Probably one of the most difficult, and yet crucial, aspects of the publication process for all publishers – but particularly small publishers – is distribution. It is also worth considering what is precisely meant by distribution – does it mean simply ensuring the publication is adequately represented in bookstores, or does it mean ensuring the publication reaches its intended audience?
When distributing to bookstores, some small publishers may choose to deal directly with the bookstores rather than using a distribution agent. This approach may well be common in the case of a new publisher. However, certain bookstores – particularly the larger retail chains – may be reluctant to deal directly with small publishers. Purchasing managers are often extremely busy and, perhaps with reason, may be sceptical about dealing with a small publisher who may not – and probably does not – have a formal business infrastructure in place. To put it plainly, they may not wish to deal with what they perceive as being an amateur.
This leads to the issue of administration. Due to the proliferation of fraud, large chain bookstores have become extremely fastidious about controlling their creditors’ departments. Some are no longer willing to process payment purely on receipt of an invoice – in some cases, delivery notes and monthly statements may be required before they are prepared to do so. For a small publisher, this effectively means running the publishing operation as if it were a fulltime business, even though it may be little more than a ‘hobby’.
If a small publisher does have the time, resources and energy to sell directly to bookstores countywide, well and good, but if they haven’t – and it is unlikely they would – the best option is to get a distribution agent. While there are quite a few distribution agents in South Africa, they are not always cheap, and commission fees can range from 12% - 30% of the net selling price of the book (see below), depending on what the agent is prepared to do. For example, the agent may undertake selling, delivery, invoicing and collections, or only some of these functions.
But the overall costs of selling to a bookstore, with or without an agent, is particularly important because it carries equal weight in affecting both the publisher’s profits as well as the willingness of a customer to pay the gross selling price of the book.
For example, you publish a book that costs R20 to produce. As a publisher, you obviously want to make a profit, so you may add on another R20, selling it to the bookstore at R40 (this is without taking authors’ royalties or VAT into consideration).
But to ensure they too make a profit, the bookstore may well want a 40% discount on that price, which would reduce your profit – at a 50 % discount – to zero, and the bookstore will only pay you R20.
You should therefore add on a 100% mark-up, invoicing at a recommended gross selling price (the price at which the book is sold to the public) of R80. The bookstore can then deduct its 50% discount from the R80, and you will be paid R40, which is your net selling price. It is on this amount that a distribution agent will take their commission.
It is most important not to simply add on 50%, because a 50% mark-up will make the price of the book R60. Thus, when the bookstore deducts its 50% discount, you will be paid R30, and not the R40 you require.
It is also interesting to note that, unlike other industries, in the book trade it is the publisher who sets the gross selling price to the public, not the bookstore.
But now comes the burning question – will a customer pay R80 for the book? If customers are willing to, excellent; but if they are not, then it is likely the book will remain on the shelves for a year or so, only to be sold off at about R30 at the next book sale – at a loss to the bookstore. As a publisher, you are then faced with the issue of whether the bookstore will be willing buy more books from you.
This is a scenario that an experienced bookseller would probably take into consideration before buying the book, so immediately, as a publisher, you could be under pressure not to set the gross selling price too high; after all, you don’t want the reputation of a publisher of books that don’t sell. Remember that bookstores are not necessarily ‘lovers of literature’, they are retailers in business to make a profit.
So if you are pressured to reduce the gross selling price – from which as much as a 50% discount may be deducted – your intended profit is also likely to be reduced.
The other distribution option lies in selling directly to the intended audience, usually by mail order. Many literary journals do this by establishing distribution mailing lists based on upfront subscription. By doing this, you can take the costs of distribution and bookstores’ discounts out of the equation, sell the book at a fair profit, and still make it cheaper for the customer than what they would pay in a bookstore.
But mailing lists take time to build and their success depends on a number of factors, such as the regularity of publication. Also it takes time for a new publisher to build credibility and people may be hesitant to subscribe to a new publication from a relatively unknown publisher.
Consumers generally like the reassurance of being able to see products prior to purchase. And the more exposure; the better. I suggest that small publishers, especially new small publishers, regard neither distribution channel – whether through bookstores or directly by mail order – as exclusive routes to reaching an audience. It may be a good idea to try to obtain half distribution through bookstores and half through mail order.
Originally published as Dye Hard Press newsletter 1