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My Careen as a Bookseller (7) :: Plan A

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Elliott Bay Books

This is what a properly functioning just-in-time inventory system for books looks
like. Elliott Bay Books in Seat­tle, not so far away really.
Photo by sea turtle/Creative Commons.

My career as a bookseller really began in the late 1990s, when I dreamed up a scheme for getting New Star’s books into a few stores, a scheme that I called Plan A. My People’s Co-op connection was the key here. Plan A would never have happened, had store manager Ray Viaud not accommodated my proposal back in 1997. Plan A saved New Star Books when our distributor failed in 2002, and the rest of the Canadian publishing industry was deciding to go all-in with Indigo-Chapters.

To recap, the problem I was grappling with as New Star’s publisher was the shrinking space for our books — in spite of the supposedly burgeoning retail book trade. The People’s Co-op was typical, in that New Star’s sales of $1K to $2K per year there had fallen to less than $300. The standard narrative was that us small publishers had lost touch with the market. Our books were being ordered in 1’s and 2’s and 3’s instead of the former 5’s and 10’s, because that’s what the “market” was dictating. Don’t worry, our reps, and the bookstore buyers, reassured us; “just in time” inventory management techniques would see to it that books for which there was demand would be stocked.

But that promise was not kept. Most of the time, those 1’s and 2’s and 3’s would not be re-ordered when they sold, simply because they fell under the bookseller’s radar. A book that was initially ordered in quantities of less than 5 had already been judged as not likely to sell in the quantities required by the bookseller. The software tools they were increasingly reliant on were not trained to spot potential steady-sellers, they were looking for bestsellers. Worse, our books, which since the early 1990s were available through mainstream distributors, were also being returned prematurely to those distributors to free up the bookseller’s credit: the technique of “churning” that I described in this post.

There is a fundamental truth about book buyers that has been steadfastly ignored by the architects of this re-engineering of the book trade. It is the fact that, as survey after survey and study after study has shown, somewhere between two thirds and three quarters of all book purchases are what they call “impulse purchases”. That is, the vast majority of books are purchased by people who had no intention of buying that particular book that day. Maybe they had heard something about it, maybe the cover caught their eye, maybe the bookseller handsold it to them: in any case, the book was purchased only because of its presence in the bookstore.

Let me underline the importance of the “impulse purchase”. The most valuable bit of real estate in any retail establishment is the cash desk. Shopkeepers will clutter that space with displays of inexpensive, but high-margin, items that shoppers will pick up on impulse as they pay for their purchases. Retailers who demand pay for display (grocery stores, and the stores modelled on them: e.g., chain bookstores) often won’t rent this space out at all, but reserve it for themselves.

The concept of “just in time” inventory is based on the premise that a customer entering the bookstore has a shopping list, layered with the belief that they will ask the bookseller to special order a title they cannot find. This supposedly amounted to pretty much the same as having stocked the book all along. Meanwhile, the store’s valuable real estate could be devoted to the “big” books from the “big” publishers because, well, that’s what was going to be driving their sales, and their profitability, here in the New Economy.

In my head I heard what was being said, but in my guts I knew it was nuts. “Just in time” was never in time. Consumers would not be rewiring their behaviour to conform with some commerce professor’s self-serving theory about proper behaviour in a capitalist marketplace. Book buyers, never the most tractable of consumers, continued to behave the way they had always done. Sometimes they special-ordered a book, sure. (More and more, that “special order” was a book that would have been on the shelf under the old regime.) But most of the time, at least two times out of three anyway, they limited their purchases, including their unplanned purchases, to what was available in the store that day. And if what had been chosen for them didn’t appeal, they just left it. This “command economy” in books, which looks more like the way the Soviet Union did business than it resembles any theoretical model of free-market capitalism, is as probably the biggest driver of the returns bloom that has seen return rates rocketed from 10 to 15 percent on the eve of the giant chains, to the present-day 30 percent or more which is considered “normal” and workable by mainstream publishers.

What if, I thought, New Star was able to replenish that initial order for 1 or 2 of our books when they sold? So I asked our manager Ray at the store if I could run a little experiment. He was quite agreeable (an act of generosity I did not fully comprehend until I learned, years later, how difficult contemporary bookstore systems make this sort of behaviour). Starting in 1997, the People’s Co-op stopped ordering our books through whatever big Toronto-based distributor they were getting our books from, and allowed us to supply directly, monitor stock levels, and replenish as necessary.

The effect was instantaneous. Sales did not double, and they did not triple. They quadrupled. Not over an extended period of time, either: overnight. One year after we implemented Plan A, our sales at the People’s Co-op had gone from less than $300 in the previous year, right back up to $1,500 — the same level it had been at, before all this crazy rationalization gripped the trade.

If a book sold, we replaced it. If the replacement book sold, we replaced that. If a book sold steadily, we made sure that we were never out of that title: “just-in-time” inventory in actuality. In letting New Star try Plan A, Ray not only provided some much-needed vindication for my unorthodox views; he inadvertently saved the press. Because thanks to the People’s Co-op example I was able to point to, I was able to persuade fifteen or sixteen other booksellers over the next decade or so, to sign on with New Star’s Plan A. For a time around the collapse of our distributor, General Distribution Services, the cash flow from our Plan A stores made it possible for New Star to continue. At its peak, Plan A was bringing in around 20 percent of our sales to the independent sector — an astonishing figure; remember that Plan A was never more than 15 or 16 stores at any time. Over the ten years of its existence, Plan A sold probably 4,000 to 6,000 books that would otherwise not have been bought, because they would not have been available for purchase.

Plan A went too much against the grain of the book trade, however; and a few years ago I was obliged to wrap it up. I’ll delve into Plan A, and the reasons for its demise, in the next post in this series. But in the meantime, Plan A, and the People’s Co-op Bookstore, and the store’s manager, Ray Viaud, saved New Star Books.

Start from the beginning: My Careen as a Booksellers (1) :: Before It All Began

Continue reading My Careen as a Bookseller (8) ::  Culture Clash