Distribution has always been about maximizing warehouses, people, and technology. Even with fewer bricks-and-mortar bookstores and less shelf space, dedicated distributors and publishers that offer client services are upping their game by investing in technology and equipment and offering print-on-demand, digital short-run printing, and e-book conversion and distribution.
Bookmasters Distribution, which is going through major growth, purchased close to $3.5 million in equipment and operating systems in 2011 to keep up with changes in technology, while Hachette has been investing heavily in its system for the past several years, a commitment that helped the house win back Disney and Hyperion as distribution clients. “They’ve returned because we’ve transformed our publishing and distribution systems,” says Hachette chairman and CEO David Young. Random House, too, has invested “significantly,” says Jeff Abraham, president of Random House Publisher Services, to leverage sales opportunities and decrease excess inventory at retail.
Others are investing in people. Steve Black was hired a year and a half ago by Simon & Schuster as v-p of client services as part of S&S’s commitment to distribution. “We’re looking to grow this dramatically,” says Black, “and we have added to staff to increase service to clients on operational and sales and marketing matters.” He added, “While we already have 23 client publishers we are deliberate in who we bring on as it needs to be the right fit for both client and distributor.”
Large presses like Disney and Hyperion aren’t the only ones shopping for services. “There will always be a place for a good distributor,” says Aaron Silverman, president of SCB, which specializes in smaller and mid-size presses. “Most [presses] get into publishing with an agenda of ideas, and that usually doesn’t include running a warehouse and calling for collections.”
Karen Barch, COO of Chicago Distribution Center, the fulfillment division of the University of Chicago Press, agrees. “More and more when I pick up the phone,” she says, “it’s not so much that the warehouse is an expensive line item—publishers are looking for expertise in digital printing and a broad range of services. We heard from a lot of small publishers that they couldn’t get on the Kindle platform.”
For Sabrina Bracco McCarthy, v-p of Perseus Distribution, the shift to e-books and reduced warehouse volume has only made distribution more competitive. And more lucrative for some. Last year Continental Sales Inc., which does 80% of its business with foreign publishers of English-language books, saw sales rise 68%. So far this year, “we’re up significantly more than last year,” says president Terry Wybel. At Independent Publishers Group, sales were up 23% for the first quarter of 2012 over the first quarter of 2011, according to president Mark Suchomel. During much of that time IPG wasn’t even selling e-books to Amazon. In late February its Kindle contract expired when it refused to offer better terms to Amazon on e-books.
For most distributors and their clients, Borders’s closing has had little impact. But for some niche presses, particularly manga, genre fiction, and action figures, it was more of a blow. “There is no single entity or channel that’s growing enough to cover the loss of Borders,” says Kuo-Yu Liang, v-p of sales and marketing at Diamond Book Distributors. “It’s more like 20 different channels each making up 5%. E-commerce and international sales are leading the pack, and we’re putting new efforts into growing the 5,000-plus independent hobby stores we service.”
Publishers Group West has turned to digital to make up the difference. “In 2011, digital sales were almost equal to the sales that we lost at [Borders],” says president Susan Reich. “We continue to see significant growth in e-books, as well as nice increases in the gift and international markets. The majority of business is still through the trade, including both retail and wholesale outlets.”
Even in a time of digital disruption, bookstores continue to be essential. “Ingram is cautiously optimistic for our business in the book retail marketplace, and we continue to grow and support a sales force to cover it,” says v-p and general manager Mark Ouimet. At New Leaf Distributing Co., which specializes in New Age titles, sales are split between online booksellers like B&N.com and Amazon, and bricks-and-mortar stores. “The nontraditional markets account for very little at this point,” says CEO Alim Thompson.
Still, nontraditional accounts are playing an increasingly large role for many distributors, even with Home Depot’s recent exit from the book business. “Specialty/gift/nontraditional channels represent excellent sales growth opportunities,” says RHPS’s Abraham. The company boasts the largest in-house special markets team in the industry with more than two dozen people, including four dedicated sales liaisons who work exclusively for RHPS clients. That’s in addition to 125 commissioned sales reps.
Special sales and sales to craft stores and museum gift shops are a growth area for Bookmasters Distribution, which also has a Spanish-language department, a specialization in the Christian book market, and a separate national sales force for the k–12 school market. While president Larry Bennett expects specialty markets to be 10% of the company’s distribution sales in 2012, he predicts that figure will rise to 15%–20% over the next three years.
Increasingly, SCB doesn’t just sell into gift stores. It also reaches out to museum stores and galleries, New Age stores (aka rock shops), adult stores, online specialty stores, fashion and lifestyle bricks-and-mortar stores, and online stores. As to whether they make up for sales to all the bookstores of the past, Silverman says, “No. But they make up for a lot of what has been lost.”
One of the few distributors to focus on selling direct to consumers, Small Press Distribution expects direct sales to grow because of the 405 publishers it carries. “Bookstores account for about 25% of SPD’s sales, almost all of which goes to independent bookstores,” says deputy director Laura Moriarty, adding that course adoptions have increased steadily over the years. “We hope there is still some growth left in that market for us. “
While Consortium Book Sales & Distribution doesn’t typically sell to consumers, it launched a free app, Bookslinger, which is available for the iPad, iPhone, and iPod, to foster discoverability at a time of fewer book outlets. The app, which takes the company’s original name, comes with five short stories from various Consortium clients. A free story is added each Friday automatically.
Micropresses and Self-Publishers
Although several distributors that specialized in micropresses and self-publishers have closed in recent years or shuttered their micropress distribution arm, others are finding success with publishing’s smallest clients. “Bookmasters prides itself on being an incubator for micropublishers. We currently work with over 1,500 small and self-publishers. We think that the well-documented changes in the industry are creating more and more opportunities for the smaller houses to make themselves heard,” says Bennett.
Greenleaf Book Group also caters to micropublishers. “They make up most of our list,” says Tanya Hall, director of marketing and business development. “We’re very careful about who we do bring on, since there’s a lot of pressure for each title to perform.” With fewer bookstores, Greenleaf has tried to help its authors and others get their message out by developing their brand. Last fall Greenleaf launched its Platform Development program to help authors with keynote presentations, Web design, mobile apps, and viral campaigns. Hall calls it “a great new revenue channel.”
At New Leaf, “we are exploring all possibilities,” says Thompson. “We take self-published authors on a ‘frontloaded’ fee basis, if we think they have potential. We will refund those fees if their sales reach a certain threshold that will make the relationship profitable for us.” Three years ago IPG launched Small Press United for one- or two-title publishers with strong books, and it has been growing quickly, according to Suchomel.
Perseus Book Group has also had success with smaller presses. Perseus Distribution handles distribution for Diversion Book, the Waxman Agency’s publishing arm. Its first book with Perseus, Swing Your Sword, was a New York Times bestseller, and Perseus is in the midst of selling in several other projects. On the self-published side, McCarthy sees the most possibilities for her division and Perseus’s digital division, Constellation, for authors who are already established in their field and don’t want to work with a traditional press. Constellation continues to grow its Argo Navis Author Services, launched specifically for authors who are represented by agents but want to self-publish, and added eight more literary agencies last week. The division has also been growing internationally through last fall’s partnership with Faber & Faber U.K. on Faber Factory Powered by Constellation.
Book fairs in London, Frankfurt, and BEA have taken on added significance in recent years. “In today’s world, rights and content are becoming increasingly global. We are always looking for good opportunities to help foreign publishers that are underdistributed in the U.S.,” says Hachette spokesperson Sophie Cottrell.
Hachette’s not alone. “Where we see opportunity, we pursue,” says Jason Brockwell, director of sales for NBN, which has a strong presence in Canada, the U.K., Europe, and Australia. “We have great clients from the U.K. and other countries, and expect to add more foreign publishers in the coming year.” At this week’s London Book Fair NBN is announcing that it is expanding its Fusion digital conversion and distribution services, which has 50 U.S. publishing clients, to the U.K. at NBNi in Plymouth, England.
“We see content becoming less about its origin, or ‘foreign,’ and more about how we can help publishers reach our global channels,” says Ingram’s Ouimet. “We see our U.K. POD operations, recent expansion into Australia, and our overall Global Connect programs providing future channel distribution service to Brazil and Germany as extensions of our core distribution services.”
For Diamond, which exhibits at consumer shows like the Middle East Film & Comic-Con in Dubai and Komikon in Manila, overseas trade shows are all about access to new markets. “You may see U.K. publishers needing access to Europe or interested in getting into Southeast Asia,” he says, pointing to recent contracts for world rights for Angry Birds publisher Rovio and North American rights for Penguin U.K.’s Doctor Who YA titles. Diamond distributes into 75 countries, and international sales make up 50% of its business. Smaller distributors aren’t in nearly so many countries yet, but New Leaf has plans for Canada, the U.K. and E.U., Australia, Singapore, and South Africa.
“Our international sales program on behalf of RHPS clients has been growing dramatically the last couple years under the leadership of Cyrus Kheradi,” says Abraham, who notes that Random generates 10%–20% of clients’ book sales outside North America. “The opportunity is enormous, both in respect to markets where physical English-language books can still thrive, and also in terms of the growth potential of digital e-book sales where technology is still catching up and is a couple of years behind the U.S.”
Tuttle Publishing looks to overseas clients to fill gaps in its own lists. “It adds to our patina as a publisher,” says sales and marketing director Christopher Johns. “We wanted more Chinese books on our list, so we found an English-language Chinese publisher, Shanghai Betterlink.” As a result, Tuttle distributes Shanghai in the U.S., and Shanghai sells Tuttle’s books through its Shanghai Book Traders stores in China.
Others focus on digital growth abroad. “There is definitely an increase in sales potential internationally given the rise of digital sales and the globalization of all media,” says PGW’s Reich. “It is now easier to reach the consumer anywhere in the world, and digital delivery of the book is faster and cheaper.”
This year Midpoint Trade Books rolled out its first clients for Midpoint Plus, a program designed to make it more affordable for overseas publishers to set up a branch in the U.S. Carroll & Brown signed last month to republish The Pregnancy Bible by Dr. Keith Eddleman and Dr. Joanne Stone, which has sold one million copies worldwide, under its own name in the U.S. and Canada in 2013. It will also publish a second title by Eddleman and Stone, My Pregnancy and Birth, this fall. The new program coupled with a revamped Web site, an upgraded distribution center in Little Rock, Ark., and e-book sales of more than $1 million in 2011, lead CEO Eric Kampmann to predict that the company will double in size over the next three years.
With print sales shrinking, some publishers, even ones that provide back-office distribution, are pulling back from investing in warehousing. “Everyone is addressing capacity in their warehouse operations,” says PGW’s Reich. “We are in discussions with some large independent self-distributed publishers who are now considering outsourcing for the first time.”
Last November, Harper moved its frontlist fulfillment to R.R. Donnelley. At the time, Harper’s executive v-p of operations and technology, Larry Nevins, said, “In light of the shifting publishing landscape, we determined that it made the most business sense to move our new release fulfillment from several disparate warehouses to one central location tied closely to our printing.” In July, Donnelley will take over frontlist and backlist title fulfillment for Zondervan.
Ingram, too, has been picking up the slack for publishers that want to do away with the costs and headaches of warehousing and logistics. Starting June 1, it will manage the U.S. inventory for Cambridge University Press from Ingram’s distribution center in Tennessee.
Digital services will continue to be an important area for growth. Perseus Distribution’s McCarthy calls it “a major focus of what we deliver now. And we are investing heavily in developing more digital tools for the future” through Constellation.
Not that physical books are going away anytime soon. “We believe physical books will remain a vital, dependable part of our business well into the future, as digital publishing continues to increase accessibility and revenue,” says RHPS’s Abraham. To help clients transition to digital and adapt to a marketplace he characterizes as “in perpetual transformation,” Random House is rethinking its annual Client Summit and turning it into a quarterly workshop, RHPS Ideas Exchange. Clients will be able to interact with each other and leading book industry figures from within and beyond Random House.
Do distributors matter in a time of change? For many, the answer is “yes.” “The reasons for publishers to use distributors are still valid. The challenges of hitting as many accounts as possible and getting the widest coverage for a book are still there for the distributor,” says IPG’s Suchomel. “We’re still as valuable as ever, and may be more so as publishers realize the importance of broadening their account base even as the retail side of the industry consolidates.”