visible position on Amazon's website.
Similarly, fees allow for certain books to appear at the top of
the page when a keyword is searched. Amazon also has a reputation for
tough bargaining with publishers on discounts and co-op advertising.
Amazon has been quite successful in selling used as well as
new books. The Authors
Guild has been most upset that Amazon sells used and new
books on the same page, believing that used books reduce the sale of
new books. Authors and publishers receive no royalties or other
payments on used book sales.
Both Amazon and Google have book databases and search engines to search book content ["Search inside the book"] so that buyers can find information in parts of books and may then purchase those books or "chunks" of content. There are rights issues, but this is a major step forward in what will eventually be the sale of "chunks" of content from books.
Amazon is feared because of the large number of relationships
it has developed with customers. There is some concern that Amazon may
become a publisher and attract authors and content. Amazon Connect t is a program that allows participating authors
whose books are sold on Amazon to send messages to readers who have
purchased their books.
Barnes and Noble also has a notable website [with the option to pick up items at local stores] as do a variety of smaller chains and independent book stores. Barnes and Noble customers who come to their website purchase twice as much, on average, as those who visit the stores.
Both of these large WWW bookstores have strong affiliate programs where there is a link on the affiliates site to Amazon or Barnes and Noble. Each affiliate gets a small percentage of the price of each item sold. Affiliates may be large or small. For example, Barnes and Noble is the exclusive bookseller for the Microsoft Network [MSN] and also for AOL, CNN, and ESPN. Amazon is the exclusive bookseller for Yahoo! and Excite. Your website might also be an affiliate. Barnes and Noble has more than 120,000 affiliates with embedded links versus Amazon's 100,000. Affiliate commissions usually range from 5 to 7 percent. Affiliate programs depend on favorable arrangements for their success. For example, an author website may not wish to be an Amazon.com affiliate when Amazon appears to encourage used rather than new book sales. Customers clicking on an "Amazon Buy Now" banner at an affiliate web site now go to a page showcasing several products instead of the single book and that is not popular with some affiliates.
Independent online stores use Ingram or another wholesaler to ship the books to the customer. Amazon began with a small inventory and used Ingram for the rest. It now has its own distribution system.
While Amazon has gone from being a book store to being a department store with a large book department, discount stores are adding book departments. Wal-Mart has signed an agreement with Books-A-Million to provide the books for Wal-Mart's website. Books-A-Million is the third largest bookstore chain in the U.S.
The WWW encourages publishers, like others who create and sell products, to consider eliminating the middle person and eliminating some price discounting. Penguin has been the leader with Random and S&S following. However, books are sold at full list plus postage and handling. Harlequin offers a twenty percent discount plus free shipping. Obviously, this is upsetting to traditional retail channels. Most publishers discourage direct sales and direct consumers to "authorized" dealers. Still, direct sales are tempting.
At the same time, book stores, especially the national chains,
are moving into publishing. Independents, if they become publishers,
typically serve as POD publishers for local authors.
Knowledgeable staff are the most important difference between a book outlet and a "real" book store. How important to you and to the typical book buyer [your opinion] is such a staff?
If you managed or owned a bookstore, which sidelines would you include in your store? Why?
There is considerable controversy about the impact of large chain stores on smaller, family owned stores. To what degree, is the decline in smaller independent book stores cause for alarm?
The online bookstore on the WWW has many advantages including an extensive stock. Discuss the strengths and weaknesses of the online bookstore versus the physical store in the community.
Briefly describe your "ideal" bookstore with some thoughtful rationale for the way that it should be.
