Distribution in the Digital Age
Observed from 30,000 feet, the modern system for delivering manufactured goods appears little changed from what it was 30, 40, 50 years ago—trucks roll, trains rumble, ships ply the harbors and canals. Only a closer view reveals the logistical revolution made possible by rolling stock, just-in-time ordering and outsourced production. Similarly, the average consumer picking up the latest best-seller at their local bookstore is unaware of how book distribution models are changing. While the book they hold in their hands may adhere to the old “print-and-deliver” model, for instance, the one next to it may have been “deliver and print,” as in large distributors receiving and storing electronic files, and handling the printing themselves.
“The first thing publishers have to do is have the ability to manage digital assets,” says James Gray, president and chief executive officer at Ingram Digital. “We look at existing content workflow in terms of the file output.”
Most publishers currently work with PDF files, he says, which are not as compatible as other platforms with e-reading devices such as the Amazon Kindle. “The move toward XML and new e-standards is something we endorse,” he says.
Because handling print and digital content is a vertical challenge, standardizing file formats is important to Ingram, which sees itself continuing to fulfill its traditional role of storage and distribution, while at the same time removing barriers across multiple supply channels.
“We see a big [opportunity] in Ingram providing storage service … [and] engaging with the people who are buying these books, and the different ways they are interacting with the content,” says Gray—from print to e-books, by-the-chapter downloads to interactive textbooks.
E-books ‘Taking Off’
A major growth market for Ingram Digital is the textbook and academic market, where Gray says consumers are already used to e-journals, and students appreciate the interactivity and updating capacities of online publication. Increasingly important, however, is the consumer book trade.
“We’re seeing a huge uptake in e-books by consumers,” he says. “Clearly that’s the Kindle effect. It would appear to us that the retail market, after many false starts, is taking off.”
E-books are beginning to have an impact in the small and niche publishing market, says Laura Dawson, an independent industry consultant.
“One of the uses I find really surprising is the success of romance books [in the e-book market],” Dawson says. “This is the consumer segment with the [highest] adoption.”
Speaking at the Book Industry Study Group’s (BISG) Making Information Pay event in May, Malle Vallik, Harlequin’s director of digital content and interactivity, stressed the importance of offering free e-content to encourage readers to try the experience and get comfortable with it. Many women may not be naturally inclined to read e-books, she said, so giving them an incentive to try the format out can enable them to find out they like it.
Jacqueline Simonds, CEO of Reno, Nev.-based based publisher and distributor Beagle Bay Books, says that she has only just begun to explore electronic options, as she considers releasing chapter-by-chapter e-documents once she has chosen a solution for managing her content across platforms.
“I think that as e-reader [devices] evolve, that becomes more interesting, but I think it’s going to be e-content rather than full books,” she says. “It’s not a problem really. You just have to think of your book as a content package that you can pull … content from, something you can re-monetize and repackage in a lot of ways.”
The use of electronic information is affecting the supply chain on the back end as well, Dawson says.
“Getting information electronically is just the standard way of doing business today, and that leads to a whole lot of efficiency in the supply chain,” she says. She cites as examples instant updates for inventory, having codes stamped on boxes rather than having to scan every book individually, and the use of radio frequency identification technology, which she describes as “E-ZPass for your books.”
The Marketing Component
For publisher and distributor alike, marketing through multiple channels—from traditional brick-and-mortar bookstores and public libraries to social-networking Web sites—is important to engage consumers where and how they get their content.
Simonds focuses on marketing as a key (and often overlooked) component of a successful distribution strategy.
“When you send books out, you should have a strategy to [prevent them from being returned], and that means driving people into bookstores and into the library,” she says. “One of the biggest hurdles is marketing. A small publisher simply does not have the money to put out there to buy the kind of eyes that [for example] Penguin gets, and because of that, there is a lot less interest [from] the bookselling chains,” Simonds adds.
“When you are small, you have to be thoughtful about what you send out. For a small press, a bookstore [is] kind of a zero-sum game,” she says. “They do not buy books; they rent books on the off chance that they can sell them, but that is ruinous for a small press because we need the cash.”
“It’s a headache in the beginning,” Simonds adds, noting that many of her clients are dealing with the vagaries of book distribution for the first time. “You try, as a distributor, to prepare people for [the inevitable returns], because no one thinks it’s going to happen. We have strategies for dealing with [returns such as selling them on the] Amazon Marketplace [where third parties can sell items through Amazon for a commission fee], or putting [them] back on the shelves and repackaging [them]. Some books are too scuffed up to put back in the system, so another option is to put them on our Web site and sell them as signed copies.”
Opportunities for Small Publishers
Programs do exist, such as Barnes & Noble’s Small Press Department, that help smaller publishers get national distribution.
“Obviously [these programs] are picky, and that’s good for them,” Simonds notes. “I don’t offer them everything. I only offer [books] that I think will drive customers [through] their doors and that will be successful.”
For Simonds, that excludes novels—“People don’t buy novels from a nobody,” she says—but includes books like the Beagle Bay young-adult release “Women Astronomers,” the first in a series of books about women scientists.
Barnes & Noble ordered 100 of them—one per store—in a test marketing strategy in which an automatic reorder kicks in if the book sells.
Another option for small publishers is the Amazon Advantage program, which allows books to be listed on Amazon without having to be picked up by Baker & Taylor or Ingram. The program requires an annual fee and a 55-percent discount, but pays promptly, which Simonds says can be another issue for smaller publishers trying to stay solvent.
The Importance of POD
Another important development sending ripples through the supply chain is the growth of print on demand (POD).
“The costs of POD have continued to fall, so it’s getting close to offset [printing],” Gray says. “Why would a publisher fund books sitting in a warehouse? It is absolutely reinventing the supply chain.”
Ingram is now printing 1.5 million books a month, Gray reports, and the numbers are growing quickly. “POD offers straight access to the entire supply chain,” he says. “It’s really taken off, and more and more trade content is coming into the program. Anyone who is not engaged in POD is almost in dereliction of duty, it is such a core component of supply chain. Publishers are looking at [using it for] the front list as well as backlist.”
As the quality of POD has improved, an increasing number of publishers are using it to streamline printing, warehousing and distribution by joining these services under one roof, notes Yali Friedman, author and publisher of the textbook “Building Biotechnology.”
“POD works very well for textbooks and backlist books, where demand varies significantly over the course of a year,” he says. “Instead of paying up-front to print large quantities, and running the risk that they won’t sell in a timely manner, POD allows publishers to have books printed as they’re ordered. This means that textbooks won’t go out of stock in the middle of back-to-school season, and backlist books won’t fill warehouses.”
Martin Cournoyer, general manager and digital printing specialist at Transcontinental, says cost savings are emerging as a central advantage of digital printing as publishers look beyond cost-per-unit considerations in the face of rising energy and transportation prices.
“Right now with digital, maybe the unit cost is more expensive compared to offset, but the total cost, when taking into consideration distribution, inventory and sending books back because they cannot sell—this is a new way to look at it,” he says.
The Role of the Big Distributor
Even as more publishers find opportunities for taking on the printing and distribution role themselves through venues like Amazon and direct selling on their own Web sites, Simonds believes that the role of the big distributors is not likely to be eradicated any time soon.
Reviewers and retailers often will not pay attention to a book that is not listed in Ingram or Baker & Taylor, she says, because of concerns about availability.
“We encourage small presses to find some kind of distributor; otherwise, it’s almost insurmountable to get anyone other than a small, local bookstore interested in you,” she says. “If you can get a distributor and get some marketing going, and if people come in and say ‘Why don’t you have this book?’—that’s when [bookstores] will start stocking it. Our business is about getting people to go into the bookstore and ask for something.”