In an age when locating new markets is the name of the game, some children's book publishers have found a way to circumvent traditional book outlets and online stores altogether by selling books to customers in their own homes. Through Tupperware-style parties and direct-mail catalogues, publishers have borrowed tactics from Avon, Amway and J. C. Penney to get children and parents hooked on buying books direct.

Innovative publishers like Educational Development Corporation (EDC), DK and Pleasant Company (creators of the American Girls books and dolls) have turned niche marketing on its head by going straight to the consumer. At book parties, consultants typically target parents, much like themselves, who have young children not yet in school; while catalogues are frequently designed to appeal directly to kids, especially girls between the ages of seven and 12. These two forms of direct marketing reach millions of children and their families, with Pleasant Company alone sending out 50 million catalogues each year.

As children's booksellers continue to struggle against competition from warehouse clubs, superstores, book fair companies and online retailers, how are book parties and catalogues affecting bookstore sales? Do they complement traditional bookselling outlets, as publishers maintain, or do they fragment sales even further? What are the advantages when a publisher reaches a consumer through direct mail or network marketing? And how exactly do these two sales techniques work when it comes to books?

Ding, Dong -- Book Rep Calling

When DK first went direct to consumers in 1993 with the formation of its DK Family Library division (as it was then called), based in Orlando, Fla., there was some grumbling from booksellers. Tupperware-style parties gave customers the impression that independents overcharge, since their neighborhood DK representative, with lower overhead costs, often offered the same books at lower prices. The Red Balloon Bookshop (St. Paul, Minn.) was one of a few bookstores to actually stop carrying DK.

Today, said Michele Cromer-Poire, co-owner of the Red Balloon, which has long since resumed carrying the DK line, "We are more comfortable with DK. They publish some very nice titles, and they have some books by local authors. The underlying thing for us was we didn't think it was fair for a publisher to sell to the end consumer if we were doing the same thing."

For Sally Jordan, owner of Jeremy's Books and Toys (Webster, Tex.), network marketing is just one more form of competition. "Independents are just watching their market be chipped away bit by bit, whether it be e-commerce or other ways. I can't not carry DK books, just like I can't not order from Ingram." What she finds more problematic is that "the product no longer differentiates us. Everybody has the same books and toys. That's why some booksellers have turned to almost a private-school dimension to their stores; they're tutoring and doing tea parties."

In many ways, book-party planners are a lot like independents, in that personal service is exactly what distinguishes the best "educational consultants," as they are known at EDC's Usborne Books at Home (UBAH) division. At DK Family Learning (as the company was renamed three years ago), self-employed "distributors" bring the company's popular lines of children's books, videos and CD-ROMs into the home. In addition, these consultants represent their companies at book fairs, PTA meetings and teacher presentations, and can also sell to libraries. One enterprising DK distributor in Minnesota even tried recruiting booksellers to sell the Family Learning line.

Currently celebrating its 10th anniversary, UBAH prides having on pioneered home-party marketing for books. Initially, said Kathy Plecinski, v-p of UBAH, "We grew too fast. For four years we were growing at about 100%, and we had to restructure. Now we're growing at 20 to 30% a year, and we'd like to get back to 100%."

The company's goal is to hit $100 million in home-party sales in the next five years. EDC, which publishes between 80 and 100 books a year, has plenty of product ( over 1000 titles) to support that goal, and currently splits its sales evenly between the retail and at-home businesses. According to CEO Randall White, that proportion will be changing, with more of the business going to at-home sales. "The retail side is not growing at the same rate," he said. We can't do $100 million in stores, because they won't give us the space."

Like Avon and other companies that sell through network marketing, UBAH offers an opportunity for women -- 99% of all of its consultants are mothers -- to make a good living and stay home with their kids. Consultants are not paid to recruit other consultants, but they do make a percentage of the sales of everyone in their downline -- their recruits and their recruits' recruits. Between their own sales and those of their recruits, educational consultants can earn as much as $100,000 or more annually, with one woman without a high school diploma taking home $30,000 a year by working only 10-15 hours a week.

For White, the key to his company's -- and consultants' -- home-party success is that EDC books are not available everywhere. "A Random House couldn't do it," he said, "because you have to have something unique." That's one reason White d sn't want to sell over the Internet, although UBAH's top two recruiters do have their own Web sites. Instead, the company provides an Intranet for its consultants. "There are people who have 600-700 people on their downline and they can track sales on the Net," he noted. Consultants also use the Net to track packages and post messages. In addition, UBAH supports its consultants with a toll-free phone number, a handbook, a national convention and, most importantly, fast shipping. According to White, orders are shipped "the day we get them, and we have less than a 1% error rate."

EDC, which has a strong list of educational, science and history books, d s best in the home market with Steven Cartwright's early childhood books. Although the company has experimented with CD-ROMs, it has found that the shelf-life of a typical CD can be pretty short. "We want to keep our focus on the books," Plecinski said. "Our customers want the books, and they want to interact with their children." Even so, EDC is hoping to capture big sales in both its home market and retail outlets like Zany Brainy by developing a book-and-CD reading-and-phonics package. With a projected fall/winter release, the as yet unnamed package will have four modules, each with three books and three CDs, and will carry a suggested retail price in the $200-$250 range.

Home Learning Centers

DK Family Learning got its start in 1992 in England, where DK is headquartered. "We did research in England," explained DKFL CEO Peter Cartwright, "and we found a lot of people don't regularly use bookstores. We thought we should find a vehicle that gets to them." Today DK has home-party divisions throughout the world, including India, Russia and Japan.

The concept behind DKFL is to sell families on the idea of having a learning center in their homes. The brochure that distributors hand out to their customers encourages them to "Think of your entire home as a 'Home Learning Center.' "

That same hook is also used to recruit distributors -- 20,000 of them in the U.S. alone. By hosting a "Book Look," or book party, they can build their own home learning center for free. Increased sales mean increased bonuses such as a free copy of Millennium Family Encyclopedia, a $99 retail value, or for top sellers, even more free books plus a trip to Hawaii for the July 2000 sales conference. DKFL distributors earn a 30% commission on their sales and 5%-15% on the sales of the people they immediately sponsor. They also receive .75% for those at farther removes on their downline.

DKFL operates much like UBAH, and Cartwright, like his UBAH counterpart, stresses that the book-party business is not geared toward making people rich, nor is it intended to compete with anyone. "I very much see this as a complement to retail sales," he said, stressing that "we're very connected to the family." According to DK president Danny Gurr, 90% of DKFL's business is in homeselling, and only 10% is to the schools. Still, some booksellers have found themselves competing with DK in the school market, especially in California, where all sides are eager to get a cut of the state's allocation to school libraries of $28 per student to buy books.

At DKFL both CDs and books geared to children up to seven years old, are especially strong sellers. Distributors can demonstrate multimedia more easily in a family room than booksellers can in their stores. While the Family Learning division accounts for only 20% of DK's combined adult and children's sales in the U.S. -- close to £69.9 million for the fiscal year ending June '98 -- it sells a disproportionately high percentage of children's books and multimedia, Gurr reported. "In trade, we're about 60/40 adult to juvenile in dollar volume. Gardening books, travel books, dictionaries and atlases account for our adult sales. But that's not really the strength of FL. Their sales skew much more to the concept books."

FL sells all DK books as well as a couple hundred proprietary titles created just for them. Among their bestselling exclusives is P.B. Bear. But even though the FL division may not do as well on older children's titles as the trade side, it still sold 100,000 copies of Star Wars Episode I: Incredible Cross-Sections, which was featured on the cover of its spring catalogue.

Shopping at Your Fingertips

The fact that mail-order catalogues come directly into the home is the primary overlap between the children's book-catalogue and book-party businesses. In all other respects the two differ greatly in terms of products offered and selling arrangements. Pleasant Company, which was founded by Pleasant T. Rowland in 1986 and was sold to Mattel last year, is the acknowledged leader in mail-order books and dolls, having sold four million dolls and more than 54 million books in the past 13 years. Each of Pleasant Company's American Girls Collection dolls come packaged with a book, and additional books are available about each doll. "The books help bring the educational quality into the product," explained public relations manager Julie Parks.

From the start, Pleasant Company has reserved the lucrative doll business -- including doll clothes and doll furniture -- for itself, but has encouraged bookstores to carry the complete line of related books and magazines. According to Janice Blankenburg, v-p, publications division, "Books have always been the core of the American Girls Collection, and, from the beginning, we've sold the books separately in bookstores, schools and libraries. Pleasant Company is not just a direct marketer, nor just a publisher; we use all these tools to drive our business."

Blankenburg estimated that 90% of the company's books are in fact sold through the trade. She added that "we are strong advocates of booksellers and work very hard to create programs to help sell our books in their stores, including a bookseller promotion kit, merchandising and display ideas, event ideas and packages, and advertising and publicity pieces. In addition, we have a competitive co-op policy."

"The catalogues actually help my sales," remarked Marge Wilson, owner of the Little Red Lighthouse (Portsmouth, R.I.), referring to Pleasant Company's frequent consumer mailings, "because the companies spend so much money on marketing." Linda Wilkinson, manager of Adventures for Kids in Ventura, Calif., concurred. "They've got their fingers on the pulse of what girls like. Almost all the things they've come up with, like their Little Grin Pins, are really good marketing tools."

To hold on to the girls that are already hooked on Pleasant Company products, the company has begun to reshape its list by adding books for older readers. This fall Pleasant Company will introduce a series of History Mysteries, featuring resourceful preteen heroines from the 1860s through the suffragette era and World War II. Pleasant Company is also starting a new line of contemporary teen novels, called AG Fiction, and recently purchased the Nashville-based Daughters newsletter, geared to girls between the ages of 10 and 16 and their parents.

As if the catalogues and bookstore shelf space weren't enough to make Pleasant Company a household name, the company has begun an even more intense branding effort a la The Gap by opening its first Pleasant Company store, American Girl Place, last November in Chicago. There girls can purchase every single Pleasant Company item, including those usually available only by mail, as well as watch a live presentation of The American Girls Revue, an original musical featuring the characters in the American Girls Collection. According to Blankenburg, close to a half-million people have visited the store since it opened. She confirmed rumors that more stores are being considered, including one in New York City's Rockefeller Center, but declined to confirm numbers, locations or dates.

Several smaller toy manufacturers have copied the Pleasant Company model, creating dolls for the seven-to-10-year-old set that are complemented with book lines. Like Pleasant Company, they market their dolls exclusively by mail or the Internet, but have recently begun selling books through regular trade outlets.

Magic Attic, based in Westbrook, Me., is one of two newer kids on the block. Now in its fifth year, the Magic Attic line of books and dolls was developed by Georgetown Productions, which was bought two years ago by L.L. Knickerbocker, a leading manufacturer of collectibles like the Annette Funicello Bear. At present there are five vinyl Magic Attic dolls and 35 books charting the dolls' lives. In each book, a doll/girl uses a golden key to unlock a neighbor's attic where there is a trunk full of costumes and a mirror that can transport her back in time.

Magic Attic found that most mail-order customers don't want to spend $5.95 for a paperback plus shipping costs. Last fall the company signed a distribution agreement with the Millbrook Press to handle book sales and marketing so that Magic Attic books would be more accessible in traditional book outlets. According to Debbie DeForte, product development manager of Magic Attic, the company gives Millbrook a formatted disk for each new book, and Millbrook takes care of printing and distribution.

For Millbrook Press, which celebrated its 10th anniversary at last month's ALA and only recently began selling its own Millbrook and Copper Beech books to the trade, the addition of the Magic Attic line has been a boon. "Because we do mostly nonfiction, it was a way to expand our fiction," explained marketing manager Michelle Bayuk. Millbrook is offering a buy-two-get-one-free promotion this fall on all Magic Attic books. It offers co-op on a case-by-case basis, and has a doll visitation program for the schools.

Magic Attic plans to develop more Magic Attic books and dolls, although the most recent doll, Rose, was introduced in 1997. Magic Attic is also continuing to strengthen its catalogue program, and mails several million pieces annually. In addition, the company has a strong Web presence through its parent, with direct links to such nontraditional book outlets as QVC, which regularly airs promotions for Knickerbocker's dolls.

Four-year-old Kid Galaxy (Manchester, N.H.), originally named Just Pretend, has ambitious plans as well. The specialty toymaker and publisher of the Stardust Classics series recently reorganized into a family of catalogue divisions, which includes Just Pretend; Dolls Unlimited, which sells the company's complete lines of dolls, including its newly developed Dream Doll Designer CD-ROM; and Kid Territory, which focuses on children's room furnishings. "Each division has its own core direct-mail catalogue and its own product development team," said director of marketing Gayle Calistro. "It's something we have developed from the ground up. We present [our products] through our catalogues and our Web site."

Calistro, who has a background in publishing, was hired last year, when Kid Galaxy introduced Stardust Classics to the trade. The books and dolls focus on strong and spunky heroines: a princess, a woodfairy and a time traveler. "For us the whole mission is to bring back classic fairy tale and fantasy themes," Calistro explained. Although the target age group is seven to 12, she said she has heard from parents who use the Stardust Classics as read-alouds for readers as young as age six. Despite the five million-plus direct-mail catalogues sent out last year, Calistro regards bookstores as "the corner of our book business. You can't see the beauty and quality of the books when you see them just on Amazon or in our catalogues."

To foster that business, Kid Galaxy is working with bookstores on special promotions, and is even considering acceding to their request to sell the dolls either year-round or at Christmas-time only. In addition, Calistro noted, "we're continuing to add to the series. This holiday season, we've made available a boxed set for the first time. Now a parent can get an entire series for under $20." The company has also developed activity kits for store events, and calculates its co-op plan on an unusually high percentage of net sales.

Kid Galaxy is expanding in another direction, as the first toy manufacturer/cataloguer to explore creating a book series directed at boys. This spring the company introduced 45 Bendos Action figures for boys ages three and up, and now it is researching what boys want in the way of books to go with the figures. It is helped in the process by an advisory board of teachers, parents, and educators and by a customer-driven attitude. According to Calistro, Kid Galaxy "encourages people to call us and write us about what they like and what we can do better."

For some booksellers, however, no matter how aggressively Kid Galaxy and Magic Attic go after the bookstore market for their series, it may be too late, since both company's book divisions are geared to selling series-based books. Terri Schmitz, owner of the Children's Bookshop in Brookline, Mass., has found that even the American Girls and the Baby-sitters Club no longer sell in the same way. "All of our series have dwindled away except Animorphs," she said.

Vying for the Same Customers

So where d s that leave booksellers? While many do well with the books published by catalogue-based companies, they usually aren't given a chance to sell the company's most lucrative products -- the dolls -- even though many children's bookstores have strong toy departments. As for book parties, they are part of a growing trend that pits booksellers against their own vendors. UBAH's White, who d sn't see it that way, acknowledged that they've had both booksellers and consultants return their EDC stock. He told a story about a bookseller returning all of its EDC books when an educational consultant set up shop in the same town of 25,000. Similarly a consultant in a small town ceased operations when the local bookstore put up a window display of EDC titles.

For Judy Nelson, owner of Mrs. Nelson's Toy and Book Shop in Laverne, Calif., it all boils down to her needing publishers to support her store. The fact that she can sell Pleasant Company's books but not their dolls sends a mixed message: "We'll support you, but we don't support you." Even worse is the fact that she now g s head-to-head with Scholastic for book fairs in her area. "They give away more than we could ever afford. It's been quite a struggle."

For publishers, at-home sales through book parties and catalogues are a seemingly logical step in an increasingly a competitive marketplace. As DK's Gurr noted, "The concept is brilliant. It's a way of demonstrating and handselling books." And in an age where there are countless titles vying for the attention of booksellers and consumers, capturing an audience at home may be one way for publishers to distinguish their products and to translate selling into sales.


Chinaberry Books -- A Catalogue that Operates Like an Independent Bookstore

Ann Ruethling started Chinaberry Books Service, which is located in Spring Valley, Calif., at her kitchen table in 1982, when her daughter Elizabeth was only two years old. Since then Ruethling has gone from warehousing her books on two shelves in Elizabeth's bedroom to renting a 60,000-square-foot warehouse. The Chinaberry catalogue, which includes annotations of hundreds of books each season, began after Elizabeth received a copy of Richard Scarry's Mother Goose for her first birthday. "It was my first encounter with children's books as an adult," Ruethling said. Over the next year, she kept on reading kids' books and making notes. "Originally I had no idea of selling the books," said Ruethling, who mailed her first catalogue to 71 people answering an ad in Mothering magazine for information on "positive and uplifting books for children." Today there are 200,000 names on the Chinaberry list, and Ruethling mails roughly 1.5 million catalogues a year. Chinaberry's mission, which is printed in each catalogue, is to offer "items to support families in raising their children with love, honesty, and joy to be reverent, loving caretakers of each other and the earth." For each picture book that gets listed in the catalogue, Ruethling reviews hundreds of titles; there are no reviews of books that she d sn't like. Ruethling continues to do the bulk of the reviewing, although another person in the office helps, as d s a customer-turned-friend from Seattle, who reads most of the young adult novels. Unlike other mail-order catalogues, there's nothing slick about Chinaberry. Each issue is printed on newsprint and has a four-color outside cover, and two colors throughout the rest of the 100-plus pages. All book covers are reproduced in black and white, and the copy is long and dense. Ruethling faces much of the same competition that traditional independent booksellers do. "It's more challenging to make the catalogue profitable with Amazon.com and B&N.com and before that Barnes and Noble and Bookstar [competing for the same customers]." And warehouse clubs are also a concern: "Before we carry an item," she said, "we try to make sure it's not carried by a price club." Although Ruethling knows that some people use her catalogue to buy from other booksellers or discounters, she still gets letters from people who say, "I love your catalogue and I thought I'd get these books close to home. But I realize you are close to home." She gets many such heartfelt letters, and they have caused her to delay launching a Web site, because she's worried about being inundated with so much e-mail that she can't keep up. Still, like other booksellers, she's readying the company to take the plunge, and at the same time she's also searching for other ways to expand her market. Three years ago, Ruethling added a separate catalogue for mothers, called Isabella,which contains not only books, but such items as prayer beads, Sweet Pea Pod sterling silver pins, and Spirit and Light pendants. All are geared to helping women slow down and reconnect with their inner spirits. With the addition of new titles each season, and with a mailing list that continues to grow, Chinaberry has come a long way from the days when Ruethling stocked up -- five whole copies -- on her first bestseller, Goodnight Moon. -- JUDITH ROSEN

Part 2: The Harry Potter Halo