Canada’s publishers face deluge of returns as bookstores re-open after eight weeks lockdown and a 63% drop in sales

From The New Publishing Standard:

Canada’s book publishing trade association Booknet is warning that as bookstores open their doors there will be even more books than usual being sent back unsold and unwanted.

While some bookstores have managed to maintain curbside sales, overall bricks & mortar sales are down about 63% and bookstores are sitting on case after case of unsold books that there is unlikely to be sufficient demand for as high street trade gradually resumes.

Canada’s The Star quotes Booknet Canada’s Noah Genner as saying:

If we just look at physical bookstores, so not online retailers, but mostly physical bookstores, they’re down almost 63 per cent year over year for the period. So 63 per cent in unit sales. That is hugely significant.

. . . .

The returns model, introduced last century to give bookstores flexibility to stock more books than they needed at no risk, is not just a Canadian problem but a model used around the world, and in normal circumstances the expectation of returns is factored into the production costs, so would not be a heavy drain on publisher profits.

But now publishers face not only the loss of sales for the lockdown duration (and however long it takes for some degree of normal trading to resume) but also an exceptional excess of unsold titles that will end up being pulped or more likely sold off to remaindered operations for re-sale.

Link to the rest at The New Publishing Standard

PG says that the book returns system is a twist on vendor financing, which, outside of the book business, typically happens when the retailer can’t qualify for conventional financing in order to pay for its purchases from a bank or other financial institution.

In the reality-based business world, vendor financing is often regarded as an indication that the customer isn’t in very good financial shape and doesn’t have enough working capital to operate its business. It can also be regarded as an indication that the vendor has a hard time selling its inventory unless it becomes what is, in effect, a bank or finance company for its customers.

Vendors often offer a price discount if the purchaser pays within X time period. This may be structured as follows: The Seller offers a 2% discount on an invoice due in 30 days if the buyer pays within the first 10 days of receiving the invoice. This usually doesn’t carry the same taint as vendor financing over a much longer period of time.

1 thought on “Canada’s publishers face deluge of returns as bookstores re-open after eight weeks lockdown and a 63% drop in sales”

  1. Hardly a shock.
    Among others, KKR predicted it.
    Now to wait for the authors’ teeth gnashing when they get their statement next year.

Comments are closed.