Don't Maximize, Optimize: The Wonderful World of Dual Distribution

You have two possible avenues in which to sell your books: retail and non-retail outlets. As a general rule, however, it is not necessary to choose only one of the two options, because some combination of them will most likely optimize your profitability. This is the concept of dual distribution.

Creative Marketing Example

By understanding your options, you can choose the best marketing strategy for each of your titles. Let’s say yours is a 6 x 9-inch soft-cover book, 240 pages with a list price of $19.95. If you printed 1,000 of those books at $3.04 each and sold all 1,000 to bookstores with a distribution discount of 65 percent off the list price, your revenue would be $3,943. If instead you sold all 1,000 to a discount store like Wal-Mart at a 70 percent discount, your revenue would only be $2,945, which is $1,000 less.

Figure 1 demonstrates both of these situations. Furthermore, in both of these cases the books are returnable.

On the other hand, if you apply creative marketing strategy you will most likely be able to increase your revenue. For instance, you could sell the same 1,000 books through a library wholesaler at a 55 percent discount and make $2,000 to $3,000 more than you would by selling them all to a bookstore. Or you could sell them direct to end users at a 20 percent discount and maximize your revenue, as shown in Figure 2.

You might complete this analysis and decide you want to market all of your books directly to end-users. However, you will quickly learn that your gross revenue will be diminished by the increased costs of doing all the selling work yourself, which is why dual distribution is often best. Also, you may not have the time or skill to successfully conduct such an intense direct marketing campaign and fulfill every order manually.

Optimize Your Revenue

Your overall sales goal should be to optimize, rather than maximize, your revenue. As Figure 3 shows, if you divide your sales among several distribution channels—employing the concept of dual distribution—you can find the distribution combination that will lead to the most revenue given your available time and talents; thus, optimizing your profits.

For example, Combination B in Figure 3 eliminates the option of direct marketing, but minimizes your potential revenue. However, this may optimize your revenue if you disdain selling. Combinations A, C and D may not maximize your revenue, but they do demonstrate how a strategy of dual distribution can optimize and strengthen your revenue streams, which will protect you against competitive actions and deviations in the general economy.

[NOTE: You can purchase an Excel spreadsheet that will automatically calculate your own distribution options at www.bookmarketingworks.com]

Not all dual distribution strategies and combinations yield the same results. Manipulate your non-trade marketing strategy to generate the most lucrative distribution combination for your circumstances. Your answers to the questions in my next post will help you determine the best combination for your book.