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Returns Terms and Print-run Pronouncements

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content=””I’ve asked every business person I know if their industry has 100%”>





by Terry Nathan

Director, PMA


Returns Terms and Print-run


At the PMA office, we get a
constant stream of questions by email and by phone, and of course we try to
provide useful answers to each of them. Sometimes this means focusing on a
particular member’s particular book. But sometimes it means explaining parts of
the big picture that pertain to many members with many different kinds of


Prompted by a suggestion from a
PMA member, we’re sharing two questions that deal with aspects of the book
business. Board member Rudy Shur of Square One Publishers has provided the
illuminating answers.


If you have a question on a topic
that other publishers might also be curious about, please send it to me at <span




style=’font-size:11.0pt’>I’ve asked every business person I know if their
industry has 100 percent returnable terms between the manufacturer and the
retailer, and have yet to find one that does. I understand why small publishers
are hurt by these terms, since they create cash-flow problems. However, I’ve
often heard executives at large publishing houses defend—and even fight
to keep—100 percent returnable policies.


style=’font-size:11.0pt’>How exactly do these policies help large publishing
houses? What is their motivation for wanting to keep 100 percent returns the
industry standard?




When it comes to returns,
publishers are not alone. For over two decades, the fashion industry has been
forced to take back returns in order to work with large department stores and
mass merchandisers. As a matter of fact, their returns gave rise to
manufacturers becoming retailers via their discount outlets, which can be found
almost everywhere. Shipping back unsold product for full credit is also a
long-standing policy in the record business. With that said, it is important to
note that outside the book trade (bookstores), many nontraditional book
outlets (such as fabric shops, pet stores, and hobby shops) do not return
books. Instead, they receive a slightly deeper discount.


As to how returns got started in
book publishing, there are two stories: the first blames it on the Great
Depression of 1929. To help bookstores remain solvent, publishers allowed them
to return books that did not sell. The second blames it on an aggressive
marketing program that Simon & Schuster began in the 1940s. As soon as
S&S opened the door to returns, everyone else was forced to follow its


Whyever or whenever this policy
began, today we seem to be stuck with it.


It is not surprising that few
large publishers find it problematic. First, most big houses work on
formula-based sales. Their bestsellers pay for their total returns and more.
Second, execs at large houses are often simply hired hands working for a
disembodied corporate entity. On the other hand, most indies are owned by the
people who run them, and these people understand just how unwise it is to allow
the current returns policy to stand.


Since returns have become such an
important factor in keeping independent bookstores in business, it is unlikely
that abolishing our return policies would be helpful to anyone. However, that
does not mean we need to stay with the status quo.


What We Might Do


Here are a few changes we should


·      Distributors, wholesalers, and
publishers should stop accepting damaged returns for full credit. Today,
although policies are clear about refusing credit for books in non-resalable
condition, few, if any, suppliers adhere to them.

·      Instead of having a full-credit
returns policy, why not allow only a percentage of the order to be returned for
full credit, or allow less than 100 percent of the originally invoiced price?
In the short run, this would probably result in more conservative buys, but in
the long run everyone would save money.

·      Other publishers should consider
following Doug Shidell’s example (see “A No-Returns Success Story” in the March
issue) by negotiating no-returns deals for books with strong track records.


Will we ever get rid of returns?
It’s unlikely in our free-market society at this time. As a group of independent
publishers, however, we should be able to police our industry well enough so
that wholesale abuses are not commonplace. As a unified group moving forward,
we have the power to make others aware of practices that are unfair and, in
many instances, illegal. We may not be able to close the door on returns
completely, but at least we can stand guard.




style=’font-size:11.0pt’>I’ve heard that the large publishers “fib” about the
sizes of their first print run with prepub statements that say, for example,
“This book will have a first printing of 75,000 copies,” when in fact the
number is much lower. They do this, as I understand it, to generate excitement
among booksellers—and larger orders from them.


style=’font-size:11.0pt’>Is it true that you can’t trust these statements?




Sometime in the distant past, a
publisher somewhere decided to do an unusually large printing of a book, that
publisher innocently mentioned this information to a bookstore owner,
and—lo and behold—acting only on that fact, the bookstore owner
placed a larger-than-usual order for that title. A light went on in that
publisher’s head, and the idea of big print-run promotion was born. As that
publisher may have learned, the gambit may not work out in economic terms, but
this type of hype did result in additional sales.


Fast-forward to the 1960s, and we
have the phenomenon of the blockbuster bestsellers and their publishers’ PR
machines doing everything possible to add to the presale success of these
titles. If publishers had been inflating print-run units—and publicity
dollars—somewhat to gain both attention and wider distribution, wouldn’t
even larger numbers provide higher visibility? And so it began: trade ads
appeared trumpeting first print runs of a quarter of a million, a half million,
and—the holy grail—1 million. Perhaps in some cases it was true,
but Pandora’s box was opened.


Today, smoke-and-mirrors
first-printing numbers still dominate the book-publishing landscape. Call it a
big fat lie or a fib, this “sales tool” hides the fact that print runs at large
commercial houses now usually conform to the number of orders on hand.
Unfortunately, newbie publishers may buy into the hype and discover too late
that bigger can equate to bankruptcy.


The best story I’ve heard about
exaggerated print runs centers on a sales rep from a large house who was
visiting Ingram. The rep, straight-faced, told the Ingram buyer that his house
was doing a 250,000-copy run on a forthcoming novel, and then asked if he could
put Ingram down for an order of 100,000 copies. “We’ll take 10,000 copies,” the
Ingram buyer said. A little put off, the rep repeated his magic number. “But
we’re doing a quarter-of-a-million-copy run. You don’t want to be caught


“We’ll order more if we run out,”
the buyer told him. As soon as the meeting was over, the rep rushed to the
nearest phone and called the production editor. “Listen, you know that 250,000
print run we’ve been hawking? I think 12,000 copies would be much safer.”


Lesson: Know the business you are
getting into.




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