Strategically Speaking: Outsourcing Your Distribution—The RFP Process Made Simple
Editor’s note: In the August issue, David Hetherington explored the reasons why publishers should periodically review their sales, warehousing and fulfillment operations, and examine the potential long-term merits of outsourcing to a third-party provider. (You can find the column, titled “Should You Be Outsourcing Your Distribution,” here.)
If you are already working with a third-party provider, Hetherington advises that it may be equally valuable to re-bid your business as your existing contract nears renewal.
In this column, he examines the request for proposal (RFP) process, and details the information you should share with potential distributors, and that distribution candidates should provide to you.
The first step in the RFP process is to identify the companies you wish to consider as potential bidders for your distribution business. You have, essentially, two options: specialist firms that provide distribution services to book publishers, and book publishers who handle distribution for other publishers.
Each of these options has its pluses and minuses. Consider both—the broader you cast your net, the better your options, as well as your understanding of the range of services available.
Regardless of the players you consider, your RFP should be sent to a minimum of four bidders, and you should allow ample time (four months, minimum) for the entire process from RFP creation to final vendor selection.
Protect Your Information
Before you exchange any information, all prospective bidders should be required to sign a non-disclosure agreement (NDA). The NDA should not only include prohibitions against divulging confidential financial and operational information provided by either party, but should contain a clause clearly prohibiting the discussion of the RFP with unauthorized parties within the publisher’s organization. Moving to a third-party distribution business model is a significant step, and until the decision is finalized and a transition plan confirmed, the details of the effort should be shared only on a need-to-know basis. Beyond the potential anxiety and disruption to your business, your negotiating leverage is diminished if your effort is plagued by information leaks.