Like most industries, the bargain book business involves a certain amount of lingo, terms used freely among those within its ranks that may not translate easily to the public at large.

The prevalence of sale tables in retail outlets large and small has familiarized bookstore customers with remainders, and the concept of the promotional title published just for the bargain market is of little concern to shoppers pleased to find books at such reasonable prices. But mention a hurt book, and you are likely to find yourself in a spiraling series of explanations aimed at assuring the customer that there is really nothing wrong with the merchandise.

Eventually you are bound to evoke the systems of returns unique to the book business, the system that allows retailers to return for credit unsold merchandise to its publisher and by which that same merchandise makes its way into the inventory that is sold in bulk and known as hurts.

Last May, Barnes & Noble chairman Leonard Riggio once again took aim at what he termed this archaic and expensive practice of publishers selling returnable and recommended its abolition. That would be bad news for a large segment of the bargain book trade, because hurt books in ever greater numbers have become the most visible and in many ways the most sought-after merchandise of that trade. Hurts are marketed aggressively to retailers large and small, Riggio's stores included, and buyers search out such books in showrooms, on Web sites and at trade shows.

For this article we talked to three of the most active and largest wholesalers of hurt books—American Book Company, in Knoxville, Tenn.; Book Depot in Thorold, Ontario; and Strictly-by-the-Book in Fall River, Mass.—which represent the scale and growing sophistication of the trade. Two smaller companies, Great Jones Books in Millwood, N.Y., and Symposium Books in Providence, R.I., take a more focused approach and do significant business with university presses and specialty publishers.

Whereas hurt books, which have been on the market for decades, used to be something of an afterthought for vendors involved in remainders and promotional publishing, these companies all established their businesses with hurts as a major focus. American Book Company started buying and wholesaling hurt books in 1997. According to CFO Pat O'Connor, the wholesale business initially existed to provide a better margin for ABC's own 70 retail outlets. But the company has since sold those stores and now markets exclusively to others in the trade. In the late 1980s, Book Depot was a small publisher in Canada that bought remainders and hurts to include in school book fairs and the temporary stores it operated for fourth-quarter sales. Wilf Wikkerink, a partner in the business who oversees purchasing, says those businesses led to wholesaling and retailing from a warehouse location and, by the mid-1990s Book Depot was among the first to move into what was then the relatively untried waters of the Internet. When Strictly-by-the-Book formed in 1996, it began by buying skids of hurts from other remainder dealers, breaking them down and producing inventory that could be sold by title. “We were doing something people swore was an impossibility,” says president and CEO Erez Bredmehl, “and we made it work.”

Publishers put returned merchandise that will not go back into regular inventory onto pallets of unsorted titles. Unscrambling the eggs back into an inventory that can be marketed by title is a labor-intensive process that requires a considerable amount of real estate. All three companies maintain multiple warehouses totaling several hundred thousand square feet of processing space, used to transform thousands of miscellaneous titles spread through hundreds of skids into a usable inventory.

At Book Depot, Wikkerink says, “It's not rocket science. It takes a lot of people at any given time working in crews of five to seven people sorting books from maybe five publishers.” They sort by the first letter of the author's first name and move the larger quantities into bin locations. At Strictly, Bredmehl says, “We have developed innovative ways to maximize the process,” but he compares the details to a secret family recipe, not to be shared with others. However they do it, all three companies generate what seems like a mind-boggling number of titles. At ABC, O'Connor describes a constantly changing inventory of around 15,000 titles. Both Strictly and Book Depot talk in terms of 30,000+, but the quantity per title can range from only a handful of copies to several thousand.

Exclusive Contracts

The growth these companies have experienced in the past several years is directly linked to the relatively new practice of exclusive contracts negotiated with major trade publishers. Publishers have sold hurts for decades, usually at a set net price for cloth or paperback books, and either through organized programs or on an ad hoc basis whenever a vendor calls and asks what's available. With these new contractual agreements, companies like ABC, Book Depot and Strictly acquire all of a publisher's returned inventory for the period specified by the contract. “We are proponents of contracts and exclusives,” says Bredmehl, “and we're showing publishers that it is the right formula, with benefits for themselves and the vendors.” O'Connor sees the contracts as a “natural outgrowth of the relationships we were building [with publishers.]”

Having a single customer for a year's worth of product simplifies things for publishers, and they must also be pleased that the annual bidding has driven the unit cost higher. Although O'Connor says ABC has not necessarily been able to pass that higher cost on to its customers, he and others still praise the amount of control and volume of product the contracts guarantee. When several years ago certain publishers began to create similar contracts for their entire remainder inventory, along with their returns, there was an expected amount of grousing among vendors accustomed to bidding competitively on those titles. But this process produced another exponential level of growth among those companies prepared to participate. Now, along with the perpetually rotating stock of hurt titles in sometimes disappointingly small quantities, remainder companies have lists of mint condition titles in significant numbers they market to chains, other wholesalers and outlets outside the traditional book trade.

More Case Studies

Great Jones Books, founded in 1997, and Symposium Books, founded in 2003, focus on books from the scholarly and literary markets, and have from their beginnings mixed hurts and remainders in their offerings. Cliff Simms, president of Great Jones, knew the value of hurts from working in bookstores; while bidding on academic remainders for his new company he also bought unsorted trade skids from other wholesalers. Scott McCullough, co-owner with his wife, Anne Marie Keohane, of Symposium Books, recalls that his first buys were still among his best. “Indiana University had a remainder list that we bought, along with 16 pallets of hurts. And from Yale we got eight or 10 pallets.” Both companies still buy truckloads of books from individual publishers and distributors, but they remain open to smaller buys of material that will add special interest to their lists.

Whereas larger companies and their customers have come to expect hurts to be essentially indistinguishable from new titles—apart whatever mark or stamp identifies them as non-returnable—both Simms and McCullough identify the hurts on their lists and prepare customers for some signs of shelf wear. Both agree, however, that hurts are among the most desirable titles on their lists. These tend to be newer titles than those that become remainders and, although the available quantities per book may be in only the double digits, they often represent a scholarly press's most sought-after authors and popular titles. “Placing that 'H' beside a title does not affect pricing, and now the hurts are often higher priced than the remainders,” says McCullough. Simms describes it as an “inverse law. The remainders are in greater quantities, and you pay less. The hurts become the most desirable titles, and you pay more.”

Both agree that they must pay more now because of competition from Internet sellers, who view small quantities of hurts as titles they can turn around at retail rather than wholesale prices. But Great Jones and Symposium also offer publishers, on a reduced scale, the sort of contracts or agreements trade houses get from larger companies. Publishers benefit because these companies can control where the books end up, by marketing them through their own retail outlets and to other retailers through their B2B Web sites, e-mails and at trade shows.

Everyone contacted for this article spoke in the same terms about the value hurt books bring to retailers. “It's a tough economy,” says Wikkerink. “Everybody likes a bargain.” Simms says that hurts “offer retailers a cheaper way to diversify” inventory, and adds, “A good selection of bargain books helps to sell new books.” That theme is voiced consistently by wholesalers. “A customer may be willing to try a new author at $5.98 or $6.98,” says O'Connor, “and then become a customer for that author's new book when it comes out at full price.”

For whatever reasons, buyers are now scrambling for the best hurt books when they peruse these companies' Web sites or rush their displays at CIROBE and other trade shows. And with the choice of titles in literally the tens of thousands, buyers should be able to leave satisfied that they have found something uniquely suited to their market. And with vendors receiving fresh pallets on a regular basis, what a buyer may miss one day could be found the next.