The Trade Tuesday: Understanding Distribution


Every author wants to see her book in a book store. Most authors want to see their books in what are called "big box stores", stores like Barnes and Noble, Walmart, and Kroger. Why aren't all books available in stores like those, and why can't many publishers get their books into such stores? The answer is one word: distribution.

Most people have heard of distribution and have an idea of what it means. Essentially, distribution is a company's ability to get its products into stores. It sounds simple, but it's not. Let's look at the three factors that in many cases limit a publisher's distribution.

The main factor, I believe, is the size of purchase orders. Barnes and Noble has over 600 regular stores and over 600 that are on college campuses. Barnes and Noble isn't going to purchase five copies of a book like a mom and pop bookstore might. Barnes and Noble is going to buy 10,000 or 20,000 or 50,000 copies of a book. That's GREAT, right? Yeah, it is, if you have somewhere between $20,000 to $250,000 dollars. But, but, but doesn't Barnes and Noble pay for the books? Yes, of course they do...after you send them the books. It costs a lot of money to print 10,000 books, and many companies can't grow simply because they can't fufill purchase orders. Many publishing companies simply can't get into big box stores simply because they can't fufill a massive purchase order.

The second factor is margins. By margins, I don't mean that blank space on the side of a page. I mean profit margins, the percentage generated when one divides net income by revenue. A publisher's profit margin isn't high. Publishers don't sell cosmetics. They sell books, which cost a lot to make. Even direct to consumer sales, sales made when a publisher sells directly to a customer rather than through another website or a book store, have a low profit margin. So once you distribute to big box stores, your profit margins go down. Why? Because big box stores buy at a huge discount, often around 50%. Giving a 50% discount probably kinda sorta eats into profit margins.

The third factor is returns. Returns are kind of crummy, right? Someone didn't like your book. Well, they're really, really crummy for your publisher. If your publisher sold 40,000 copies of your book to Barnes and Noble but Barnes and Noble only sold 36,000 copies, your publisher probably gets to fork over around $28,000 to Barnes and Noble. How fun, right? Not so much. Businesses need to reinvest their profits, and most companies don't leave tens of thousands of dollars sitting around for long. What happens when a publisher doesn't have any cash on hand when thousands of books are returned. It's simple: the publisher is in big trouble. Any publisher who has a decent amount of business sense knows that not having cash on hand to cover returns is a distinct possibility, and many either couldn't alleviate such a problem financially or don't know how to prepare to deal with it.

Hopefully this post gives you a better understanding as to why many publishers can't or won't distribute to big box stores. If your publisher can, be thankful. They've put a lot of work in to get to this point. If your publisher can't, focus on mom and pop stores. They can be really great. Also, be a good author and sell lots of books so that your publisher can eventually get your book into a big box store!

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