What we are seeing today is actually the second renaissance of indie bookselling, not the first

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From veteran publishing consultant Mike Shatzkin:

Publishing and digital change consultant Bill Rosenblatt — always worth paying attention to — pointed his contacts last week to a podcast from NPR celebrating the current renaissance of independent bookstores. The history reported as part of what was really the celebration of very recent events is useful to ponder, even if it was sometimes a bit confused about the timing of mall stores and superstores and their impact on indies. But its memory wasn’t long enough to recall a critical development that is essential to understanding book retailing over the past half-century and what makes it possible to be a successful  retailer of books today. And it elides the fact that indie bookstores have risen before, several decades ago.

The story the NPR report didn’t tell contains the kernal of a totally underappreciated fact of the book business. The first serious harnessing of the power of modern computing to improve the book supply ecosystem was by Ingram in the early 1970s. Ingram’s innovations over the past two decades, in what could be called the Amazon era, are critical elements of the modern book business infrastructure. Lightning’s print-on-demand capability and “third party fulfillment”, by which Ingram can turn any entity with a web address into an Internet bookseller, are the industry’s counterbalance to Amazon’s growth.

. . . .

The central challenge of book retailing has always been to use the store’s limited shelf space and inventory investment dollars to have the best possible selection of books in the store. Before Ingram’s seminal innovation, publishers and retailers had a many-to-many supply chain with hundreds of publishers selling to thousands of stores. Wholesaling — stocking a warehouse that could provide books from many publishers — faced the same challenge. Wholesalers in those days were predominantly “local” — many of them had added a few trade books to their magazine and mass-market paperback selections.

. . . .

The trade books were worth more to the wholesaler, unit for unit. When a title took off, the wholesaler could order a big shipment from the publisher and it got orders for the book quickly from local accounts. That’s where the money in book wholesaling was in those days, pumping the bestsellers, not “backing up” a store’s need for an additional copy here or there across the range of possible titles.

The fact that wholesalers stocked very few titles didn’t stop stores from trying to order what they needed from them. The net result was unsatisfactory for everybody. Wholesalers couldn’t fill most of the orders they got. Stores found resupply of anything except bestsellers from the local wholesaler to be time-consuming and inefficient. And the net result was that it was very hard to for most stores to match inventory to demand.

And that was a big part of the reason that independent bookstores had trouble competing with the mall store chains as they built out. They couldn’t compete with a better or more responsive selection of books because the supply chain inefficiencies, which included the fact that there were hardly any in-store stock tracking mechanisms in those days before personal computers, made that an insuperable challenge.

And then Ingram changed everything.

. . . .

One day Hoffman entertained a former Bell & Howell colleague who showed him their new microfiche reader technology. The microfiche enabled the delivery of data on a piece of film that could be read by a projecting reader. Enormous amounts of data could be put delivered quickly and inexpensively by microfiche, if only the recipient had the “reader” machine to look at it. Hoffman and his team quickly grasped the potential benefits if a store placed its orders to Ingram with advance knowledge of what was in stock and what was not.

They hit on a formula. If the stores would pay the “rental” cost of having the reader (about $10 a month), then Ingram would deliver its complete inventory record to the stores weekly, including both the titles being stocked and the Ingram inventory as of when the microfiche was cut. The benefit to the store was that there was a high likelihood that their order would be filled (except for some titles whose stock had been depleted during the week.) That made Ingram their wholesaler of choice.

And to Ingram, the benefits were even greater than the increased volume of business. They no longer were processing reams of orders they couldn’t fill.

. . . .

It was this innovation by Ingram that actually spawned the first big uptick in the number of large and successful independent bookstores.

. . . .

For the next twenty years, until the mid-1990s, successful book retailing increasingly depended on delivering “selection”: larger and larger title counts in the stores. Big selections were the signal to the consumer that they would find what they wanted. With increasingly sophisticated communication with Ingram and B&T, stores could get most high-demand books in a day or two if they weren’t in stock. The mall stores and smaller independents suffered because their smaller selections were less of a magnet to the book shopper.

Then Amazon changed everything again, becoming the first store that carried every book and would tell you exactly how long it would take for you to get it. Of course, they did that leaning primarily on Ingram’s inventory and reliable service to deliver.

Link to the rest at The Shatzkin Files

8 thoughts on “What we are seeing today is actually the second renaissance of indie bookselling, not the first”

  1. A next iteration might be local book stores ordering wholesale via Amazon.

    They win because the closest Amazon warehouse probably has anything they need in stock. Amazon wins because at the cost of offering a bulk bookstore discount on goods, they firmly cement themselves even more as the central figure in the logistical flow, making it even more difficult for potential competitors.

    Now extend that to non-book merchandise…

    • It happens right now.

      Not regularly but every once in a while, when a book gets hot overnight, many Indie stores find than ordering from Amazon is faster than waiting on Ingram and often cheaper, too.

  2. Just note that nothing (that I know of) currently gives Amazon the right to do wholesale discounting of our self-published titles to bookstores. How could Amazon possibly maintain anything like the royalty rates they currently offer self-publishers while meeting the independent bookstores’ demands for wholesale discounts in the range of 40-50%?

    • Hmm, if you price your ebook at $10 you only get 35%.
      If Amazon then offered it at 50% off you’d get 70% of the $5 they collected. (Works for anything over the %9.99 70% limit.) Same thing in all the places that you can only get 35% …

    • Amazon doesn’t distribute to Independent bookstores. That is something CreateSpace does. When they buy from Amazon they are buying them at retail, just like any other consumer.

      And Independent bookstores do not typically get their books at 40-50% off list, much less the 55%-plus Costco and otbers get. That is precisely their beef with Amazon: they are lucky to get much more than the 30% that B&N typically offers consumers. So if Amazon or B&N is actively promoting a specific title, they can easily sell it for less than what it costs the Independent store to buy it from Ingram. That is precisely why they sued the BPHs and Borders and B&N in tbe 90’s.

      Those deep 40-50% discounts are based on sales volume. B&N, with hundreds of stores, moves hundreds of times more copies of any title than even the biggest, best run Independent. Amazon moves thousands of times more of some titles, especially new releases. And they do very few returns. Which is why they get to negotiate large discounts.

      The way for Indie titles to get into whatever Independent bookstores are willing to consider Indies is to list price the pbook high enough to allow a 35-40% margin *and* be willing to accept returns.

      That probably works best for established Indies, methinks. 🙂

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