Deconstructing Distribution

Thomas Woll and I estimated the probable sales volume by the top tier of each outsourced sales/distribution source, based on published, verbally reported and estimated sales volumes:

● 10 key master distributors: $400 million–$500 million

● 10 key major publisher distribution services: $750 million–$1 billion, and

● 350 commission reps: $250 million–$500 million.

This totals about $1.4 billion–$2 billion, or 8 percent to 11 percent of book sales to booksellers. My guess is that more than 90 percent of these sales dollars are coming from among the 5,300 publishers in the $500,000–$49 million bracket mentioned earlier.

Wholesalers’ role
Any discussion of distribution seems incomplete without mentioning the role of the wholesaler. The classic distinction is that the wholesaler essentially “works” for the bookseller, while the distributor really “works” for the publisher. But when it comes to assuring timely distribution and backlist sell-through, the economic benefit of wholesaler efficiencies in combining orders from diverse imprints is enormous to both publishers and their outsource distribution partners.

In its 2006 “Book Industry Trends” report, BISG forecasts that wholesalers’ 2006 sales to retailers would account for $3.6 billion—or 20 percent of publisher sales to booksellers. (To libraries and institutions: $2 billion.) Since wholesalers also handle books of the “big 10” (who themselves may account for 50 percent to 60 percent of bookstore sales), the health and vitality of these distribution channels are critical to the entire industry—top tier as well as small and independent publishers.

For the love of books
One might ask what motivates people to keep this complex system going. After all, although a lot of cash may flow through, it usually takes its time and leaves behind relatively modest portions, if any.

As to why we’re in this business and why we persist, Miller explains, “To have a bookstore is part of the American Dream. It is a form of self-expression.”