When Scholastic sells a title like Kasie West’s P.S. I Like You or Sharon Cameron’s The Forgetting to Owlcrate, Uppercase, or another YA subscription box, it generates a direct order that can reach 10,000 units or more. Not only that but it can see sales bumps across other channels. “We get additional exposure for our books in the fun unboxing videos or the beautiful cover photos on Instagram,” explains Meaghan Hilton, Scholastic’s special markets manager for retail and premium sales. “All the social media representation helps spread the word.”
Benefits like these have caught the eye of special sales departments, which are always on the lookout for new distribution channels for children’s books. As a result, special sales executives are increasingly taking advantage of nontraditional e-commerce opportunities such as subscription boxes, as well as flash sales sites and other digital platforms.
Each segment has its own characteristics. Flash sales sites are relatively well established and can drive significant unit sales, albeit at very low retail prices, while subscription boxes are newer but are a fast-growing opportunity.
Exposing Readers to “Hidden Gems”
My Subscription Addiction, a directory listing current subscription boxes, counts 96 services specializing in books.
“The subscription box model is an exciting and burgeoning business and another way to showcase our titles to consumers who, while not necessarily looking for a specific title, are anticipating a curated experience with fun and surprising merchandise arriving at their doorstep every month or quarter,” says Pamela Roman, v-p and director of retail and wholesale sales in special markets at Penguin Random House.
“It’s a strong sales opportunity, and it continues to grow,” Hilton concurs. Scholastic sells to book boxes including Litjoy Crate, MyBookBox, Once upon a Book Club, Owlcrate, and Uppercase.
Literary boxes are available for all ages, from infants through teens, with YA a particularly vibrant sector. Titles featured tend to be hardcovers and cross all genres. While the missions of the companies vary, YA boxes are likely to focus on new releases, while boxes for younger readers are more apt to feature classics and overlooked backlist titles.
“Our mission is to help people discover things they wouldn’t have known about otherwise, or the hidden gems that they might have missed,” says Jane Tanner, cofounder of Bookroo, which launched in 2015. “We get feedback from parents that it’s so great to get books they wouldn’t have picked up in the store because their child only wants books about trucks. This lets them branch out into something else.” Bookroo sends out picture book and board book boxes to thousands of customers each month. It works with publishers including Child’s Play, Chronicle, HarperCollins, and Simon & Schuster.
Owlcrate, meanwhile, is a YA and middle grade box service focusing on titles published within 45 days of shipping, according to cofounder Korrina Ede. Owlcrate launched in 2015 and works with HarperCollins; Little, Brown; Macmillan; Penguin Random House; and Scholastic. It sends out more than 10,000 boxes per month for its core YA product and about 1,000 for its new middle grade version. In May, the company began shipping books with exclusive-to-Owlcrate covers.
Each box from Uppercase, a YA-focused service that was introduced in August 2014, features a signed book published in the past 30 days and one to two sideline items, such as tote bags, enamel pins, or notebooks (a recent box’s notebook featured the Hogwarts school crest). Each book comes with a “reading experience” consisting of a bookmark with a page number and code that allows readers to access exclusive digital content.
As a result of box marketers’ need for differentiation through exclusive features, publishers often must devote some resources to creating videos, designing unique covers, and coordinating author participation. Hilton notes that providing exclusive content such as signed books, videos, or personal author letters can require creativity on the part of the marketing department to create a unique extra and get it done on a tight timeframe.
Some boxes are even individually personalized. The Reading Bug Box, launched by the Reading Bug bookstore in San Carlos, Calif., a year and a half ago, sends out 400 boxes per month—a number that store owner Lauren Savage expects to double or triple by Christmas—focused on children up to age 12. “We want them to keep going for a long time and have the box grow with their age,” she says. “We ask [customers] for information about what they have in their [child’s] library already, and we read their emails about what they like and don’t like. If one child wants a book on astronauts, we’ll pull it from the shelf.”
Savage notes that the box brings the store customers from all over the country and even the world. She believes there may come a time when the subscription box income will even help keep the store afloat during slow months. “It’s another revenue stream to help cover our rising operation costs,” she says. Despite all the advantages of doing a box like this, Savage says she wouldn’t recommend that other bookstores launch box services unless they have staff to devote to them. “It’s not easy to do. It’s fun and it’s a great fit for our store, but it’s exhausting.”
Spurring Sales Through Viral Marketing
In addition to significant unit sales, a subscription box order can give a title a marketing boost. “Consumers are connecting with our books and sustaining their interaction as they share what they’ve received on social media,” Roman says.
“What I love to see is when the authors engage with people posting the unboxings,” says Lisa Parkin, president of Uppercase, a YA-focused box that was introduced in August 2014 and includes books from HarperCollins, Macmillan, Penguin Random House, Scholastic, and Simon & Schuster. “It’s so much exposure. It’s not just the extra sales—there are so many people posting and talking about the book.”
For the companies shipping the crates, the subscription business is low-margin. As a result, some box companies, especially those ordering in smaller quantities, are hoping publishers become more flexible in pricing.
When it started four years ago, Little Fun Club, a box for ages up to 12 years that includes two to three books per month, had a hard time attracting interest from publishers for a very new business model. Once quantities started to rise, publisher interest increased, and houses ranging from Simon & Schuster to Child’s Play became suppliers. But many continued to offer terms that did not work for this channel.
“We told them, we’re not going to return them, ever,” says Hayk Petrosyan, CEO and cofounder. “I know how many subscribers I have, and I’m buying just what I need.” He says that intrigued some publishers, but did not open many doors. “It’s better than it used to be,” he adds. “Now I can say, if I buy five pallets of the same title, will you work with me on pricing? We do get publishers that want to figure out how to work with us. But it’s still hard for us to get over that threshold.”
The Reading Bug is working with many of the publishers from which it purchases for the store, “especially those that offer us a steeper discount,” Savage says. “The problem is that the margin is terrible, and then there’s the shipping cost. That’s why a lot of [boxes] fail. Once we become more meaningful to the publishers, we hope they’ll work with us.”
Aside from boxes specializing in books, some publishers are also exploring sales to boxes containing multiple types of products organized around themes. The Disney Princess Mystery Box from Pley, for example, sometimes includes books along with toys, T-shirts, and other products. Fan Blocks, a pop-culture box company, partnered with Penguin Random House Canada in 2015 to supply celebrity-penned books for a variety of its subscription boxes. (It also offers Comic Block, a monthly service centering on comic books and graphic novels, along with an exclusive T-shirt and other licensed add-ons.) And Scholastic sold Greg Tang’s nonfiction title Grapes of Math to Kiwi Crate, a STEAM-themed box. “That’s a way to bring a popular older title back,” Hilton says.
Reaching Customers in New Channels
Flash sales outlets include Gilt, Groupon, HauteLook, Rue La La, and Zulily. They offer a continuously changing assortment of sales events, one-to-three–day sales of discounted merchandise ranging from luxury goods to restaurant coupons.
“We consider the flash sites an important channel,” says Roman. “Reaching more consumers for our books and authors is crucial, and we are excited about any emerging new business models offering a chance for incremental business. We have been selling to all the major flash sites for a number of years.”
Zulily, which launched in 2010 and specializes in merchandise for moms and families, is one of the top flash sites for children’s publishers. With sales reaching $1.5 billion in 2016, Zulily sells to five million active customers. It has worked with more than 15,000 brands to date, and typically launches more than 100 new sale events and 9,000 product styles each day.
“Children’s books represent a significant portion of our hardlines business and are featured on Zulily every week,” says Casey Clark, Zulily’s merchandising manager for DIY, personalization, and education, who is responsible for the book category. Titles range from classics to newer hits to books from emerging authors. Zulily works with big publishers including Penguin Random House, HarperCollins, and National Geographic, as well as smaller independent houses.
“We have the ability to feature books alongside complementary products that can tell a unique story or inspire an ideal moment for customers,” Clark says. “Since our business model is all about the excitement and discovery of shopping, we feel this ‘boutique’ approach to serving up product creates a fun yet simplified shopping experience that is enhanced with the idea of entertainment.” Clark identifies board books, picture books, and activity books as strong formats.
As with subscription boxes, Zulily provides marketing as well as sales advantages. “We’ve been working with Zulily for five-plus years, and have had a really strong relationship with them from the beginning,” says Jennifer Perry, v-p of worldwide publishing at Sesame Workshop. In 2017, Zulily is hosting nine Sesame Street–branded events, with books from Phoenix, Random House, Sourcebooks, and Studio Fun in the mix. Zulily is also open to providing a forum for Sesame Street marketing and content campaigns. “What’s so strong about Zulily is that it’s creating a fully fleshed-out message about the Sesame Street brand,” Perry says.
Selling on Zulily and other flash sites is a way for publishers like Gibbs Smith to reach new fans. “We want to find areas where consumers are who aren’t already our customers,” says Lareen Strong, director of marketing. “Maybe they’ll see us there and then go to Barnes & Noble and buy one of our books.”
While the marketing benefits are primary, Gibbs Smith finds Zulily to be a strong revenue channel as well. “It’s not why we do it, but fortunately we do make some pretty significant sales dollars on Zulily,” Strong says. Since Zulily discounts everything by as much as 40%, Gibbs Smith only sells backlist titles on the site.
Bendon also runs sales on Zulily, sometimes identified with the Bendon brand and sometimes unbranded, as part of a broader effort to expand its presence across e-commerce channels. The company tries to offer something unique via flash sales, just as it does in other retail channels, according to president and CEO Ben Ferguson. “We’re very conscious of not having a competitive product to what we have at retail. We want to make sure this is an incremental purchase for the consumer as opposed to an either-or [proposition].”
Emerging E-commerce Opportunities
Some publishers are experimenting with other nontraditional e-commerce channels. Publishers such as Highlights for Children, Houghton Mifflin Harcourt, and Kumon, for example, are selling to Hollar, founded in late 2015 and billed as the first online dollar store. Focused on middle-American millennial moms, the site has been experiencing double-digit month-over-month growth. “We’ve recently expanded more to books,” says Michelle Andino, senior director of merchandising. Toys represent 30% of sales, with the rest of the 15,000–20,000 items on the site ranging from apparel to beauty products.
Bendon has been doing business with Hollar for more than a year. “It’s a different business model,” Ferguson says. “It’s far more opportunistic and more price-conscious” than other retail channels. “We need to figure out what we can do for them under their pricing model.” Because the site is relatively new and quantities are still low, it can be hard for publishers to meet Hollar’s nothing-over-$10 price point.
“We focus on what we see as trending, but our target demo is very value-conscious,” Andino says, describing the site as a “guilt-free treasure hunt.” Hollar curates its assortment to make products easier to discover, including offering collections of children’s books that encompass classic, new, and licensed titles. There is also a department dedicated to activity sets and books, which shoppers can browse whether or not a collection is being promoted.
Hollar is just one of a number of nontraditional e-commerce venues that publishers are exploring. Sesame Workshop and its licensees alone have a presence on e-commerce sites ranging from those that sell books for charitable purposes such as First Book Marketplace and All About Books to baby products e-commerce platforms such as Diapers.com and Buy Buy Baby. Through these channels, Perry explains, “we’re reaching our audience in a different way and at a moment when they might not expect it.”