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Distribution Deals: Major
Publishers Want Houses of a Certain Size

 

by Linda Carlson

 

To paraphrase that maxim
about building a better mousetrap, even well-established midsize publishers
need to keep beating paths to their customers’ doors. Although many midsize
firms use national distributors such as NBN and IPG, and some handle
distribution in-house, distributing via a major publisher is an increasingly
common option.

 

What<span
class=95StoneSerifSB>
s In It for
the Giants That Distribute?

 

Large presses, which once limited
distribution of others’ titles to books similar to their own, now aggressively
pursue a far greater variety of distributees. Often, the ones they want have
annual revenues approaching or above $1 million.

 

One reason: this allows them to
amortize the costs of their sales forces and distribution facilities and
systems over a higher number of books. As Mike Shatzkin said in a speech to the
Stanford Professional Publishing Program and a related piece in the October
2005 PMA Independent,
“If you’ve got a warehouse, you want to fill it, because you pay the same for
empty space as you do for utilized space. More volume gives you more leverage
to collect money and makes it easier to support a sales force.”

 

Another factor? “Launching new
titles successfully and maintaining sales on backlist are both getting harder
and harder in the current marketplace,” Shatzkin pointed out. “So volume
increases are most easily achieved by getting more books to sell from somebody
else’s investment. That means getting distribution clients.”

 

What’s In It for
Distributees?

 

The most significant advantage for
distributed publishers is the potential for higher sales, given the services of
a large, established sales force.

 

Another significant advantage for
publishers that choose to be distributed by larger firms is that it’s often
easier to deal with major trade wholesalers and retailers and with the
increasingly important nonbook retailers such as Target, Wal-Mart, and Costco.

 

Publishers that outsource
distribution also avoid having to install and implement the expensive systems
that selling today requires, as Shatzkin explained, noting that correct use of
standards for data transmission is also required.

 

Shatzkin and others cite
additional advantages of using a large press for distribution:

 

·      Distribution costs become
variable, not fixed. “You pay for the warehouse space you use, not the whole
warehouse. You pay for the pick-and-pack activity associated with your actual
sales; you don’t have a payroll to meet regardless of whether anything is selling
this week,” Shatzkin points out. “When distribution costs are set as a
percentage of net sales, you get a high degree of predictability of expenses.”

·      Cash flow improves. Smaller
publishers may wait more than 90 days for payment. Large publishers often have
more reliable collections. “This certainty as to when cash will arrive can have
life-or-death value,” Shatzkin adds.

·      Risk is reduced, since
distributors absorb the loss if a customer defaults on payment.

·      Publishers can contract out most
functions to a single source. Depending on the distribution agreement, the
distributee may handle only book acquisition, editing, and design and rely on
its distributor for everything else, including sales, marketing, print
purchasing, and Web site hosting.

 

Items to Investigate

 

If you’re considering approaching
a publisher about distributing for you, what questions should you ask?

 

·      Do you need this distributor? If
you have a narrowly focused book for a small market that you know well, the
answer is no. The same is probably true if you have a book with a local or
regional market.

·      Are your titles compatible with
the distributor’s?

·      What sales channels does the
distributor pursue—trade bookstores and major Internet booksellers only, or
special markets, international sales, and mass merchandisers as well?

·      How much will distribution cost?
You may pay 25 to 40 percent of the distributor’s net. If that’s 50 percent of
cover price, you might gross as little as $1.25 on a $10 book.

·      Do you have to grant an exclusive?
Many distributors require exclusives in terms either of market or of geographic
area.

 

Jeff Abraham, president of Random
House Publisher Services, recommends that you also ask:

 

·      Can the distributor provide expert
distribution services in Canada?

·      How state-of-the art are the
distributor’s systems, particularly those dedicated to information reporting?

·      What is the quality of the account
management team?

·      Does the distributor have
dedicated salespeople calling on key accounts? How much of the sales force is
commission vs. employees of the distributor?

·      Do you feel good chemistry and
potential trust emanating from the initial meeting with the people you would be
working with every day?

 

Finally, Abraham and others
suggest that you research what booksellers think of your potential
distributor’s fulfillment and customer service. This requires nothing more than
an afternoon on the telephone, speaking to owners and managers of bookstores in
your target areas—preferably a few large outlets of chain stores as well as
many independent stores.

 

What Makes Distributors
Want You

 

As potential distributors assess
your titles, they will look at:

 

·      Fit in terms of subject matter.

·      Overall quality of the book.

·      Pricing.

·      Packaging, including covers and
bar coding. Packaging that isn’t consistent with industry standards creates
problems for booksellers, which will then be problems for the distributor.

·      Sales potential. Although some
relatively large independent presses will distribute for companies with only a
few titles, large publishers like Random House seek clients with net sales of
at least $1 million annually.

 

Linda Carlson
(lindacarlson.com) writes from Seattle, where she handles marketing for an
independent press. Her own most recent book is <span
style=’font-size:11.0pt’>Company Towns of the Pacific Northwest

(University of Washington Press).

 

 

 

 

 

Distribution in Nontrade
Markets

 

Publishers of many
different sizes use other publishers to distribute their titles to special
markets. For instance, Ten Speed Press uses Gryphon House to reach educators.
Although Gryphon House is smaller than Ten Speed, it is more focused on the
school-supply market—stores, catalog companies, and Web sites that sell to
educators and constitute an ideal secondary market for Tricycle, Ten Speed’s
children’s imprint.

 

“Our relationship with larger
publishers is actually the same as our relationship with smaller publishers
whose books we distribute,” says Cathy Calliotte, the Gryphon House marketing
director. “Publishers that have distribution in other areas, such as the book
trade, find that we can increase their sales by selling to a market they don’t
approach.”

 

Calliotte and others stress
the importance of critical mass. “A publisher with just a few titles would find
it very difficult to get the attention of the buyers it seeks,” she says. But when
their books appear in the Gryphon House catalog—which includes more than 600
titles for early-childhood teachers from 50 presses—they know the books will be
pitched by sales reps who develop relationships with customers.

 

 

 

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