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Selling Direct: Exploring Direct-to-Consumer (DTC) Sales

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by Deb Vanasse, Reporter, IBPA Independent magazine —

Deb Vanasse

Publishers that build direct-to-consumer (DTC) sales into their business models can reap substantial rewards, especially when they tap into online platforms and services that help in scaling up their efforts.

Article Synopsis:

  • Savvy publishers are succeeding with sales made directly to consumers from their own websites.
  • Targeted marketing can help publishers grow their sales by finding and keeping consumers.
  • For companies that don’t yet have sufficient DTC online sales volume, consider Ingram’s Aerio and the Bookshop platform.

Rarely do modern consumers buy products from those who make them. The book business is no exception. But publishers that build direct-to-consumer (DTC) sales into their business models can reap substantial rewards, especially when they tap into online platforms and services that help in scaling up their efforts.

Person-to-Person, Person-to-Click

Events are a tried-and-true means of connecting readers with books. Publisher Kiersten Hall says 75% of sales at her company, Fox Pointe Publishing, are made at literary festivals, book fairs, art crawls, and similar events. “These organized events come with the benefit of multiple advertising routes, several people getting the word out, and a larger advertising budget,” Hall says.

In Hall’s experience, consumers are more likely to buy when they connect directly with Hall or one of her authors. “There’s a reason door-to-door sales did so well,” she says. And in the book business, where distributors and retailers would otherwise get a share of the profits, direct sales help the bottom line. To bridge the gap, she taps the power of the internet. At events, customers sign up for the company’s quarterly newsletter, which includes purchase links and seasonal deals that drive traffic to Fox Pointe’s online retail platform.

But in-person sales can be labor and time-intensive. “There isn’t enough time in the world, and I haven’t perfected cloning myself,” Hall says.

By tapping online resources, publishers can greatly extend their DTC reach. Rather than funnel their online sales through retailers like Amazon, which grab both a large percentage of the revenue and the incredibly valuable consumer data generated in each transaction, savvy publishers are succeeding with sales made directly to consumers from their own websites, especially when they have a built-in means of driving traffic there.

At Rocky Trail Press, owner Erik Stensland sells about 50% of his photography books at galleries he owns. The rest of his sales are made online in tandem with social media advertising. He follows the tried-and-true practice of gathering customer data and sending newsletters, but he says he primarily relies on Facebook to reach consumers.

“The largest sales happen when I’m preparing to release a new book,” he says. “I advertise to my audience on Facebook (17,000 followers) and send them to my website to pre-purchase.” Within a few weeks, he often grosses $20,000-30,000 on the title—enough to cover most of the cost of his first print run, because he doesn’t have to split the revenue with an online retailer.

Louis Force Torres

At Adizes Institute Publications, director of publishing Louis Force Torres notes the benefits of meeting consumers in person. “I like to speak to people one-on-one. It gives us a chance to meet the audience and treat them with respect.” In-person events lead to online sales, says Torres, and popups at the company’s online store capture data. When consumers sign up for the company’s newsletter, they learn about future events, forthcoming titles, and free downloads. “I want them to feel as if they’re in a sort of book club,” he says. “I want them to want our data and exchange some of theirs to get it.” An abandoned cart checkout feature, managed by bots that remind customers of items left in a cart, has transformed 10% of abandoned carts into sales.

At BiggerPockets Publishing, marketing coordinator Kaylee Pratt is able to tap the user base of the parent company as a platform for on-site sales. “Our largest portion of sales come from email and social media promotion,” she says. “But we also like to market our books as often as possible on other relevant pages, such as adding a book link to the author’s blog posts or in their forum signature, or by offering beginner books on easier how-to pages.”

In addition to not having to share profits with an online retailer like Amazon, Pratt notes the advantage of controlling prices and discounts from the company’s own site. So as not to compete with the company’s efforts to market other products than books, the publishing arm focuses on promotions aligned with book launches.

To generate online sales, Pratt suggests publishers expand what they offer. “If you have a pre-existing user base or are able to tap into a parent company’s list of emails, then find a way to make it work. If not, it might make sense to offer more content than just books,” she says. “That way, you can build your list, engage potential customers, and maintain interest throughout the year, not just when your books launch.”

Hit the Bullseye

To grow their direct-to-consumer sales, publishers need consumers, and in a competitive market, it’s hard to know how to find and keep them on any sort of scale. That’s where targeted marketing can help.

Aaron Tanner

At Melodic Virtue, publisher Aaron Tanner says that nearly 100% of the company’s sales are made exclusively through its website. “All of our advertising is direct response,” he says. “We don’t use any print media, radio, or TV. We drive traffic to our site through targeted ads on social media.” As clicks become sales, the company gathers consumer data that enables them to fine-tune its reach. “Get to know your customers,” Tanner says. “Once you understand what they’re looking for, the rest is relatively easy.”

As Tanner sees it, there’s no downside to the approach. DTC sales enable Melodic Virtue to know its customers, maintain control of its branding through the use of custom-designed mailers, and enjoy “a significantly higher profit margin” as opposed to sharing profits with an online retailer.

Jason Kutasi

Another publisher who has hit the DTC bullseye through direct response advertising is Jason Kutasi of Puppy Dogs and Ice Cream. Kutasi’s expertise runs deep: He owns a direct response ad agency. When he ventured into publishing, it was only natural that he’d deploy the same direct-response tactics that he used to boost sales for his big-brand clients. With sales from his small list pushing up over 500 copies today, he’s scaling up his publishing efforts.

As Kutasi explains, a direct response ad is simply an ad that tries to get someone to do a thing. For instance, a company that sells mortgages might get customers to click on an ad offering a free home valuation, then convert that click into a customer.

Before publishers can make good use of the direct-response approach, they first need to make sure the title they’re marketing has an engaging cover that’s readable on a mobile device. They also need to figure out why someone would buy their book. “There needs to be an angle,” Kutasi says. “Who does it resonate with?” Once the publisher knows the hook, the direct response formula is simple: Remind someone of a pain point or feeling; push that point to amplify; then offer a solution.

For Kutasi, who publishes children’s books, a pain point might involve a child being bullied or learning to handle emotions. Grandmothers make an excellent target market, he says, because they’ll buy multiple copies of the same title, and Kutasi’s company caters to this tendency by discounting bundled books.

Like Tanner, Kutasi only runs direct response ads on social media, targeting whichever consumers he deems most likely to respond. The ad lays out the pain point, which might not be pain so much as an emotion, such as the nostalgia associated with Grandma’s kitchen. A click of the ad takes the consumer to an article or similar resource that amplifies the point, then offers the book as a solution, attainable with a click that takes the consumer to the publisher’s website.

Children’s books work well for direct response, Kutasi says, because they’re an emotional purchase; he estimates the first-time click-to-conversion rate at 90%. “There aren’t a lot of objections in books,” he says. At his company’s site, consumers can view every page of each children’s book online, which leads to a low return rate.

An effective direct-response campaign isn’t cheap, Kutasi says. Publishers need to price their books accordingly, and that doesn’t work if their books are available elsewhere at a lower price. “I know why Amazon is putting publishers out of business,” he says. “The margins are garbage.”

The pattern-interrupt of direct marketing works by making a book discoverable. “People on Amazon are already in the market,” Kutasi says. “You have to go find the people who aren’t looking for a book.”

Direct response advertising doesn’t come cheap, and Kutasi admits that it’s tough to pull off if you don’t have the expertise. “Algorithms with ad platforms are changing all the time,” he says. “You have to spend enough.” Publishers need to know what margins they need to scale a title. To pay for a successful direct response effort, selling a hundred books a day likely isn’t enough.

That means publishers have to find a price point that works. “Most publishers make the mistake of pricing for retail,” Kutasi says. For instance, they might pay $2.50 to produce a book and then provide it for $5 to a retailer, who sells it for $10. Though marketing expenses in such an arrangement might be minimal, the publisher doesn’t own the customer.

In contrast, Kutasi’s company commits to producing a quality product, and they do extensive price testing, but in general, they price books higher than most of their competition, and they don’t try to compete with Amazon’s free shipping options. But as Kutasi points out, once the customer has purchased a book from his site, he owns the customer. From there, “you just have to stay in front of them,” he says. That might mean reaching out to them via email or SMS, perhaps more often than you might think based on your own preferences.

Despite Kutasi’s impressive results with direct-response ads, he predicts a shift to the tactic will be slow to take hold in the industry. “The general thing that I’ve found in the publishing world is that the book business is so antiquated and stuck in their ways,” he says.

Fulfillment Solutions

Companies that go all-in with DTC sales from their own websites must contend with filling orders—a happy problem, to be sure, but one that requires ramping up on systems and staff that would otherwise be handled by distributors and retailers.

For companies that don’t yet have sufficient DTC online sales volume—or who simply don’t want to grapple with building out their web commerce and fulfillment capacity—there’s help at hand through Ingram’s Aerio venture and Andy Hunter’s newly launched Bookshop platform.

Though Ingram does not sell books directly to end consumers, the company acquired Aerio from its founders as a means of facilitating DTC sales by others in the industry, says Peter McCarthy, Ingram’s director of digital services. “Any publisher can sell print books and e-books directly to consumers on the platform,” McCarthy says. “In essence, they can create a micro-store, populate it with their books—or anyone else’s in the Ingram catalog—and begin selling immediately with all the attendant e-commerce functions, such as couponing, available to them.”

There’s no upfront charge, but Aerio takes “a small fee” on each sale. As the merchant of record, Aerio handles credit card processing, customer service, and fulfillment. The platform is not exclusive to publishers; authors, influencers, and virtually anyone else who wants to market books online can use the service.

McCarthy also touts Aerio’s built-in marketing features. “Aerio previews are elegant samples that are viewable online and look terrific in social contexts,” he says. “They are highly customizable, enabling such features as differing percentages available for sampling, optional email collection prompts, flexible outbound links, and more. One of the killer features is publishers using these previews on their own sites and within their own social streams. The engagement is off the charts.”

As publishers know, online sales are not a “build it and they will come” enterprise. “Aerio works best when the selling features are used in concert with the marketing features,” McCarthy says. “Stores don’t work if no one knows about them; getting the word out is essential.”

With Amazon the go-to online retailer for many consumers, McCarthy reminds publishers to leverage their “unique value proposition that speaks to a specific audience—an audience they are able to reach and with whom they have credibility. Amazon’s value proposition, generally, is ‘we’ve got everything and it’s cheap,’ whereas successful Aerio sellers say ‘we’ve got exactly what you want.’”

Recently launched, the Bookshop platform offers another option for DTC sales. The concept began with CEO Andy Hunter’s dismay over Amazon’s growing share of the book market, which he notes is now at over 50% of sales as tracked by Bookscan. “It feels like we’re at a tipping point right now,” Hunter says. “If Amazon continues to grow at the same rate, it’s going to be hard for most stores to survive the next decade.”

Simply by signing up at the Bookshop site, publishers can become affiliates, which enables them to sell directly to customers and earn an affiliate fee of 10% over wholesale while not having to deal with inventory, packing, shipping, or returns. “It’s a much better model than a small publisher selling direct on their website, disintermediating the bookstores, keeping cartons of stock in their offices, and having interns stuff books into padded mailers and haul them to the post office,” Hunter says.

Having founded the nonprofit Electric Literature and the website LitHub as well as Catapult Publishing, Hunter is no stranger to the industry. A key feature of his most recent venture is his passion for supporting independent bookseller affiliates, which receive a 10% share of the overall profits and 25% on sales generated through their stores.

“Bookstores are huge advocates for books and reading in their communities. If they go away, people will read less. The market for books will shrink. The importance of books in our culture will diminish. We can’t let that happen,” Hunter says.

Deb Vanasse is the author of 17 books. Among her most recent are the novel Cold Spell and a biography, Wealth Woman: Kate Carmack and the Klondike Race for Gold. She also works as a freelance editor.

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