This content has been archived. It may no longer be relevant
From veteran publishing consultant Mike Shatzkin:
One thing the pandemic has done is to make everybody more aware of “supply chains”: the path by which a thing gets made and delivered to its ultimate user. Many of us heard many times that a ventilator is constructed of 150 parts that come from all over the world, hinting at the massive logistical challenges of ramping up supply. And we’ve learned about how hard it is to get the toilet paper or the milk intended for offices and institutions packaged and delivered to stores for consumers instead. Supply chains were not talked about much, but they’re important in ways that lots of people are suddenly becoming aware of.
I doubt it was called a supply chain for books when my father started working on it in the late 1940s, but he recognized early that managing inventory title-by-title was both the achilles heel and the biggest opportunity in the trade book publishing business. Each book was not as complicated as a ventilator, but publishers did dozens or hundreds, and now thousands, of different books a year. Unlike most businesses, book publishers created unique products over and over again. Particularly in the days before computers, managing all this detail was a major logistical challenge.
The way book supply for trade worked for years was that the publisher ordered copies manufactured by a printer in bulk for delivery to the publisher’s warehouse. Then the publisher shipped orders for that book, usually combined for shipment with other books from that publisher, to bookstores and libraries and the wholesalers that served them.
So unsold copies sat on the shelves at the publisher’s warehouse, at a number of wholesalers, and on the shelves and stockrooms of book retailers. The rhythm for most titles was to push out copies in advance of “publication date” (the day on which reviews would run and the publisher would start to promote to the public). Then, for most books, the cycle would end a few months later and unsold copies would be returned. A minority of the titles initially shipped sell well enough across enough retailers to become “active backlist”.
But, all along, the publisher would pay for and receive the books from the printer and hold them waiting for orders from their customers. Over time, particularly as big accounts like chains and big trade wholesalers evolved, certain shortcuts were developed by which books might get shipped in bulk directly to major accounts. The basic configuration, whereby publishers ordered from printers, took the books in, then shipped them out to customers who sometimes sent them back, was the way it worked almost all the time in the book publishing supply chain.
. . . .
Doing all this well was critical to every publisher’s commercial success. Manufacturing books is — perhaps aside from rent and salaries — a publisher’s single biggest cash outlay. Managing that inventory, the publisher wanted to make sure they had the books that were ordered from their customers on hand at the lowest cost to them but with almost none left over when demand slowed down or stopped.
Feedback from accounts — advance orders before publication and actual movement and reorders once the title is active — is what informs print quantity decisions. When a book has a reasonably steady rate of movement, or at least has established its appeal as enduring rather than fleeting, publishers have to decide how much supply to reprint at one time. Print more and you get a lower unit cost but you tie up capital for a longer time and take the risk that you’ll fail to sell them all. Print fewer and you save cash and reduce the risk of waste, but you add to the risk that you’ll be caught short at some point. Something will create a surge in demand and you won’t have the books.
What makes that happen? John McCain picking Sarah Palin to be his running mate was one example; the book on her was not particularly active and large quantities were not in stock anywhere. The suicide of TV personality and author Anthony Bourdain in 2017 was another. No publisher would ever have enough inventory to satisfy that kind of a spike in interest, but taking even a week or two to deliver a reprint would predictably cost a very large number of sales.
. . . .
[A]bout 25 years ago, Ingram Book Company started building Lightning, a print-on-demand capability that could produce a single copy of any book in its database in a production line. The original vision focused on books that might otherwise go out of print or which were in very low demand, so it was challenging for Ingram to allot the capital and the space to as many as might be ordered. Indeed, even a single copy or two might sit on the shelves forever, and the thousands of books in the long tail could make that a prohibitively expensive proposition.
There are some compelling aspects of this for publishers. Most author contracts allow a publisher to maintain control of the book as long as it is “in print”, which is defined as being able to fill orders for the book. So when a publisher decided that the rate of movement on a book was too slow to support a minimum printing, which is in the low thousands of copies, they might have to relinquish all future rights. Lightning immediately solved that problem.
. . . .
The first big hint of the new possibilities was the Sarah Palin example I cited above. Of course, this occurred in 2008. McCain picked her, there was sudden demand for the book and the publisher was out of stock. They loaded the title up on Lightning and Ingram moved 40,000 copies into the retail channels before the reprint could be delivered.
This and other less dramatic examples inspired John Ingram to start pushing the idea that titles should be loaded into Lightning, not only for “just-in-time” delivery, but also “just-in-case” some spike in interest created sudden demand that could only be capitalized on by Ingram’s unique ability to deliver a book tomorrow that isn’t yet manufactured today.
Even before the present Coronavirus craziness that has strangled all supply chains, examples of how this could be beneficial abounded. One dramatic example was Bourdain’s shocking suicide in 2017 while he already had a bestselling book, “Kitchen Confidential”, in the market. It happened that publisher Ecco Press had set this 2007 title up with Lightning years before and the POD capability was used to deliver about 30,000 copies to customers in the wake of his death. I asked somebody at Ingram how often he saw opportunities like this, where publishers could capture substantial sales that would otherwise be lost by having set up at Lightning. He told me, “every day”.
. . . .
[S]omebody at Ingram showed me a graph of their “print-to-order” business: the POD books for which they received orders today and will ship tomorrow. It was the same graph, where today’s level was many many times the highest point ever before. Publishers in large numbers were suddenly discovering that this much simpler supply chain was, in the circumstances, much more effective. They can send down the book file today and have Ingram start shipping whatever quantity they need to the stores, or Internet resellers, tomorrow. The differences in the unit costs of delivery look smaller and smaller when you see those units delivering sales that would otherwise have been lost forever. Suddenly, and without any warning, the virus caused book sales to shift from where publishers had positioned inventory (in stores and on their own warehouse shelves) to online vendors, most of whom are supplied by Ingram. Nothing like a sudden crisis where normal sales suddenly evaporate and all the inventory is in the wrong places to encourage publishers to try the Lightning alternative which still worked!
. . . .
[I]t is very likely that when “normalcy” returns, it will be a “new normal”. Publishers are seeing for themselves that the higher unit costs may be real, but so is the reduction of waste (no returns), the more efficient use of cash (because books aren’t printed for future use), and the instant capture of perishable sales. The new Ingram-Lightning supply chain will undoubtedly be used in ways six months from now that were never considered six months ago.
Link to the rest at Mike Shatzkin – The Idea Logical Company
PG suspects that if book publishers performed a truly sophisticated analysis of all the costs including salary and benefits of staff associated with:
- shipping to a warehouse,
- order fulfillment,
- shipping orders from the warehouse to store,
- shipping and restocking
- costs of returns,
- crediting and paying bookstores for returns,
- bookstore and bookchain bankruptcies and
- dealing with stock involved in the bankruptcies,
- etc., etc., etc.,
Publishers might conclude that not only is having Ingram do all that is cheaper, but taking those tasks out of the publisher’s hands would make for:
- a simpler and smaller organization to manage and
- allow everyone to focus on acquiring great titles then
- doing sophisticated marketing to sell more copies of them.