A Publishers' Conversation with Authors: Is Amazon putting bookstores out of business? Understanding the Right of Return Model of Book Selling

 

It is Tuesday. Time to tall turkey. Monday's madness is over, and Wednesday will take us over the hump, so Tuesday it is--for some serious discussion with authors. Tuesday talks mean to address authors in waiting and self-published authors who would like to go a more traditional route or who would What at least like to take their steps with a publisher by their side.

Today's topic arises from a discussion last week with an author whose cost of book returns brought an otherwise successful book into the negative net income (i.e.) loss realm. Our conversation revolved around several questions that arose from her discussions with her local bookstore. 

Why/how do returned books create loss for an otherwise successful book?

• A large number of returns can eradicate all profit from the book sale and put the book into the loss column on a P&L statement:
• print costs will not have been recoupled; additional books have now been returned to the publisher's inventory, books that were not meant to be printed for inventor; the print costs are now sunk costs
• overhead, distribution, and book promotion/marketing costs associated with those books will not have been compensated
• in some cases, freight/shipping costs will also not have been compensated, and additional shipping costs may be encountered to get the books back home to the pubisher
• often, the distributor will charge a service fee per book for returning the book
• Money paid for the book must be returned, but the book returned rarely can be sold as new because even if it is in mint condition, it has been out in circulation and is rarely truly mint-new in appearance; generally, it has to be sold at a sale/lower price.

What are the rules on right of return?

• Generally, bookstores may return any book purchased as long as it is not damaged.
• Typically, there is no period of time in which 

How does Amazon handle returns from customers?

• Where books have been sold and returned by readers to Amazon, they are sent to liquidators.
• They may end up being resold as used books.

Are retail bookstores disadvantaging themselves by insisting on right of return?

• Yes, IMHO, they are if they will not take books other than if given right of return. The prompt for that stance is that they will be stuck with unsold books if they cannot return them for full reimbursement. There are alternatives such as 
• ordering fewer numbers of books and keeping them until sold out
• or even better for mom-and-pop stores, taking books on consignment; it requires more bookkeeping from them but opens them up to being able to sell books from publishers who will not offer right of return.
• Yes, IMHO, many are because of the way they manage returns. Too many over-order (or order a reasonable number) but return the books at regular interviews, creating a revolving door at publisher expense.
• Often books are over ordered for book events, like the book signing at the launch of a new book; it is understandable that stores would not want to run out of books for a signing, but generally signing sales are low and returns are high -- a bad way to start out a new book.
• Sometimes, though, bookstore policy is to turn over books on a regular basis to keep them looking fresh.
• Yes, IMHO, they are because right of return is a risk for a publisher. 
• The opportunity to sell books through Amazon where books do not boomerang is more attractive to a publisher. 
• While all publishers will honor bookstore orders, not all will give right of return because of their past experience with predatory practices (perhaps painting all stores with the same brush, but, in my experience, a publisher can be put out of business by bookstore practices that place all risk of sales/no sales at the doorstep of the publisher).

There is an assumption running around inside bookstores and with readers that Amazon is putting bookstores out of business. I would disagree. It would appear that bookstores own practices are doing that. 

The bottom line is that some small publishers simply are not interested in working with bookstores because of the risk of going out of business due to the current model. We are not exceptionally enthusiastic about bookstore placement but will accommodate it until individual bookstores bite the hand that feeds them and much prefer when bookstores order direct through us (when we can better control over-ordering and avoid abuse of right of return -- we will accept returns s, but we negotiate a reasonable order size upfront. We also are highly in favor of the consignment process, which is fair to publisher, author, and bookstore. 

Lesson for today's Tuesday talk: The current model of bookstore purchase and return does not work for anyone, not for bookstore and not for publisher. To compete successfully with Amazon, bookstores need to adapt their model to something similar to Amazon or something even more creative.

 Read more posts about publishing HERE.

 (Book available from MSI Press LLC; discount of 25% with coupon code FF25;   currently on sale for $5, but that offer will not last long).