For the big book retailers,
it’s My (electronic)
way or the highway; get on it or get lost. In effect, says Curt
Matthews, they tell independent publishers, <span
style=’font-size:11.0pt’>We will not play ball with you unless you can play the
electronic game. Matthews, chief executive officer of IPG, adds
that the message the big chains and Amazon are sending independent publishers
also says, You’re too
much trouble, and the transaction costs are too great, unless you can do
everything electronically.

Or as Julie Schaper, president and
chief operating officer of Consortium Book Sales and Distribution puts it: “One
of the things you have to do is invest in technology in order to be
competitive.”

Those observations, and others
reported below, surfaced in interviews with five distributors about trends
they’ve recently spotted.

Electronic Communication
Is Increasing

Matthews foresees major
booksellers requiring that, within the next two years, all publishers and
distributors start sending orders, new publication information, delivery
queries, and other information and inquiries electronically. The big
booksellers also want vendors to be compliant with the ONIX (Online Information
Exchange) standard. (A full explanation of ONIX will appear in an upcoming
issue. Information on it is always available via <span
style=’font-size:11.0pt’>www.bisg.org; click on Standards in the
navigation bar.)

“We’re at the place now that our
salespeople are not allowed to present a book to a major buyer unless
electronic data has already arrived,” Matthews says. And, as Rich Freese of PGW
points out, this demand for electronic ordering and communication holds true
outside the United States as well. “It’s not just domestically,” he says.
“Japan and Germany have the same requirements.”

The good news for independents:
automation reduces errors and can lower costs and increase profits. IPG is
saving money by automating ordering. “An error [with manual inputting of
orders] could take more time and money to process than a thousand invoices,”
Matthews says.

The bad news is that buying and
installing the necessary equipment has huge upfront costs in time as well as
money. Matthews reports that IPG has spent more than $300,000 on automation. It
purchased software from Quality Solutions, a turnkey supplier for the
publishing industry that also equipped the likes of Simon & Schuster. And
IPG hired a full-time IT person to oversee its title database.

Similarly, Consortium Book Sales
and Distribution put in a new computer system three years ago. “It’s always
been a challenge to keep up with technology, but it’s also helped us keep
current and helped us deal with major customers,” says Schaper.

Schaper and Matthews agree that if
the investment in technology has been great, so have the rewards. IPG sales
representatives used to have to fill out an 87-page order form. “The order form
was probably the most expensive book that we were publishing,” Matthews
declares. Now they send the same form from their computers, which makes for
less work at IPG headquarters. “We used to have three people punching in
orders,” Matthews says. “Now we don’t have to punch anything.”

Having IPG’s sales reps keep
information on laptops and take orders electronically is much more efficient,
Matthews finds. Reps “can keep tons more information on laptops than in their
heads,” he says, noting also that orders can now be processed more quickly,
keeping the IPG customers happy and the orders coming. Although Matthews
believes automation is the wave of the present and the future, he also thinks most
people who entered the book industry 20 years ago would not have imagined
spending so much time on it. “Not everyone gets into book publishing because
they are interested in IT,” is how he puts it.

Automation Is an Issue for
Indies

Technology is a two-edged sword
for independent booksellers, most distributors agree.

Those who can afford to automate
can use technology to lower overhead. For example, managing inventory by
computer can help an independent store order the right number of
books—not so many that it’s overinvested in stock that doesn’t sell, and
not so few that it loses sales because customers can’t find the books they want
on the shelves.

But technology might also increase
the gap between the big and the small. “It may help the independents compete
against the big boys,” Matthews says. “But it may just further open up the
divide, since you have to plow a ton of money into automation, and I’m not sure
if independent bookstores can afford to do that.”

Matthews hopes independent
bookstores will band together to find ways to make technology purchases more
affordable.

Opportunities Are
Multiplying Online

As the Internet continues to offer
relatively easy and inexpensive ways to find customers for books, particularly
books on niche topics, more and more small retailers are interested in carrying
titles on specific subjects, and smaller retailers are becoming more
successful. At this writing, Forrester Research had recently projected that
about 45 percent of holiday Internet sales would go to them, up from 42 percent
in 2004.

“The Internet has increased the
‘findability’ of books, which is good news for little publishers,” Matthews
says. “It’s almost impossible to imagine a book in a niche that’s too small to
be successful.”

As Davida Breier, sales and
marketing manager for Biblio Distribution, puts it: “The Internet really helps
niche books, books that are focused on narrow topics. These are books that a
lot of stores won’t take on because their audiences are too small, but on the
Internet, there are a lot of online retailers willing to sell them.”

And Consortium’s Schaper says
Amazon has also helped independents and will continue to do so in 2006. “The
ability to reach a lot of people via the Web is just unparalleled,” she says,
noting that it’s also interesting to see what books are in demand where on the
Web. “What’s selling at Amazon is not necessarily what is selling elsewhere or
at the major chains,” she observes.

Sales Cycles Are Changing

Because of the Internet, the sales
cycle for individual titles is expanding, which helps make independent
publishers’ backlists more viable, as well as viable for longer periods.

After books pass through an
initial sales cycle in retail stores—with numbers that may be high at the
start and then peter out—they can take on new life on the Internet,
Matthews says. “It used to be that you’d get your initial orders and put the
book out there, and then the sales curve would go down to nothing fairly
quickly. Now there’s a fat tail-end on the curve.”

And the good news goes on; people
buying books online are generally willing to spend more than customers at
brick-and-mortar stores, Matthews notes. “Bookstores are price sensitive,” he
says, “but you can raise the price by three dollars when you reprint and sell a
book on the Web. People want it, and the pricing doesn’t matter as much.”

My
Child Is Allergic to Everything is
an example. “This book has died and been resurrected by the Internet,” Matthews
says, because parents with highly allergic children are desperate for answers
and are willing to pay top dollar for a book that offers solutions.

Sales Overseas Are on the
Rise

“International sales have been
growing very quickly and that is heartening,” PGW’s Freese reports, explaining
that his company has subsidiaries in the United Kingdom, Australia, New
Zealand, Singapore, Mexico, and Canada.

Jane R. Graf, director of IPM,
also sees international sales increasing. They were up between 15 and 18
percent in 2005 compared to the prior year, she says, adding that “Canada is
crazy” and that sales are also strong in Latin America, the Caribbean, and
Mexico.

IPM has also found selling books
from abroad in the United States profitable. “We’ve been bringing in a lot of
international presses, and their books have been selling well domestically,”
Graf says.

Sales Are Up Beyond the
Bookstore

Several distributors pointed to
one big trend that will continue through 2006 and beyond: selling through
so-called nontraditional channels. Book distributors and their publishers are
picking up sales from associations, seminars, and other special-sales venues.

Here too, the Internet is a
factor. Using email and Web sites, it becomes fairly easy for an independent to
get the word out about a title. Publishers can reach special-interest audiences
at affordable prices to acquaint people interested in a particular topic with a
book on the subject and make it simple for them to order.

IPM’s Graf thinks small publishers
that are having trouble getting into the big chains should forget about them
and pursue associations and other affinity groups instead. IPM’s own imprint,
Capital Books, came out with a book on thrift shops. “Thrift shops are buying
it like crazy,” she says.

The Distribution Business
Is Growing

Distributors I interviewed—whose
main business is distribution–pointed out that other companies, including
big publishing houses like Random House, are adding or resurrecting or
expanding distribution arms. Most of these companies are looking to sign
relatively large publishers as clients. “They are looking for publishers that
do a million-plus in business,” says Schaper.

Meanwhile, distributors that
represent smaller houses continue to fight what Breier classifies as an uphill
battle. She says that part of the challenge for small publishing companies and
their distributors is combating a stereotype. The quality of the images and the
quality of the writing in books from small publishers are comparable to the
quality in the big houses’ books, Breier says. She adds, “These independent voices
deserve to be published.”

The trend she’d most like to see
in 2006 is for indies to overcome the negative stereotype and convince
retailers that smaller is better.

Like Breier, Consortium’s Schaper
has seen improvements in books from independent publishers. “The quality of
submissions from startup and existing small presses is getting better,” Schaper
says. “I’ve been impressed by it.”

Jenny McCune, a business
writer, has worked in book publishing and reports regularly on publishing and
publishers for PMA
Independent. You can reach her at jennymccune@imt.net.