Publishers can compliment revenues and drive cost-of-sales down with e-commerce

e-commerce solutions for book publishers

e-commerce solutions for book publishers

The internet is disrupting the core of book publishing and distribution. In 2008 at the beginning of the recession, I steered the specialist publisher David & Charles (now F&W Media International) out of the turbulence of the recession by focusing on two key areas of cost improvement: a) moving away from loss-making negative-option direct mail book-club operations and b) outsourcing to better value trade distribution. These were both critical to the business and the goal was to drive higher-margin publishing and e-commerce activity, which we achieved.

Prosperous new distribution territories

Making decisions about changes in distribution is complex but there has never been a more urgent time for book publishers to embrace e-commerce fulfilment. That’s because book audiences are shifting from being mass clusters to niche audiences connected online. The core of book publishing is no longer about large print runs and a few retailers of scale. Book publishing is abut low cost distribution to individuals’ homes.

As the market transitions to meet the needs of smaller, more fragmented reader groups, there is a growing demand for more effective and targeted e-commerce fulfillment to reach the many people who are ordering specialist books from their homes. Therefore, publishers urgently need to integrate their direct-to-consumer (DTC) operations within their overall commercial operations as they shift from predominantly B2B trade-focused businesses to increasingly consumer-focused B2C businesses.

Fertile opportunity for smaller specialist publishers

In printed books, it’s difficult to compete with Amazon on scale, pricing and just-in-time delivery but there is a opportunity for some specialist publishers to work with seasoned, lower scale, reliable e-commerce, white label and drop shipment partners. This model might not work for everyone but for niche & enthusiast  publishers focused on community, DTC can be a great revenue and margin driver.

The DTC opportunity is really most suited to special interest publishers bundling a variety of non-book merchandise with their books (paint brushes and easels with art books or needles and scissors with sewing books). These publishers need solutions which allow them to add value by leveraging their specialist product and customer knowledge.

Caution

If a publisher is unable to offer more than they already offer customers on Amazon, they should not bother to set up separate fulfilment because a) they will fail to ween customers off Amazon and b) they will add cost rather than increase margins on their business.

Gap induced demand

If there’s a market for bespoke fulfillment, it’s because there is a gap in the supply side. Current book distributors, besides Amazon and its competing online clutch of online book retail sites, focus their efforts on reaching a dwindling trade market and there’s little evidence amongst these distributors that they are adapting to the changing market, changing customer behaviour or that they are able to meet the needs of publishers wishing to fulfill the specialist needs of special interest communities. There are specialist publishers in the UK working with their usual trade distributors to fulfill DTC orders, but it would likely be more profitable for the publishers if UK customers ordered their books from Amazon rather than the publishers own e-commerce platform.

If I were a special interest publisher today

I’d be looking for a fulfillment partner for e-commerce who can offer the following:

1. Competitive Pricing

This can only come from economies of scale since its dependent on the overall volume a fulfillment house dispatches. Therefore, I’d seek a partner with a solid list of customers and a growing turnover. A profile not dissimilar to The Hut Group.

2. Digital Marketing

I’d look for a partner with an understanding of digital marketing and social media who can contribute to online and offline marketing and PR efforts to achieve the best pull and push marketing.

3. Customer relations management

I’d look for a distribution partner who could grow my list of customers emails and and promote/sell more of my books and merchandise to this group via targeted direct marketing.

4. Meta language

The ability to be discovered online is critical when you’re niche publisher with specialist titles. This is why successful online dicsoverability relies on having the best possible product descriptions in the form of carefully chosen and structured meta language. I’d look for a fulfillment partner with an acute understanding of this prerequisite. Although a publisher needs to develop this modern day digital marketing skill in-house, a worthwhile distribution partner needs to demonstrate an understanding of the skill.

5. Feedback from customers

The most valuable driver of success for any creative publishing business is continuous and reliable feedback from customers, so look for a distribution partner that is able to provide consistently good feedback via their customer service people who can tell you what is and isn’t working: what customers are/aren’t buying and more WHY? Without this feedback it’s very difficult for editorial and marketing teams to improve the offer for future and repeat customers.

6. Up-sell

It’s in the nature of special interest communities that they’ll need individual care so there’s a great opportunity around regular customer interaction. Look for a fulfillment partner whose staff are trained in the art and craft of effective up-selling. Increasing the average basket value is a key success driver.

7. e-books

This will be an important future need for all niche publishers and consideration of a fulfillment provider’s capacity to integrate digital content distribution and DRM will be key. It’s good to have one-stop solutions.

Finally, it’s a myth and a potential business calamity for a an small or medium-sized publisher to believe they ought to be running their own DTC fulfillment. Publishers are better off seeking solutions of mid-scale or they will take on an commercial activity that will drive their costs up not down.

If you feel your company is a pioneer in mid-scale e-commerce fulfillment, I’d be interested to hear your experiences. Please comment below or send me an email.

If you’re a publisher who’d like to discuss your e-commerce solution please contact me for an initial chat.

The above article originally appeared as a comment I posted to the Specialist Media Network discussion group on Linked In  as a response to AASM Fulfilment suggesting publishers could compliment their revenues with e-commerce.

One thought on “Publishers can compliment revenues and drive cost-of-sales down with e-commerce

  1. stephen Bateman

    The following responses were posted by readers on the TOC Linked In page http://linkd.in/dGQWQf

    Thatcher Sanford • At Penn State Press we dropped our UK distributor and went to using Lightning Source UK’s POD service to fill all orders over there–for everything but art books, which POD does not work well for, and in that case we do still have a distributor, Manchester University Press.

    Ishani Appaya • Many publishers now have the option of setting up their own branded and customized eCommerce enabled online portals/websites to sell eBooks directly to their readers rather than go through a distributor. This has many advantages –
    1. Serves as a new revenue stream, with publishers getting a higher share of the profit.
    2. The advantage of collecting valuable information about your readers enabling publishers to customize the offering to them.
    3. Offer other enhanced versions or supplementary material to the reader.
    4. Flexibility to experiment with different pricing models – enabling selling or renting part of content for a prescribed period of time etc.
    5. Enabling easier search options where readers can search for phrases within the book before buying.
    6. Enabling book previews
    7. Reaching out to wider geographies etc.

    Many large publishers such as Sesame Street, Marshall Cavendish, Elsevier and university presses such as MIT Press etc are already working on such business models

    Thatcher Sanford • You’re right, Ishani, but the cost of running your own direct e-commerce site is not trivial, and it will only make sense for larger publishers. What publishers of all sizes can benefit from, however, is the RightsLink software that the Copyright Clearance Center offers, which provides the functionality to sell at the article or chapter level and takes the IT burden off of the publisher while making it appear to the customers that they are dealing with the publisher through its own web site. (Disclosure: I serve on the CCC’s Board of Directors.)

    Ishani Appaya • Well I didn’t want to bring this up in this discussion, but my company runs a software as a service cloud infrastructure for publishers and empowers even small publishers to set up their own portals at minimum cost.

    Stephen Bateman • @ Ishani / Thatcher, thank you both for narrating your experiences back to the group and for sharing your insights on the subject of ecommerce book distribution – I’ve been thinking about distribution challenges for a UK digital startup and the considerations I’ve been having over digital distribution are multifarious

    * The first is that in the digital world, survival depends on building relationships directly with customers in a direct-to-consumer (DTC) model as well as sustaining and improving the existing B2B relations with the trade (online and offline)

    * the second realisation is that online and digitally mobile people expect to be able to experience media and entertainment in more flexible ways than between the two covers of a 300 page book, and so creating and distributing bundles of specially formatted/originated content in “any form” (e.g short and precise vs. long and general) will be essential for all publishers – we’re seeing this in the academic textbook market in the UK and US with Select E-Chapters, a platform that allow students and scholars to buy downloads of chapters from Mc Graw Hill. Likewise a new UK based eTextbook Aggregator startup, Reference Tree, announced the launch of its new content platform to all UK higher education last week – the eCommerce resource delivers electronic textbooks by the chapter, reflecting the changing dynamics of study and learning in today’s digital climate. As the cost of higher education courses escalates, the chapter-by-chapter approach enables students to spread the investment in course materials throughout their academic year.

    * aggregator platform like this does something Amazon does and it manages to spread the cost of distribution across several players which helps some of the smaller niche publishers like Learning Matters who would never have been able to undertake an initiative like this alone

    * But processing micropayments is expensive which is another challenge for publishers needing to earn a decent margin on microcontent

    * social platforms like FB might be the answer to this problem with more than 500 million members, FB could become the standard bearer in the micropayments market since PayPal is already a payment option for the emerging “FB Credits”.

    * Amazon customers know how good Amazon are at direct marketing – they are the ones to emulate when it comes to good direct marketing practices online. Conversely, iTunes is laborious to navigate and not an online eCommerce – the platform feels more like a product depository than a customer-friendly experience

    * my final observation is that online shopping for books (“e” or otherwise) is all about search and select rather than browse and discover and that wherever one shops online, the experience fails to match the wonderful experience of discovery ones gets in a real bookshop – ecommerce stores are great at category organisation, product data, cover, look inside, author info, cross selling, author intros, user reviews and praise for the title, reader recommendations and comments but they fail to engage the online shopper in the act of browsing that leads to unplanned discovery and additional sales – excellent

    * this is another big challenge online ecommerce distributors and fulfilment houses will need to crack so that more unplanned happy discoveries occur in a way that replicates a real life shopping experience – What might the answer to this challenge be – does anyone have any thoughts? This lovely little French film depicts the future role of the digital retailer, but is it probable or even possible?? http://youtu.be/aK75RSQBZYsh

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