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What to Do About Returns

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When we asked PMA members to
imagine that a genie had granted them the power to abolish returns, some
publishers said they’d exercise that power in a heartbeat and some said they’d
refuse to use it because the side effects would be unpleasant. Selections from
these responses ran in the January issue.


A sampling from a third
category of responses appears below. As you’ll see, the publishers in this
group suggest alternatives other than abolishing returns or maintaining current
policies, and several of them report on how they’re already minimizing or
eliminating returns of their own titles.





Alter Incentives


I’m both a retail bookseller and a
publisher (the former led me to the latter). For a small independent store like
mine, abolishing returns probably wouldn’t have drastic consequences. We try to
buy smart to start with, and we tend to hold onto books longer than the
industry averages.


My store’s returns rates aren’t
real high now—except when publishers give us incentives or structure
terms that lead us to take more copies of books than we otherwise would. These
situations arise more often than you might think, and I see them as a much more
serious problem than returns by themselves.


Also, bear in mind that Ingram is
a huge culprit in the returns area; as far as I can tell, it returns books to
avoid paying invoices when due, only to reorder the same books a few days


Since publishers would have to be
a lot smarter about how they market and sell if returns were abolished, I’d do
something else instead. Specifically, I would:


·      design programs that give
retailers incentives to be efficient (such as sliding-scale credit for higher

·      alter discount schedules so that
they no longer encourage stores to take more copies than they think they can

·      structure shipping practices so
that stores could do small orders frequently to keep stock at appropriate



Creek Press/Drood Review Books




All Sales Final


I’m relatively new to the
publishing business, and I will be the first to admit that I’m no expert.
Formerly, however, I spent some 30 years as an executive in the business world,
fixing distressed operations or acting as the lead dog in entrepreneurial


What I’ve learned about the
publishing business during the past two years is troubling. I’ve never been
involved in an industry that so patently feeds upon the misfortunes of others.
In the business world, we always try to dream up new ways to reduce risk and
use someone else’s money to finance our own operations, but the publishing
world carries it to the extreme.


Allowing book returns violates a
basic tenet of good management, which is about accountability. Who makes the
decision to place a title in a store, and who ultimately controls book sales?
The publisher produces the book but has no input or control over how the store
merchandises and sells its product to the reader. So I have to ask: Why should
the publisher be subjected to such an open-ended commitment?


The elimination of book returns
would enable publishers to make decisions based on fact and not on a blend of
past performance and hopeful projection. At the same time, bookstore managers
would be forced to promote and merchandise titles the same way as any other
retail business or face liquidating them at vastly reduced prices. A
consequence might be that larger chain stores might carry fewer titles, which
could adversely impact some publishers, but they too might look into more
creative marketing.


After an initial shakeout, as
retailers adjusted to their new responsibilities, the publishing business would
become much healthier and more financially secure.


We currently sell all books net 30
days, all sales final. We had one consignment account, but it was just recently
grandfathered out. And yes, our new mode of operation has created some real
challenges. We’ve given up sales, and we won’t be selling through the big
distribution centers, but at least we know where we stand from day to day.
Needless to say, a level playing field would be very helpful.


I read a lot about the ills of our
business, the woes of publishers, and the adverse impact of the Internet, but
very little about the root causes embedded in the basic structure. Returning
unsold books, in my view, is a structural flaw that is a serious drag on the






Familiarity Breeds Success


I’d get the genie to convince
bookstore employees to read my books. My sales are dramatically different at
stores where employees recommend my titles, and the risk of returns falls to
near zero.



Story Press



What Wholesalers Could


If a genie gave me the power to
abolish returns in the book business, I wouldn’t. Instead, I suggest that:


·      Wholesalers stop giving stores
credit for damaged returns. Stores should pack returns carefully.

·      Wholesalers routinely reship
returned books in good condition to fulfill existing or subsequent orders, with
no extra fees to the publishers.

·      Wholesalers refrain from
automatically fulfilling orders for large quantities of a title. Exceptions
could be made when a book’s author is doing an event at a store. Otherwise,
stock of likely bestsellers should be apportioned to stores in a fair and
logical way, based on past sales and other data.

·      Wholesalers refuse to accept
returns without copies of invoices showing that the original purchases were
from them.


All the wholesalers would have to
do is notify stores of these new policies. Oh, and some wholesalers would have
to simplify their contracts with publishers to eliminate all those pesky
returns fees.






Gone Today, Gone Tomorrow


We don’t do returns. On principle.


We’ve never lost an order that we
know of.


L. Zingrone



Other Industries’ Examples


Of the five distributors we use,
only Baker & Taylor has returned books to us, and the vast majority are
dirty, smudged, bent-up, smelly, and sticky. These books cannot be resold.


We recently told B&T that we
will no longer accept returns except copies with manufacturing defects, and
only one book has been returned with that kind of defect (well, we’re human,
after all). We also said we would ship only after our B&T buyer provided
proof of legitimate orders from booksellers, libraries, etc. When B&T
backed down on charging restocking fees and agreed to our new terms, we were
surprised but, of course, pleased.


I have a great deal of experience
in retailing all sorts of merchandise, from apparel to jewelry to toys and home
products. When defective or broken products arrive, stores generally—and
gleefully—write off the loss on their P&L and dispose of the item if
it cannot be sold at a discount. Booksellers should jump at such a chance.


Example: A dinnerware company
ships a retail store chain 100 sets of dishes through a distributor. The
company’s workers pack the dishes in the cartons without incident. In transit
to the chain’s individual stores, some of the dishes in the cartons are broken.
The store’s clerks hear the sound of broken dishes while putting the boxes into
a stockroom. There is no way to determine whether the manufacturer broke the
dishes, the distributor’s personnel dropped a few boxes off a forklift, it was
the fault of the transit company, or the store clerk accidentally dropped a box
or two. Employees in the store’s financial department write off the set, and
the unbroken pieces are used to complete other sets that had breakage. Have you
ever heard of a retailer that would have its employees pack up the broken set
and send it back to the distributor, who then ships it back to the
manufacturer—and charges the manufacturer for the associated costs?


Another strategy that has worked
extremely well for us is sometimes selling directly to booksellers. We undercut
B&T’s price, pay the shipping, insurance, and tracking costs, and still
make a profit. This has paid off, especially with financially strapped
libraries and independent booksellers.


Final thoughts: we are a small
publisher, probably among PMA’s smallest, but we can rant and roar with the
best of them in hopes of ending the practice of returns.



Publishing Company, Inc.



Create Ceilings


I would set an upper percentage
limit for returns: no more than <span
percent of the order, with the numbers
at about 50 percent for orders of 100 copies or fewer, 25 percent for orders of
100 to 1,000 copies, and 15 percent for orders of 1,000 copies or more.


Why? To generate some buyer
responsibility in ordering.






A Simple Special-Orders System


As a small press, we have made
great strides in reducing paperwork, headaches, acid reflux disease, and more
since we announced a no-returns policy. We give as well as take away, though.
We have the same discount for bookstores whether they order one copy or 100. We
just ask that they pay in advance, order what they need, and, if our products
don’t sell, have a book sale or give them to their local libraries.


We don’t mind at all being a
special-order house for our usually upscale independent bookstores. We also
sell by special order to large chains and expect (and receive) payment in
advance from them as well. We give personal attention and a quick turnaround to
every order because we know someone is waiting for the book, and our kinds of
readers don’t return their books to the bookstore.


Why should publishers be the only
accountable entities in the book-business food chain? We make plenty of
mistakes, but we’ve stopped owning everyone else’s too.


P. McElhone

Publications Inc.



The Ten Percent Solutions


First, I would put itching powder
in the chairs of all Barnes & Noble College Bookstore Division accounting
people. So far, they have refused to honor my 10 percent restocking fee.


Second, I’d suggest that
bookstores consider selling those overstocks to their customers at 10 percent
off list price rather than paying me the 10 percent restocking fee. I’d be far
more inclined to offer them selling incentives (bookmarks, shelf-talkers) if
they dealt with those extra books themselves.


C. Senn

Central Communications


Make It Market Price


Actually you don’t need magical
powers to abolish returns. It could easily be done with a change in trade
agreements. It is a basic law of economics that there is a price that matches a
given supply with a given demand. That’s the market price. This is true for any
good or service, including books. Returns are the result of an inflexible high
price, a price somewhat higher than the market price at a particular time. If
bookstores were allowed to pay an amount based on the final sale price—reduced
as necessary to find market price—rather than an amount based on cover
price, then there would be no need for returns.






Set Several Limits

There should be some balance
between allowing full return privileges and eliminating returns completely.
Perhaps a good system might limit returns in some way (<span
percent of
returns on the first order, y percent returns on the first reorder, etc., etc.), so
that a publisher would never have to worry about receiving huge returns and
booksellers could utilize a moderate ordering policy, instead of worrying about
getting stuck with too many copies of a title, while still feeling comfortable
trying out new titles from independents.



Lamp Press



Rules for Returns


Abolishing returns is not the
answer. Setting parameters is the answer.


My obedient genie would not permit
returns of more books than the store ordered. My genie would not accept <span
from a source that had not bought copies. My genie would not accept returned
books that are missing their jackets, have store stickers on them, or are so
badly damaged that they will not be acceptable to another buyer. My genie would
not accept returns that are stamped “Advance Reading Copy—Not for
resale.” My genie would make six months from date of ordering the time limit
for returns.


Also (let’s face it), if I had
that magic genie, I’d print a million copies of each book I published and they
would all be sold. No one would return even a single copy.






Other Evils to Abolish


If I truly had magical powers, I
might prefer to abolish the crippling inventory tax that is based on a book’s
retail price. That would help publishers both large and small. Or I might
abolish the stigma that has attached itself to a perfectly good technology
called “print on demand” publishing. Lots of small publishers use this
technology, and most of us are in no way connected to vanity-press publishing.
If I could wave a magic wand, I’d insert that fact into the mind of every
reader, writer, and member of the publishing industry.






How Direct Sales Help

We are already making a concerted,
across-the-board effort to market directly to those accounts that are willing
to buy direct from the publisher. Our return rate for these accounts (direct to
bookstore, direct to museum store, direct to gift shop, Amazon.com, and
B&N.com, and our own Internet sales) is less than 1 percent of all books
shipped. And our direct-to-reader/reader’s club sales—all at list
price—result in 0 percent returns, plus nice gift reorders and great PR.


In the case of the two largest
national wholesalers, our returns run 20 to 25 percent, and more than half the
returns are damaged beyond any possibility of resale (even with rejacketing the
hardcovers). And then, of course, three days after they return the mangled
books, they order more of the identical books. Duh.


Oh, yes—all our
direct-to-store accounts pay in 30 days promptly, and only two indie
bookseller/retailer accounts have gone under during the five years we’ve been
publishing. The two largest distributors take 45 to 55 percent discount and
then take five to six
to pay. It doesn’t take rocket science to figure out who
we really, really want to do business with.


For us, publishing is a
respectable business, not a masochistic fetish. Even though we are a small
press (sales of less than $1 million a year), we have already refused to do any
further business with one of the Big Five book chains, because they return so
many damaged books and pay so slowly.


If I’m going to waste time and
money, I’d rather do both with good French champagne (Tattinger, very cold,
thank you).


N. Côté




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