From The New Publishing Standard:
If it seemed, for a while, that online print sales could sustain publishers and booksellers through the pandemic crisis, it now looks increasingly like the UK will follow the path of Italy and Spain where print distribution is at a virtual standstill.
Here’s the thing: it may well be convenient and safe for consumers to sit at home and order their next print book without having to get off the sofa, but that order has to be processed at a warehouse, packed for shipping, and then it has to work its way through the delivery system to the customer’s door.
At every stage there needs to be someone risking infection with the coronavirus for that delivery to happen, and increasingly, where such actions are not yet barred, workers are reluctant to put themselves on the line.
In the UK the book wholesaler Gardners which also operates the indie bookstore website Hive, at first tried to carry on as the UK entered lockdown. No longer.
A statement on the Gardners website states:
It is with great sadness that we have taken the difficult decision to temporarily suspend taking new orders for physical product at Gardners due to the current Corona Virus Pandemic, however our digital services will be unaffected. We will be working hard to clear all outstanding orders over the coming days, so any existing orders should be processed.
We have continued over the past few weeks providing our usual high quality service to the Book and Entertainment trades around the world, however this is becoming increasingly more difficult as this crisis develops. The safety and well-being of our amazing workforce is the primary reason for making this decision.
We will be looking to see what key services we can turn back on as soon as possible, and will be updating all our customers and suppliers on regular basis as to the progress we are making.
Waterstones, for now, believes it can continue its warehouse operations, but admits on its website that things will be slower than usual
How long the UK government will allow loopholes like this to continue, always assuming the workers continue to turn out, is unclear, but it’s unlikely to be long.
With all the Waterstones stores closed for business across the country the warehousing operation is the company’s only income generator right now, and no question that will welcomed by consumers wanting more books during the lockdown.
But James Daunt must be regretting shutting down the Waterstones ebook site, which might otherwise now be a vital survival lifeline for the company.
While Gardners have suspended the warehouse operation their digital books sector continues unaffected.
Link to the rest at The New Publishing Standard
PG doesn’t claim any detailed knowledge of the printed book business in Britain, but, nevertheless, will opine that Mr. Daunt was an idiot to shut down Waterstones ebookstore. In the short term, it doesn’t cost much to keep an ecommerce site running once it’s set up and, with Waterstone’s retail business shut down, there are likely a lot of empty offices where any ecommerce support staff could be installed with ample distance between each person.
PG doubts that publishers are going to release many new books until at least a few weeks following major decline in the British portion of the virus pandemic so Daunt doesn’t need to pay people to set up new titles for sale. Just keep the link between Waterstone’s computers and those of its payment processors up and at least some money keeps coming in the door.
In a little longer view, with retail bookshops and physical libraries likely closed for the duration, some serious print readers are almost certain to point their iPads somewhere to buy an ebook to fill the reading gap.
Would Mr. Daunt prefer they buy an ebook from Waterstones or Amazon? If Waterstones ebookstore is closed, these customers will be quite likely to fall under the Zon’s spell. For a great many people, once they are exposed to the power, pricing and majesty of the Zon, they start chanting Bezos’ name over and over and are never seen in polite book society again.
Back to the more familiar territory of the US book business.
The new owner of Barnes & Noble, Elliott Management Corporation, is an investment management company. Its management committee (nine men, one woman who runs Human Resources) appears to be made up of typical finance guys, nary a book person or a retail mavin in the bunch.
Under the What We Do tab on Elliott’s website, the first entry is “Distressed Securities” which, in PG’s distressingly cynical opinion, fits Barnes & Noble to a T although he would not apply any variation of the adjective secure to the company.
“What,” you may ask, “are Distressed Securities?”
The firm’s distressed-securities trading strategies are rooted in complexity, either by itself or together with process, rather than business-value-driven situations. To create value in complex, dynamic situations, distressed securities are highly dependent on deep skill sets and lengthy, intensive hands-on efforts. Our primary focus is uncorrelated situations governed by process, complexity, negotiations, and factors unrelated to the forces impacting stocks and bonds generally.
So now you know.
PG notes no mention of anything that sounds like the business of selling books (although uncorrelated situations governed by process might be a subtle indirect reference).
In PG’s distressingly firm opinion, once the last Corona is chased back to hell (Per the CDC, Coronaviruses derive their name from the fact that under electron microscopic examination, each virion is surrounded by a “corona,” or halo. [No, PG doesn’t know what a virion is.]), Elliott will cast its uncorrelated eye on BN and see a bunch of commercial real estate leases, a lot of unsold inventory that has not become more valuable with the passage of time and a bunch of debts plus a few other random factors unrelated to forces impacting BN’s share price.
PG suspects one of the conclusions Elliott will reach is that BN is worth a lot less than the price they paid. Speaking technically, it has become a far more distressed security than it was when they bought it.
Bringing BN back to life will cost a lot of money and take more than a bit of time. You have over 600 stores full of a wide range of merchandise that may or may not be something customers may find interesting.
You probably can’t reopen a store without hiring several people. One or two employees can’t run a Barnes & Noble by themselves. Will all the employees Barnes & Noble fired be anxious to return to their low-wage jobs? Probably not unless they can’t find a better job.
One way of reducing the corporate obligations of Barnes & Noble is to return a whole lot of unsold books to their publishers for credit and then having the publishers send you a large number of new books for which payment is not required until you sell them.
Barnes & Noble probably can’t return the tchotchkes and trinkets in the stores for any sort of credit, assuming the manufacturers can even be located. Those will constitute distressed inventory, maybe another of Elliott’s specialties.
Assuming that Elliott is not willing to write off its investment and send everything that used to be BN to bankruptcy court, PG suspects it will be very choosy about which stores to resuscitate and which stores to let the mall owner take back. So, instead of 600+ bookstores, BN will consist of 200 or so bookstores located in upscale areas plus the honor of beind the defendant in a bunch of breach of contract lawsuits that Elliott will strive to settle for pennies on the dollar.
PG’s bottom line is that he doesn’t believe that the post-Corona Barnes & Noble will ever sell as many books as it did before anybody had heard of Wuhon.
A very large piece of the sales and distribution system relied upon by traditional publishers will be gone, gone, gone and it won’t be coming back. Print book sales won’t ever return to pre-Corona numbers.
The Zon will have to be careful to avoid antitrust charges for having an effective monopoly on the retail book trade, print and electronic.
Since predicting the future is not one of PG’s practice area, he could be dead wrong. His analysis and conclusions above are pretty much stream of consciousness and sometimes the stream gets pretty muddy without PG noticing.