Will books reach the point of no return?

The aim is to improve the economics of book publishing, which have historically been hampered by, among other things, the need to take back unsold books from retailers at full price. “The idea is to take all the things that we think are wrong with this business and try to change them,” says Miller. “We will try things and, if they don’t work, we will try other things.”

Driving change
“In the ‘old days’ of book retail publishers were simply focused on sales-in,” says Caroline Mileham, books category manager for Borders & Books Etc. “This led to over-ordering and excessive returns.” Good news for printers, you might assume. Unfortunately, however, while optimistic sales projections did have a positive impact on order volume for book manufacturers, they also had the adverse effect of making buyers increasingly focused on unit price – a habit that is proving hard to break.

“Nobody’s thinking about where else they can make these savings. It’s always unit price,” says MPG Books sales director Andy Simpson. “You can make all the savings by not shifting the thing about and not taking returns but it takes someone with balls, one of the big boys, to stand up and say: actually this is how we’re doing our business from now on.”

Some estimates put the cost of a returned book at about 40-45p, purely for transport. On top of that are the production, pulping, administrative and warehousing costs, which collectively can be significantly higher than the original unit price. The publisher doesn’t know how much money it has made until it figures out how many returns they’ve got. Not surprisingly, therefore, publishers have already been making efforts to reduce returns. “It would be very rare these days to see 40% returns on any title,” says Mike Taylor,

managing director of CPI Group’s UK operation. “Publishers have significantly cut their first printings this decade to ensure this doesn’t happen.”

“Thirty to 40% sounds very toppy,” agrees Mileham. “From my experience at Borders, and also [previously] Waterstone’s, I’d consider returns levels of over 20% to be at the high end.”

Even though returns are an acknowledged problem for the publishing industry, both from an economical and an environmental standpoint, many believe a wholesale switch to firm sale would be nigh-on impossible to achieve. “Imagine trying to get a big supermarket to agree to dropping sale or return, which is so beneficial for them,” says Taylor. “That would not be an easy sell.”

Mileham argues: “There are already some instances where books are bought on a no-return basis, but this is limited and moving to a blanket no-returns business model would have a significant impact on the range and availability of titles. From a retailer’s perspective, the best way to manage returns is through good, and continually better, buying which, in turn, reduces the returns.”

Cashing in
Miller, however, remains optimistic. “I’m going to talk to booksellers and try to find a way to break out of this bind booksellers and publishers are in, with this incredibly high return rate,” he says.

If HarperCollins’ move proves a success and a turning point in the way in which books are published and bought, then there will likely be winners and losers. Simpson argues that making savings elsewhere will ease some of the price pressure on book manufacturers. Not only that, but that print-on-demand printers will be well placed to cash in, whereas printers that are geared up to produce massive run lengths on tank-like web presses could be in trouble.

However, Taylor doesn’t see it having that big an effect. “I believe any further reductions in waste caused by returns will over time be mitigated by continued growth in book demand. So I don’t really see this will hurt or benefit printers in reality.”

Whatever the outcome of HarperCollins’ venture, it will be one to watch with interest, for although Miller’s “experiment” is US-based, HarperCollins’ UK arm is weighing up the model. Director of communications Siobhan Kenny said: “We are looking for alternative publishing models to employ in the future and this is certainly one of them.”