Today's Retail Scene: Are You Prepared to Compete?
It used to be straightforward. A publisher sent out a catalog of new releases, promoting certain titles to bookstores. Marketing proceeded through fixed channels and seasonal rituals, and, year after year, everyone knew their place in the dance. Not so anymore.
As the economy takes its first hesitant steps out of the deep gloom of a recession, the book industry is reshaping itself as a multichannel, multiplatform operation willing to cater to the desires of an audience accustomed to getting content when and how they choose.
For Concord, Calif.-based C&T Publishing, this has meant reshaping distribution and marketing strategies to match the needs of the niche market it serves. “We sell into a variety of channels, so our needs are constantly changing,” says Publisher Amy Marson. “We sell to the trades, but then we also have what we call our core market, which is selling to retail quilt stores and papercraft stores. It’s a completely different group of distributors, and they get serviced differently.”
This means C&T must maintain parallel distribution and marketing plans. While the conventional trade book market requires Marson to be planning strategy for the middle of next year, specialty retailers operate on much less lead time. “With the core market, we are constantly responding to trends,” she says, “whereas with [distributor National Book Network (NBN)], we are working so far out, we’re more predicting what we think the trends will be.”
With competition from online sales, discount chains and other nontraditional outlets, bookstores are adjusting marketing and retailing models as well. Borders Group recently announced the establishment of Borders Teaching Zone sections, which offer non-book items useful in the classroom alongside a range of teaching publications. The Teaching Zones are located adjacent to a recently revamped children’s department that features an expanded games and toys section.
For young-adult readers, in-store Borders Ink Teen Shops stock merchandise associated with popular authors along with books and graphic novels. These recent upgrades, along with the multimedia “shop within a shop” areas built around wellness, cooking and travel unveiled at experimental “concept stores” last year, represent an awareness of the need to build a specialty-shop sensibility into the bookstore environment.
“The experience for our customers is very important. We want to make Borders more than a place to buy books. We want to make it a place to experience books,” says Kathryn Popoff, vice president of books at Borders Group. “… Consumers can find books in multiple channels, whether it’s a traditional bookstore, or the mass merchandisers now carrying a selection of books, or a grocery store, [or on the] Internet. So we have to work very hard to give customers a reason to drive past the competition and come to our store. … We think things like the Teaching Zones and the Ink Shop, in particular, really differentiate us from the competition.”
Stephenie Meyer’s “Twilight” series provides an example of how Borders takes its cue from readers. Reacting to data showing that many adults were buying these books aimed at teens, Borders placed its young-adult shops near genre fiction areas to encourage cross-shopping.
“Retailers and publishers are having to work harder to sell books and be more creative,” Popoff notes. “It’s not enough anymore just to put books out on a front table. We have looked at how consumers are buying the titles, and reorganized the stores around that.”
For publishers, it is also important to consider how retailers and wholesalers are buying. C&T selects certain books to push in the trade market versus the specialty-retailer market, but has made its largest operational adjustment around the challenge of multichannel marketing. One distribution or retail partner, Marson says, might require a PowerPoint presentation and a sales call. Another responds best to tip sheets and a catalog, while still another a postcard, catalog and presence at a trade show. This level of complexity has led C&T to reorganize management to make the company more flexible and responsive to a variety of marketing needs. “We were sort of doing the same thing for everyone [before], and it wasn’t working,” Marson says.
The Need for Flexibility
The need for marketing flexibility mirrors trends across the entire publishing landscape, as rapid technological changes and multiplatform functionality have altered the very dynamic of the book business. “Clearly, flexibility is really the trend,” notes David “Skip” Prichard, president and CEO of the recently formed Ingram Content Group Inc. “This can be flexibility in format, in [regard to] the channel [that] publishers want to release content in, or even financial flexibility, the ability to make decisions to employ capital in different ways.”
Prichard compares the suite of options available today to a menu where printing, distribution and marketing services can be matched to specific project strategies. Given the uncertainty surrounding newer platforms, devices and sales trends, publishers need solutions that allow them to react quickly as market situations evolve, he says.
The creation of the Ingram Content Group itself resulted from a major Ingram reorganization designed, in part, to help facilitate multichannel distribution for clients. “Before,” Prichard says, “you would talk to Ingram Book Group, go over to Ingram Digital, then to the library group, the marketing agency—now we’re organized so it all falls under content organization, so we can help you however you want to get that book out.”
Smaller distributors also have recognized the need to offer integrated services. NBN recently launched NBN Fusion, a digital e-book distribution and conversion service that includes production and manufacturing services, print-on-demand (POD) and digital short-run.
The days of estimating how many books a publisher should sell and then printing 10 percent or 15 percent above that are gone, says Marianne Bohr, senior vice president at NBN. “You’ve got to figure out, ‘Should I do the book in print, should I do it in print and electronically, should I only print the book if we have demand … or maybe we just do a digital short run of 300 copies?’ Right now those answers are not really definitive.”
Part of NBN’s job, she says, is helping publishers understand that they should be considering these options, as many are still in the “print 5,000 copies and see how it does” mind-set.
From Book Publisher to Content Provider
Increasingly, however, book publishers are beginning to follow magazine publishers’ lead and think of themselves as content providers. “We try to get away from the concept of the book,” says Jim Donohue, managing director of Science & Technology (S&T) Books at Elsevier. “I stress to my editors that what we really do is create content, and then we put it on the platform in which our customers want it.
“I do think all publishers are going to have to think about what is the content that they are going to produce and what’s the best way to present it,” he says. “In some cases it will be video, in some cases it’s still going to be a PDF, in others an XML feed that allows you to search across a wide variety of books. Some are going to be things like Kindle, where you want a uniform experience of a narrative group of content.”
For Donohue, this has meant paying attention to customers—and overturning some previous assumptions. He says the best-selling book on Amazon’s Kindle for Elsevier’s Focal Press imprint (which publishes media-technology books) is on lighting techniques—a big surprise for a device not yet able to accommodate color graphics. “[It’s] astounding to me,” he says, “yet it sells enormously well on Kindle [because] people want the information in a portable, quick way, and the media-tech market is quite comfortable with that type of technology.”
In some ways, Elsevier’s S&T Books division might be considered a bellwether for the industry in terms of distribution strategy. Its approach is informed both by being part of an STM publisher on the leading edge of digital-product implementation, and by the fact that it caters largely to the end-user (in this case, the consumer as opposed to the institutional market) via Focal Press.
As a result, the S&T Books division finds itself working closely with vendors like Vital Source and Ingram to facilitate a sophisticated print and electronic distribution operation, while looking to create its own e-sales channel. Donohue also hopes other vendors will catch up in terms of offering integrated distribution services, thereby bringing more competition to the market.
On the other hand, Elsevier is not merely ceding this corner of its electronic distribution network to others. “It’s no secret to either Ingram or Amazon that we are also looking to develop our own direct sales channel for e-product. By the end of the year, you will be able to purchase any [science and technology] e-book through Elsevier Direct, which is our e-commerce platform,” says Donohue.
The Realities of a Digital Marketplace
Key to a successful multichannel strategy is the integration of print, which becomes more complicated (yet ideally more efficient) as POD and short-run options expand.
“Right now, our jobs are probably harder, because we are trying to grapple with all of the e-distribution issues, while, at the same time, we have all the old issues with print distribution,” Bohr says. “Both will be around for a long time.”
For most publishers, print still comprises the vast majority of unit sales, but e-distribution’s ample new challenges demand ongoing experimentation and attention. “Everybody is in the discussion phase and the try-it-out phase of how [e-books] should be priced,” notes Bohr. “Should they be priced lower because you don’t have the print cost? Does that diminish the value of the intellectual property?”
Publishers do not control prices, Bohr notes, a fact highlighted recently by Amazon’s $9.99 offering of frontlist books for the Kindle and recalling for some the explosive impact of iTunes on its way to dominance in the digital music sphere.
The emergence of Amazon’s and Sony’s e-readers, along with a host of new digital product options, makes the ability to offer a variety of consumer-tailored digital products that much more important. “The book is going to have to evolve as it goes into this digital platform. It’s not just going to be a flat book anymore. There are going to end up being widgets and video … [as well as] selling in pieces and chunks, especially through the library channel,” Bohr says.
Publishers must catch up to the reality of digital platforms or risk being left behind—as the music industry was—by a failure to loosen hold of their gatekeeping role, she cautions.
The winner in the emerging distribution game will be those entities who, in Donohue’s words, “own the customer”—those who control trusted, easy-to-use sources of content.
Many believe Amazon’s $9.99 e-book pricing strategy (with Amazon taking a loss on many titles in order to sell them at this price point) is driven by this concept.
“Clearly, Sony and Amazon are trying to make a market, trying to get people to buy their devices,” Bohr says, “and the incentive is the lower-priced book.”
“They see [customer loyalty] as their future,” Donohue says of distribution and retail partners.
He notes Amazon’s customer-friendly shopping experience as another key to Amazon’s success. “So for us in S&T Books group, we are focused on providing that experience for our Focal Press customers, because these are people who buy a lot of books from us, they know us, it’s a community of people, they follow us on YouTube, Facebook—and so for us, that’s the area we are going to focus on to provide a direct experience for our customers,” Donohue says.
Elsevier will leverage social media as it attempts to create an online marketplace for its products to rival Amazon. Donohue says e-products will be part of a range of products offered through a new multimedia portal, the Focal Online Resource Center (FORCE), which is slated for launch on the Focal Press Web site by the end of this year. “People in animation and the media-tech area will be able to buy a variety of things through our Web site, and we will really be built to serve that community,” he says. “We’ll see how that goes, and then we’ll look at the physics market, the chemistry market. But that’s where our real experiment in terms of distributing a totality of our product is structured for right now.”
The success of rich media efforts, including YouTube channels demonstrating animation and photography techniques viewed by half a million people, have helped spur the creation of FORCE, which will provide a way for Focal Press to provide multimedia, social networking and e-products directly to consumers. Add to this the explosive increase in e-book sales, which Donohue says is growing annually by double digits companywide.
“Our customers are really changing their behavior,” he says. “I don’t think the death of the [print] book is going to happen in the next five years …, but I think this technology is certainly changing, and publishers have to think about how they are going to distribute their content. … I don’t see how you think you’re going to survive unless you look at how you’re going to distribute in the next two to three years.”