Much of what follows is taken from an interesting article in Publishers Weekly (9 May 2016) entitled “Returns in a Time of Transition” by Judith Rosen & Jim Milliot. Their analysis was intended for the book industry; my version is intended for the reader/consumer.
For the last five years or so, the publishing industry has been distracted by the rapid growth in sales of books in the e-book format. Conversations amongst publishers and booksellers about the future of print formats were anxiety laden. It wasn’t quite clear what would pay the bills as print formats faded. With the recovery of print books, however, the book industry is now back to thinking about returns “in a time of transition.”
The book world delivers an impressive number of important, new titles each season. Some sell well, some not at all. Stocking only new titles by authors with track records or from major houses would, however, be hard on new and unknown authors and narrow consumer choice. And neither publishers nor booksellers want those outcomes. So retailers are allowed to return books that aren’t selling to their publishers for credit against future purchases.
There are no industry-wide standards for acceptable return levels from retailers. In 2015 the industry-wide ratio, returns as a percentage of purchases, for the three print formats were trade paperbacks 20%, hardcover 26%, and mass paperbacks (pocket books) 48%. These are averages across the industry, of course; some bookstores had higher return rates, some lower.
Both book stores and publishers are interested in making sure that book inventories match demand in local markets. Gainesville, Florida is a very different market than our sister city in the next county south, Ocala. Local buyers in each town are best able to pick from amongst the many titles. However, more commonly these days distant buyers order for stores in many different markets with only fragmentary knowledge of those markets. That arrangement causes higher return ratios.
“Non-traditional booksellers” now sell more books than do the “indies.” They include mass merchandisers (Walmart), warehouse clubs, drug and grocery stores, airport newsstands. They believe that the titles they buy must be stocked in sufficient numbers to have visibility, and publishers like that visibility as well. This is particularly true with mass paperbacks. Their buyers are encouraged to buy “dumps” of a title containing 24 to 36 copies for each of their stores. This ordering in large quantities is one cause of the higher return rate on mass paperbacks.
Goerings Book Store (closed Spring 2010) made heavy use of a distributor, Ingram Book Company, especially for reorders of books that had sold and that we needed to have back in the store pronto. It took Ingram only three days to get books to us, and we e-mailed in an Ingram order nearly every weekday. This source was much faster than waiting weeks for sufficient titles to warrant sending an order to the publisher. The existence of this short fulfillment time meant that we could keep fewer copies of a title in stock. We had return privileges from Ingram and other distributors that we used, but since we were reordering books that had sold once in our store, there were fewer returns.
So better front-list ordering on the part of knowledgeable local buyers and the use of Ingram and other distributors for a quick reorder definitely reduced our level of returns .
What happens to books when they are returned? Hardbacks and trade paperbacks are generally “remaindered.” They are packaged onto skids and sold by weight or volume to ‘remainder’ bookstores. One of the two Books-a-Million stores has turned into a ‘remainder’ house, 2nd & Charles. Mass paperbacks are treated differently. “Whole-copy” returns are not required, only stripped front covers. That avoids transport costs, but probably encourages returns.
Congratulation to Book Gallery West. They are the one remaining independent book store in our market. Most of their inventory is used books which are not returnable. Used book stores give the book another opportunity without generating more returns.
Most of those interviewed for the Publishers Weekly article quoted new technologies as providing “solutions” to excessive returns . Certainly new technologies are making a difference to bookselling and specifically to returns. The most remarkable new technology, however, was introduced years ago: point-of-sale inventory control systems for retail stores which track inventory levels, sales, reorders, and a sales history for each title. Better inventory control has resulted in fewer returns.
The textbook business generates a lot of returns. It is difficult to anticipate what the pickup will be for a textbook or when it will be purchased. There have been two retailers in Gainesville in recent years that dominated the textbook business, but this past May the Florida Book Store closed. Its parent company, Barnes & Noble College Stores, had merged with Follett Educational Services, which leases the UF bookstore. The textbook business here in Gainesville and in other university towns will now be dominated by one massive corporation.
Impact on returns ? In theory, a monopoly on the supply of textbooks could better deal with inventory control than can a competitive market. Better inventory control; fewer returns. But on the other hand monopolies are not necessarily good for their student customer. For example, they can determine prices without worrying about their competitors’ pricing strategies.
To remedy that situation the University has encouraged Amazon.com and other on-line competition. Information about how on-line competition has reshaped textbook retailing and specifically returns is not presently available. If the amount of space devoted to textbooks at the UF campus book store is any indication, local textbook sales are hurting.