Competing for the Source 2

Occasionally you will jump on a list, hoping to be among the first to order and, therefore, be assured a good fill rate, only to receive, when the shipment finally arrives, a fraction of what you ordered. Or you will watch my lists and discover that between one week's list and the next, 75% of the inventory of one wholesaler disappeared.

One reason this happens is your competition shops the warehouses. Usually the effect is not so obvious, but if one warehouse is visited by two or 3 large customers in a 2 or 3 week period, it can play havoc with orders and inventory. About 4 years ago I was present when one customer made a deal with the wholesaler to take virtually all of their inventory. This was one case where the haggling was hugely successful for both parties. That wholesaler's list did not recover for six months. Most orders placed at the time had to be canceled.

For most buyers, warehouse visits are out of the question unless they have a wholesaler within a day's drive or if there is a trade show the buyer attends which is located near a warehouse. Still, if you ever get the chance, take it. You will be taken more seriously by the wholesaler, find wonderful surprises everywhere you look, and get a feel for how the supplier treats their inventory. It also does not hurt to get a better understanding of what it takes to do that business, a daunting challenge that few bookstore or internet buyers appreciate. Maybe most important, use the opportunity to get to know the financial manager and talk about terms and what they need from you to improve them. This can make a big difference down the road.

(Shameless pitch time: Please let me set up a warehouse visit for you with one of my lines. I can figure the best times to visit and tell you if someone you're thinking of visiting is running lean at the moment. A big part of a successful warehouse visit is not to come in too close to a large buyer's visit or after a major sales push.)

Another reason you might be missing titles is that there are those among your competition who really do jump on the lists. I have customers who buy regularly, broadly, and order within hours of my sending the lists, even so far as sending me an email within minutes saying, "I see you have such and such by so and so, please put in an order for me for 50 copies, I will get the rest of my order to you later today." And I might receive this email at 10:00pm on a Saturday. Yes, we're nuts, that’s why we're in books.

So, no need to be extreme, but do pay attention, and think about visiting a remainder wholesaler's warehouse or two.  I'll tell them you're on your way.

Competing for the Source 1

When I got my start in bargain books in the early 80s it was common practice among buyers, especially the bigger buyers, to always bargain with remainder wholesalers. The most common method of operation was to accept a certain number of titles at the asking price, and bargain for the rest. Some buyers would haggle for every single book. Now the only ones insisting on "a price" are the chains. Have you looked at a chain bargain section lately? How's that working for them?

Gradually, over the years, the smart buyers discovered that they would get nearly everything they accepted at asking price, and very little to none of what they bargained for. As the wholesalers expanded and developed their customer base, they found that the books most bargained for by the bigger buyers were the very titles they could almost be sure of selling out at their asking price if they waited a little for the orders to come in. This realization reversed the order in which lists were sent out and accounts were called on. In the early days, the largest accounts with the biggest budgets were called on first, as they would spend the most per visit. But as the wholesalers' cost per book increased, it became clear that the larger accounts were not a place to make profits. The big hagglers became the dumping ground for the books that could not be sold at asking price, or where the titles were on hand in such scary quantities that something had to be done to make them go away.

Now we live in a market where the biggest buyers, other than the chain buyers, never look at the price, beyond verifying that they are not silly high, and only focus on what they need for their customers. The smaller bargainers still meet with some success, but seldom receive a full order. I had one last week ask why they did not get the beautiful pop-up for which they offered $1 less than asking price. It all went to the folks paying the price, and some of them did not get any due to how fast it sold. I even had an account offer to pay more for a certain line as they were continually being beaten to the punch by their competition. This offer was turned down, as it should be.

I'm not saying there are not occasions where you should try making an offer. One example is if you have a local author, maybe not a big seller on the national market, whose title shows up on one of my lists in relatively big numbers. Chances are, if you make a reasonable offer, you can get the price down for a chunky quantity. But if you have been accustomed, over the years, to getting a discount or special net prices, you have become used to very low fill rates and generally low-sales titles coming through. Maybe it's time to recalibrate your buying strategy.

The (Un)Importance of Price

We tend to think of price as the defining characteristic of bargain books and remainders. If you're an experienced buyer, you probably have a built in formula for what sells at what price and what cost it takes to get there, including factors such as percentage of list price, weight, heft, look and feel. An ex-bestseller is known among remainder buyers as a hard sell if the cost is over 15% of list price (meaning you're probably selling it at a 65% discount or cheaper). Wonderful coffee table books, cookbooks, course adopted classics, endlessly favored children's books, and scientific-technical can take a higher cost if you have the customers for them. Impulse buys tend to be lower cost and price. Rules? 25% is the limit. Only large print. Never large print. No, there are no rules here, but you know it when you see it, especially if you've been doing this for a while.

Yet… Most buyers will pay more for a book which has a unique combination of qualities that defines it as exactly what fits in a particular way in their store or on their site. They have not seen it anywhere else, or around much. Or they buy it whenever they see it, with any wholesaler. It was never a great seller when it was front list, but sales have gradually picked up over the years, and now, at 60% off on the back table, near the coffee bar, you can't keep it in stock. You have a reading group that always prefers everything in trade paper, and here it is, finally, in trade paper at a bargain price.

If you are a customer of mine you have probably noticed that many of my lists are effusively highlighted with what I call "sellers," some are not. These are titles and authors which my customers buy. I don't go with what I think should sell, just what my customers buy. I also don't highlight anything under a combined sale of 20 total within the last 90 days. Have you noticed how many titles are highlighted? If I have been working with a wholesaler for a while, it might start getting annoying as sales build to the point that every few lines are highlighted. But it's an education. You wouldn't have guessed what sells without paying attention to this stuff. All buyers, without exception, are humbled by their sales reports. Nobody can predict what their customers will buy, outside their in-house bestsellers lists. One year, many years ago, there was a run on dressage titles. Every bargain book on dressage remainder guys could find would magically sell, at costs up to 25%; retailers selling them for up to 40% off. Then they died. Now they muddle along between travel and literary criticism. 

Another interesting thing, for me, is that most of my customers will order off my lists at the asking cost. Very, very few orders are for high quantities at lowball offers. A few more will make offers on a few titles of a few points off the asking, while paying asking on everything else. I will write about the pros and cons of this approach in later posts, but the point is, again, these are widely different offers for very different titles, every time.

The bottom line is, if you know your customer, your source, and your timing, bargain books can work at low or relatively high costs.  Your first priority is to get what you and your customers need.

What are remainders, hurts, bargain books...?

Check out my glossary page here.

You know your customers are missing some great authors...

I wrote last week about using remainders/bargain books/overstocks (see my glossary page here) to differentiate you from your competition.

Somehow part of that and in its own place at the same time is the idea of using bargain books to create more interest in authors you think should sell better everywhere. I think it was T.C Boyle who said many years ago (or was it William Boyd?) that remainders made new readers for his new books.

A trade paperback novel at $3.95 - $5.95 is much more attractive to a customer wondering if an author is worth a try than is a full price book, even at a slight discount,  or an e-book. They become impulse buys at these prices. I think the same thing can happen with buyers such as you or your employees. You get hooked after a few good deals and start experimenting with authors you did not have a market for, bringing in more sales, customers, and profits along the way.

Some of my customers, including the largest, mix bargain, new, and used all on the same shelf space. Customers are driven to try authors this way. Seeing the new book next to the older title encourages bigger rings at the register. These are some of the most successful booksellers in the world, so they might have a thing or two right.

Backlist trade paper is a great source for me, as they get returned in big numbers after every fall and winter college semester begins. You can encourage your customers to discover or rediscover great classics they might not know they missed.

Think about this next time you post to your blog or create your next newsletter. Try a bargain page where you list your best bargain buys of the week or month, again trying to move your customers to authors you think should have better sales everywhere.

I think I'll work on that four word glossary now.

Rejection Selection

One area where remainders can have an impact is in differentiating you from your competition.

A funny thing sometimes happens during the course of my day. I receive orders from various customers for books which other customers have turned down, sometimes vocally and stridently. Some of my best sellers are only so because one or two customers buy them in significant numbers. There are times when one customer will order something frequently enough to entice them to start ordering it from the publisher. And it could be anything. It has even happened when one customer is blocks away from the other.

As an independent bookseller, you have a unique knowledge of your customer, your community, your ability to sell one book or category above another. You have been hearing this for years from the ABA and all the indie pride bloggers, but you might not realize how powerful this is until you really start looking at remainder lists, maybe not until you've been buying them for a while and have a section of your store or postings turning over regularly.

Then you walk into another store and look at their bargain selections, if they have one, and realize how yours, which sells well and excites your customers, is so different. This does not happen so much with new books. There will be some. But the nature of remainders and buying remainders usually creates a greater difference between bargain selections than front list. You have strong opinions about what can sell well in your store, but much stronger opinions about what can't, and you turn that on full force when you're looking at a remainder list. Oddly, the guy down the street has a very different idea of what makes up the muck at the bottom of the pond, as does the remainder buyer at Wal Mart, and the one at Barnes & Noble has a completely different idea again.

Now go add a table to your bargain section and get creative.