The key may be managing book returns efficiently rather than eliminating them

By Jim Sturdivant

The ‘Green’ Impact of Returns

Part of the incentive behind efforts to reduce or eliminate returns comes from the desire to “green” book publishing. The Book Industry Environmental Council, co-sponsored by the Green Press Initiative (GPI) and the Book Industry Study Group, seeks to reduce the portion of books that are returned from 25 percent to 20 percent as part of an effort to reduce greenhouse gas emissions by 20 percent industrywide in the next 10 years.

To achieve this goal, the council recommends print-on-demand and short-run printing where appropriate, alternative sales models and strategic warehousing, among other strategies.

“The priority for reducing books in landfills will take a two-pronged approach,” says Todd Pollak, a program manager at GPI. “The first is reducing the number of books that are overproduced and returned, and the second is finding ways to recover and recycle more books at the end of their useful life.”

Both goals are important to White River Junction, Vt.-based Chelsea Green Publishing, whose effort to incentivize retailers to reduce returns was launched in 2007. Chelsea Green works with book-seller partners to arrange nonreturnable book orders; the publisher ships free-of-charge at a base discount of 50 percent, with an annual additional credit (based on business done in the previous year) for each year a retailer is a member of the program. Retail partners also receive first right of refusal on author appearances and free promotional materials.

Chelsea Green currently works with around 40 partners, all independent book-sellers. “The chains have a hard time imagining life without returns,” says company President Margo Baldwin.

“Overall, our returns rate has been steadily declining, from 20 percent to a little over 15 percent last year,” she says. “This happened with an overall 7-percent growth in net sales. This program plays a part, but I also think it’s because we do relatively more business with retail specialty accounts, most of which are nonreturnable, and with Amazon, which is also nonreturnable. We are no longer doing direct business with Borders, so that is also contributing to a lowered returns rate.”

To encourage wider participation, Chelsea Green is experimenting with a consignment model (aimed at partner and non-partner stores) as well as shared markdowns for books to increase inventory turns and avoid returns.

Baldwin recognizes the limits of such programs, but believes the move away from a reliance on returns is inevitable for the industry. “I think the returns problem is going to be ultimately taken care of by the transition to e-books,” she says. “The large publishers and the large brick-and-mortar stores will never give up returns of physical books. The entire system is built around it. In terms of the independents, I think you will see more experimentation with different models.”

Returns remain a problem for the book publishing industry, although changes to the book-selling landscape brought about by Internet retail, e-books and new distribution models seem destined to make the issue loom less large than it did when mega-bookstores ruled the retail roost.

New options for alleviating the returns burden have proven much easier than attempting to alter the old system. Former HarperStudio President Bob Miller (now at Workman Publishing) recently told an audience at the BookNet Canada Technology Forum that, although the now-shuttered Harper Collins imprint was able to work out deals with a number of book-sellers, many top accounts simply were not willing to accept the inventory risk involved in HarperStudio's offer: discounts on titles in exchange for a no-returns agreement.

"We spent a lot of time trying to come up with terms that were attractive and get accounts on board, and we did get a lot of major accounts on board … [but] by the end of the two years, it became a reason not to buy speculative material," Miller said. "It was too often used as a reason not to take a position, and ultimately, we let go of the nonreturnable approach just in the interest of distributing books we believed in as publishers."

Ultimately, HarperStudio's desire to innovate in distribution ran up against the desire to aggressively court and develop unproven talent—and the latter won. The lesson here might be that, while everyone would like to see returns go away, the gains from changing the system often do not trump the risks involved or the greater benefits seen from prioritizing innovation in other areas.

While Harper Collins has, for now, abandoned its no-returns experiment ("… it was a very complicated program to establish, and we learned a lot," comments company spokesperson Eric Crum), other publishers continue to tinker with various no- or limited-return arrangements.

The Issues of E-book Returns

While e-books may solve the returns problem for publishers when direct selling is not involved, they do not represent the end of returns as a factor for the industry. Customers who return e-book purchases do so for a variety of reasons, according to Angela James, executive editor at Carina Press, the digital-only division of Harlequin Enterprises Ltd.

While some of these reasons are different from those driving traditional book returns, most will be familiar to book retailers.

“The … reasons people want to return a digital book are much the same as [the reasons] they would want to return a print book,” James says. “They didn’t enjoy the book and didn’t feel it was worth the money they paid, they already own a copy of the book, the formatting of the book made it unreadable. I would compare this [last] one to print in that print books get returned because the binding/glue is bad, pages are missing or pages are upside down.

”Additionally, customers will buy the wrong format or find the digital rights management (DRM) on what they’ve purchased is not compatible with their device, rendering an e-book unreadable or a file inaccessible, a problem James says happens most often with Adobe Digital. Consumers, she adds, care less about file standardization (such as EPUB) than they do about the effects of non-standard formats and DRM.

The issue of DRM and returns flared up about a year ago with reports that Amazon was locking people out of their Kindle accounts if they returned too many books. Kindle’s stated policy gives customers one week from the date of purchase to return Kindle content, at which point the content is removed from users’ libraries.

One major, new returns factor involving e-books is the unintended purchase. “[The customer] didn’t realize they were completing the order, didn’t realize they were purchasing the book and they didn’t really want to buy it,” James explains. The problem is as much an online versus brick-and-mortar issue as it is a digital versus print one. “Accidental purchases don’t often take place in brick-and-mortar stores with print,” she notes, “but I suppose they might with online print purchases.”

As with print books, there is the chance that people will read a book and then return it, and the question of what time limits to set for e-returns is still a fluid one. Some e-tailers place no time limit on returns; some (such as Amazon) allow returns within a few days, while others do not allow returns at all.

Perhaps the most important difference between print and digital is the ability of unscrupulous customers to return a book while keeping a copy on their hard drive. “That’s what makes it a different issue than print returns,” James points out.

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Cover Story: Rethinking a World With No Returns