Thursday, January 23, 2014

Cooperative Adventures in Bookselling

According to Wikipedia, "A cooperative ("coop") or co-operative ("co-op") is an autonomous association of persons who voluntarily cooperate for their mutual, social, economic, and cultural benefit." From the American Heritage Dictionary: "Of, relating to, or formed as an enterprise or organization jointly owned or managed by those who use its facilities or services..."

There are co-ops among all sorts of businesses. Some agricultural, banking, food wholesale and retail co-ops are among the biggest businesses in the world. There are co-ops that we don't think of as co-ops: Land O'Lakes, Associated Press, Ocean Spray, Ace Hardware, Blue Diamond and others are co-ops that seem at first glance to be corporations like any other, but they are owned by their member-producers and exist to support their goals. Their boards of directors are made up of a cross section of the membership, varying according to the by-laws, but typically representing smaller businesses more heavily than larger ones. The farmer with 40 acres has the same power as the one with 40,000 acres, which is to say, one vote. Their CEOs and other leaders and administrators do not make the huge, unbalanced salaries their counterparts in publicly traded corporations do. Benefits are distributed evenly among the membership.

At various times in my career I've read up on business models booksellers have used, and during more than one of these projects, I found myself researching and drawn to the idea of cooperative businesses. Co-ops are old school. They've been around, in their current form, for over 150 years. They were strongest in the USA in the Upper Midwest for many of the early years. When Independent Booksellers Consortium was formed, David Schwartz, its strongest advocate, was the owner of Harry W. Schwartz Booksellers of Milwaukee, Wisconsin, one of the old centers of cooperative business ventures.

The remainder business, at one time, looked very much like a cooperative venture, even without the structure. Of course, without being a co-op, a group of businesses cannot be truly cooperative without walking a very fine legal line, but as groups of suppliers and customers working together for the common good, remainder wholesalers and their customers came close.

If a remainder wholesaler received a supply of a known hot title in a quantity that was respectable but not enough to satisfy the projected demand, they would list the title at a modest quantity, so that, for the first run, many customers could order "all" and get it. Before bidding many would call a large group of customers and ask how many they would take if the title were available. Some customers might front some of the money necessary, knowing or hoping that enough customers, all competing bookstores, would take enough of the title to make it a winner.

There was an old practice at trade shows and in other areas where wholesalers are close to each other, where customers are introduced to the competition. This is a reciprocal relationship, and has become less common as the largest wholesalers and customers have become more exclusive unto themselves, but it still happens all the time. Buyers, competing for the finite stocks of desired titles, working in close proximity to each other at trade shows, in showrooms and warehouses, will often work out between them who gets what and how many. This happens between buyers for different sized businesses, often without them knowing each other.

This behavior is not unique to the book business. To the contrary, it is much more prevalent, established, accepted, and successful outside the book industry. An independent bookstore of any stripe may be too complex and low margin to allow the owner to focus enough on the cooperative business model. IBC is still going strong, as is the much older Independent College Bookstore Association, but others have long since faded from view or disappeared. To be clear, there are plenty of co-op bookstores, whose employee-owners and customer-members benefit from the co-op business structure every day, but these are individual businesses, not groups of businesses.

Co-ops can be local, state-wide, regional, national, or international. The benefits are large, the downside is small. Why do independent booksellers not have a more robust cooperative culture? Are they actually too independent? Are margins too low? 

It's an old idea whose time has perhaps come again. Many of the new bookstores opening up over the last couple of years are the start-up ventures of younger, more technologically savvy, social media-literate, adventurous booksellers, who, just maybe, will take another look at this very viable model for working together to make a great thing better.

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