A No-Returns Success Story

by Doug Shidell

“Doug, when you stopped selling <span
class=95StoneSerifIt>Bicycle Vacation Guide
to your distributor, you cut off Barnes & Noble.” The voice on the line had
an urgency that I didn’t quite understand. It was the voice of a wholesaler,
the same wholesaler who had lectured me months earlier about the foolishness of
expecting a no-returns business model.

I had made the decision to stop
selling Bicycle
Vacation Guide to the book industry in the spring of 2006, set
the last day of sales for August 31, and went through all the stages of
stopping sales, worrying about such a brash move but affirming that I had done
the right thing.

In short, I had moved on. <span
class=95StoneSerifIt>Bicycle Vacation Guide
would no longer sell in the book trade. The decision had not been hasty or ill
informed. I looked at the bottom line and realized that I would earn more money
if I didn’t sell Bicycle
Vacation Guide to the book trade. The man behind the voice had
known about the decision for a long time. Why the tone of doom?

“I looked through my records for
2006,” he continued. “B&N returned only one book all year.”

Interesting<span
style=’font-size:11.0pt’>, I thought, but I knew how many this wholesaler had
returned, and it was far more than one book. If they hadn’t come from B&N,
he was returning books from someone else, perhaps a large independent or
another chain. I steeled myself for another long lecture. Despite my distaste
for the business model of the book industry, I like the people, including this
man. I would hear him out. Besides, my computer was on, and I could do some
routine work while I listened.

What came next, however, wasn’t a
lecture. It was an offer to do business. He would absorb any returns from
B&N. Would I sell directly to him? He needed a 55 percent discount. Could I
do that?

Make Mine No-returns

Here was a bookseller coming to
me—a micro publisher—with an offer that wasn’t industry standard.
What was going on? While I wrestled with this unexpected development, the voice
kept talking. I soon realized that despite his earlier lecture, this wholesaler
was willing to make an offer because he was earning money from my book.

That simplified everything. He
wasn’t talking about book-industry practices over the last seven decades. He
wasn’t talking about previous attempts to eliminate returns in the book
industry, the power of book chains and major book publishers, or any of the
other factors he had cited in previous conversations as guaranteeing that the
book industry would not change “in our lifetimes.”

He was talking about a contract
between two businesses. I could get my head around that.

I came back with an offer that
stopped him for a second. He asked for a 55 percent discount. I offered 60
percent, “if you guarantee no returns.” This was not a generous offer. That’s
the same discount I give to the bicycle industry. It’s the same discount I
would offer any wholesaler in any industry with a net 30, no-returns policy.

Five points of margin is a
powerful incentive. He accepted, and picked up freight charges. The only thing
missing was net 30 terms. I toyed with the idea of pressing for that and
decided not to for reasons I won’t explain here. By the time we hung up, I was
more stunned than ecstatic. I stared at the now-blank computer screen. I had
not done routine work while listening to another lecture on the foolishness of
expecting a no-returns business relationship. I had just negotiated one.

Explanations and
Implications

Last summer I wrote a three-part
series on returns for PMA
Independent and suggested several strategies that might lead to a
no-returns contract. As a micro publisher, I didn’t expect to have the leverage
needed to negotiate such a contract for myself. My only option appeared to be
moving away from the book trade. Now I have the contract. Does it mean that we
are at the beginning of a revolutionary change in the way the book industry
does business? I won’t even attempt to answer that question. I can only point
out the circumstances that created this deal.

The most important factors behind
the contract were:

·      My book sells well. It is not a
bestseller, but a strong midlist seller, and it has had solid sales for several
years.

·      The wholesaler who made the offer
understands his own bottom line and is willing to break the standard mold to
protect that bottom line.

·      I have experience selling outside
the book industry and understand what it takes for a wholesaler to make money
using that business model.

·      I was willing to walk away from a
bad business model.

I’m not unique. I believe other
publishers have the same circumstances. For those who feel that they, too, have
solid sales, a reasonable partner, and experience selling in other industries,
I recommend trying for a no-returns contract. For those who don’t have those
factors working for them, I suggest rethinking your publishing strategy.

If you go for no-returns, keep in
mind that you must offer something in exchange. Usually that means a better
margin.

And keep the last item above in
mind. The most important tool in any negotiation is the willingness to walk
away.

I listened to a lecture on my
foolishness, doubted my decisions, watched my goal of becoming a full-time
publisher disappear over the horizon, and questioned my business acumen. In the
end, however, I did the math, and it kept pointing to the bottom line. I was
losing money with the current business model. I walked away. Without making
that decision, I wouldn’t have gotten a better contract.

Doug Shidell, publisher for
Little Transport Press, sells bicycle touring books and maps.