The problem with book returns

According to Random House, the average sell-through of a book is 60%. That means that for every 10 books sold to retailers, 4 are returned to the publisher and destroyed. Dan Brown’s new book, The Lost Symbol, put 6.5 million copies into English-speaking retailers across the world. The industry standard states that 2.6 million copies will not be sold and destroyed. At approximately $2.50/per book and $.25 in shipping, that is $7.15 million dollars completely wasted in the book distribution channel. Not to mention 22.8 million lbs of carbon dioxide and approximately 18,000 trees. Industry-wide we are talking about $10 billion worth of wasted books and 30 million trees in the U.S. alone.

This wasteful business model is damaging to publishers, retailers and consumers alike. Low sell-throughs mean much higher waste, costly antiquated processes, and higher wholesale costs. Because publishers must anticipate book returns, the cost of the waste is built into the wholesale discount. Retailers, in turn, pass marginal discounts onto consumers in higher book costs. The only sector of the industry that can bypass this financial black h*** are online book sales from Print On Demand (POD) publishers.

POD allows publishers to operate without inventory or distributors and simply fulfill orders as they come in. This revolutionary method of publishing has taken fire in the independent book sector, but is often looked down upon by retail booksellers and larger publishing houses. POD has a history of poor quality and self-published authors, so therefore, retailers do not believe it to be a viable option for brick and mortar, although they are eager to participate online. Quite to the contrary, LSI and other POD printers have achieved excellence in quality in order to viably compete, yet the perception in retail remains.

The book industry cannot survive on its current model. Last year book sales were completely flat according to Book Industry Study Group (BISG), and after being accustomed to regular growth every year this was a sobering concept to deal with. After BookExpo American 2009, BISG’s primary piece of advice for book sellers was “process and business model change” and “innovation”. For all sectors to grow in 2010, something will have to change. Costly warehouses, distribution channels, and extremely wasteful return policies are costing the industry billions every year. Innovating into POD technologies, not just online, but in brick and mortar environments will mean 40% savings in production.

If print is to survive along with digital, and hopefully in concert with, than these archaic processes need to innovate.