J is for Just-in-Time

by Steve Laube

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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

10 Responses to J is for Just-in-Time

  1. Rick Barry November 4, 2013 at 6:32 am #

    Fascinating explanations. Thanks for this. But one question: In the past, some authors have stipulated by contract that, if sales of their book stall and the publishers halts production, then all rights would revert back to the author, who could then personally offer the title as an ebook and pocket all profits after that point. Since you explain how books don’t necessarily need to go out of print anymore, is such a clause in a contract a thing of the past?

    • Steve Laube November 4, 2013 at 9:27 am #

      Rick,
      That is correct, the old style of out-of-print clause is out-dated. I will address that clause in detail in a later post.

      There still needs to be a way for an author to get their rights back if a book has stopped selling and the author wants the rights back. And that is what agents are negotiating. A redefinition of the term “out of print.”

      • Rick Barry November 4, 2013 at 9:36 am #

        Interesting. I’m wondering whether it might be workable to specify that, if sales drop below a certain threshold in a 6-month period (25 copies? 50 copies?), then the author could receive rights back? But I’m a writer, not a negotiator, so I will look forward to reading a future post on that topic. Thanks!

  2. Catherine Hackman November 4, 2013 at 8:54 am #

    How much does the following the author already has factor into the publisher’s decisions?

    • Steve Laube November 4, 2013 at 9:31 am #

      For non-fiction the author’s platform, if they are a first-timer, is a major factor. The publisher wants to know the size of the author’s current audience. The bigger the better.

      In fiction it is not as critical, but it has become part of the conversation.

      I dare not give threshold numbers because the would create an unfair subjectivity to our discussion.

      Suffice it to say if you have 600 Twitter followers and 150 Facebook friends and 300 visitors to your web site or blog each month…your audience is comparatively small.

      Steve

      • Catherine Hackman November 4, 2013 at 10:13 am #

        Thank you, Steve. I am working on building my audience right now and was hoping for some numbers to give me an idea of a target. I appreciate you taking the time to answer my question.

  3. Stephen Myers November 4, 2013 at 9:58 am #

    I’ve seen it changes as well over the years Steve. From shopping at the independent Charismatic Christian Bookstore in the mid 1970s of El Paso to the 80s storefronts in Malls and the 90s of Lifeway. Moving to DFW in 2001 I worked briefly for Mardel’s one holiday season where the tubs of books arrived daily. Later into the decade the closures of Family Christian Stores, Borders, and an ever shrinking space for books within Mardels. In this newest store configuration its less than 20% of the entire store.

    What I’ve most appreciated in the past three years are the cut out bargain books. At first I thought ‘this is the last place an author would want their book,’ until (post joining the ACFW in 2011) I lingered time watching consumers discover authors for the first time in those racks (as did I). Its what retail used to call a ‘loss-leader’ like an endcap of products sold for less (to entice customers) where they actually spend more in other (full retail) areas. I noticed that while many purchased the bargain books from the $1, $3, $5, $7 and $10 racks they also had full price books under their arms as well.

    Listening to their conversations I often heard them talk to each other saying “I found this book by Karen Kingsbury (or Colleen Coble, and many others) and liked it so much I had to buy the full series.” The Cut out bargain books seemed to reach or introduce an entirely new audience to a author. I thought that was wise in tough economic times to motivate (at the front of the department) those walking in or out for a purchase.

    I’m sure the publishers see it otherwise but in marketing and PR developing new readers it seemed like a gift horse for a writer at the same time much the same way e-books can be offered ‘free’ or at a reduced price offer? Is that why the publishers do so (to develop new readers) or is there another motivation? And I hope the Bargain book option (in stores) won’t disappear completely.

    Great information Steve. Thank you.

  4. Erin Taylor Young November 4, 2013 at 10:13 am #

    Thanks for the walk through time, Steve. Very helpful perspective.

  5. Marci Seither November 5, 2013 at 7:43 am #

    Great post from someone who understands the behind the scenes working of the publishing machine. There are so many factors in having a book do well in the marketplace. It is a risk for the publisher as well as the author because of the way things have changed. Long gone are the days of fruit baskets and book tours, unless you are on the A list.

    Publishers do not have the resources to do the marketing and PR that they once did..thus, it falls to the author, who ultimately is the one who gets the opportunity to bring another book proposal to the table or has the door shut due to their sales. The author needs to have brainstormed creative marketing ideas way before the book is released, and sometimes before it is even written. The author should have the felt needs of their readers dialed in before the proposal is brought to the table.

    The ability for the author to get their book back when it goes “out of print” is also a huge issue. Thanks for the great posts!
    Marci

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