by Steve Laube
The economics of bookselling are complex and ever changing. There is a method of inventory control called “Just-in-Time” (or JIT) that has revolutionized both the retail and manufacturing industries.
When I began as a bookseller there was no such thing as computerized inventory, at least not in the Christian bookstore business. We used a method call “Stack ‘em high and watch ‘em fly.” Because “If you stack ‘em low, they won’t go.” The idea was to merchandise large amounts of inventory because there was no quick way to replenish your stock if you ran out.
We had sheets of paper with a list of “Never Out” titles in books and music. Weekly we would physically count the remaining stock and if our inventory on a title fell below a particular level we would order more. This was our attempt to time our inventory to match the consumer demand. Titles not on the list would be reordered when that publisher’s sales rep came to visit. The rep would inventory the store and together we would determine what titles to replenish and which ones to let disappear.
Technology Caused Disruption
Computerization changed everything. Using an algorithm the computer determined the speed, or rate, of sale for each title and created order quantities to match the projected demand. This was called “Just-in-Time.” The inventory would arrive just in time to meet the customer wanting that book.
This caused serious disruption at the publisher. They too had to try to time their reprint orders to match the demand of their vendors (stores). If they printed too much they tied of their cash in unsellable inventory (inventory which later ended up in bargain bins).
Over time the size of print runs for publishers began to shrink as they tried to time their sales projections to inventory levels more efficiently. Slow selling titles like commentaries and reference books quickly began disappearing from store shelves because their “rate of sale” did not justify reordering.
Print-on-Demand and E-books
In the mid-90s to late 90s came the technology to print books on demand. Using a sophisticated machine books could be printed one at a time (on demand) instead of in long press runs. Unfortunately the cost of printing each individual book was four or five times what it cost per book doing long press runs. Plus the machines to do the work were very expensive. So this technology was not quickly adopted.
In the last five years, due to the efforts of Amazon.com and their Kindle reader, ebooks hit the market. Suddenly “Just in Time” was meaningless, at least for ebooks, because there was no physical inventory to deal with. The impact however was felt on the print side of the equation. Today, with e-books accounting for 20%-30% of all book sales it means the print inventories have shrank accordingly. In addition, the loss of the Borders chain, the reduction is the space allotted for books in Walmart, and the closure of a large number of independent stores meant that there were fewer places to ship physical books. Book sales (of physical paper books) began to shift more to online outlets.
Meanwhile the efficiency of print-on-demand (POD) and the drop in price of the machines have seen a reduction in the per book costs. This efficiency has made it possible for some publishers to do a longer press run on the initial printing and then shift subsequent demand to POD. The smartest publishers design their print books in such a way that you cannot tell which are regular print runs and which are POD.
“Just-in-Time” can now mean that for some titles (not all) the publisher can print a single copy of that book for a customer and not have to carry a warehouse full. The book arrives “just in time.” This is why you see some titles online that say “available in two weeks” instead of “available now.” A particular book may no longer be in stock but your one copy can still be printed.
For industries other than books you find the same inventory challenges. Why do you think Amazon.com is building warehouses all over the United States? They want to have distribution centers that can ship products (shirts, shoes, deodorant, books…anything they list) and have it at your door in 48 hours. I once ordered a book in the morning and it was delivered to me that afternoon. (Imagine my surprise!)
For those of you still reading this post you might ask, “So what? What does this have to do with me as an author?”
First, the meaning of the term “print run” changes. It used to be that selling your first print run was a measure of success. It usually suggested big numbers and healthy sales. Not any more. That first print run is usually determined by the number of copies stores have ordered before the printing date of the book. So if there are 3,200 pre-orders the publisher will probably print 5,000. Subsequent reprint orders are based on the speed or rate-of-sale on that title and the amount of reorders that stores make. If a book really starts to take off like Heaven is for Real the publisher might be ordering a new print run each day…to have the inventory just-in-time for the demand.
Second, your book becomes less likely to ever go “out of print.” If the publisher can print one copy using POD or sell an ebook without carrying any inventory, what incentive would a publisher have to stop carrying the book in their catalog? Your agent will negotiate that definition in your contract, but I’ll save that discussion for another day.
Third, this post should help you understand a little bit of the complexities of publishing decisions. Even with computers and data analysis, it is still a guess as to how the consumer is going to respond to a particular title. Publishers don’t want to publish books that lose money, that would foolish. Thus when they are evaluating your proposal they are thinking about these economics. You might think it is all about the beauty of your writing or the powerful message of your book…it is in part…put ultimately it is an exercise in risk management. What ideas will connect with buyers who will vote with their pocketbooks? So help your future publisher with solid reasons why your idea or book is better than the dozen others they are evaluating in today’s meeting.
Publishing A-Z series:
A is for Agent
A is for Advance
B is for Buy Back
C is for non-Compete
D is for Dispute Resolution
E is for Editor
F is for Foreign Rights
G is for Great
H is for Hybrid
I is for Indemnification