One of my favorite people of all time was General Douglas MacArthur. He was so much more than a general — he was also a great statesman who helped mold a defeated Japan into one of our greatest allies. He was also famous for promising “I shall return!” while leaving the Philippines. He then did so. A promise of returning was certainly a bold statement for a five-star general — but it is not something you want to hear from your books!
First, before you hit the panic button, as shown last month, we are entering an era when more books are sold online than are sold in physical stores. This is true of Sunbury Press too. Only about a third of our sales are through physical bookstores. Almost all of these sales are handled by Ingram, our largest distribution partner. As I said above, we are now in the red with them, having experienced more returns in recent months than sales.
Over 90% of the returns were fiction titles — many of them older. This means a number of you will be seeing red on your royalty reports where there has been black — or little reported for a while. This is just the nature of the business, but it is concerning that fiction is hit so hard.
In one instance (I will not name the title or author), nearly ALL of the books shipped to stores over the last two years have boomeranged back. Most of these were hardcovers, adding to the cost. This poor author thought he had sold a ton of books to stores — and he did for a while. These stores held these books for many months, and then sent them all back. Given that Sunbury Press was not holding funds over $50 on reserve, we took a hit by carrying negative royalty balances — due to returns AFTER royalties have been paid.
It is common practice for publishers to hold in reserve up to 30% of royalties to account for potential returns. We have never done this in the past, but we may be forced to do so for new fiction authors.
In the meantime, should you be planning a signing event, or you know of a store wanting to carry your titles (especially fiction), please check with us first to see if we have inventory on hand. Thanks!
So, what’s with the upturn in returns? First, let me say, as I have said in several prior issues of this newsletter, we both lose when books are returned. It costs more to process the reverse logistics than it does to process the initial shipment. There are additional fees charged by the distributor — because they receive back a pallet of books which then must be separated by title and publisher and then reorganized into shipments back to those publishers or their warehouses. To put it more simply, anything over a 20% return rate leads to a loss on the books and can eliminate most of your royalties.
We began noticing about five years ago a change in the book trade — especially at Barnes and Noble — not to hang onto titles as long as before. This was a response to the sudden closing of Borders, whose surprise demise led to the bankruptcy of several smaller presses. I’ve had Barnes and Noble on death watch for some time now — their financials have not been strong. And, it seems like the sales opportunities are shorter than ever. Now there are rumblings that B&N will be bought by someone or will merge to stay alive. Brick and mortar retail is suffering. The Oracle of Omaha, himself, Warren Buffet, divested himself of his Wal-Mart stock — a staple in his portfolio for decades. He believes traditional retail is fading fast.
So, what can we do? First, and foremost, if you are doing events at bookstores, encourage the managers with whom you are talking to do one of the following:
1) Order directly from Sunbury Press
2) Limit your order to what will likely sell — no more than 25 copies for book store signings.
We’ve only seen a couple of bookstore signings out of the hundreds we have participated in since 2010 where the sales were more than 25 copies. Typically sales are in the teens — sometimes less than 10! Stores like to order 50 copies so they can build a nice display — but they end up sending more than half of these back as soon as the show is over. Don’t let them order so much!
The last thing I will note — returns of fiction, at Sunbury Press, are coming in at 10x the rate of nonfiction returns. It may be that the industry will make fiction nonreturnable across the board – and we might be forced to do so sooner.