[Marketing 101] – Beyond the Bookstores: Finding New Sales Channels

Over the last year, I’ve spent a lot of time researching the publishing industry and trying to figure out how I can make my own products successful once they launch. There’s a steep learning curve in the world of publishing, and it’s clear that most of the people who get into this game don’t stick around too long once their initial investment money wears off. That’s probably because, due to the Pareto Principle, 80% of all new products fail within three years. I had trouble believing this statistic when I first heard it, because it would seem to me that the release of a new product is often accompanied by months of planning and refinement. But looking practically at the world of business, it’s clear that many products are introduced at the wrong time, or in the wrong way, or at the wrong price, or to the wrong people, or any combination of the four. The real question is not whether or not a product makes it to market; it’s whether or not a product can remain in the market by making enough profit that it’s worth the manufacturer’s while.

We can talk about return on investment, and we can talk about profit margins, but what the business of publishing really boils down to is profitability — the money the publisher rakes in after everyone else involved in the process has gotten his or her cut. If a publisher is making a profit of 5% or less, the firm is going to have trouble staying in business, because inflation renders such a small return almost meaningless. No, a publisher needs to shoot for a higher return, to the tune of 10-15% to be considered healthy, and it needs to generate at least 15%-20% to be able to grow.

But those sorts of returns are extremely hard to find in the bookstore market. And that’s why I’ve become convinced that the most valuable type of marketing work a publisher can do is not sales or promotion. It’s in building a better plan for distribution.

In the pilot episode of the NBC comedy 30 Rock, GE Executive Jack Donaghy explains to Liz Lemon that he made himself successful by developing an oven with three kinds of heat provided by thermal technology, convection technology, and microwave oven technology. Combining these three components allows the oven to cook food five times faster than a conventional oven; “With three kinds of heat, you can cook a turkey in 22 minutes,” Donaghy says with a winning smile. This is the way he thinks, and he tries to apply the “three kinds of heat” metaphor later as he revamps the format of Liz Lemon’s live sketch show.

30 Rock is a brilliant comedy that does a great job of spoofing corporate thinking. But there’s some truth in sarcasm, and the reality of the matter is that the most successful products are often those that are able to be all things to all people — available in different places, for different uses, for different reasons. One of the most notable examples is Arm & Hammer Baking Soda, a simple product that has hundreds of practical uses around the home. It’s sold on its own, but it’s also sold as a tie-in with other products, like toothpastes, deodorants, household cleaners, and pet hair removers. As a result, it’s a brand that people trust, and it’s synonymous with the baking soda category.

In the world of publishing, things are a little more challenging. Publishers produce books. Books are sold at bookstores. It seems like a no-brainer. And if you’re like many publishers, you’re probably wondering how you can achieve a higher penetration of the bookstore market. You’re likely also trying to get better at playing the bookstore game so you can achieve better sales and have better relationships with retailers, wholesalers and distributors.

But what you may forget is that a large number of books aren’t sold in bookstores at all — they’re sold in gift shops, or at big box retailers, or at mall kiosks, or through book clubs, or one of a dozen other channels. The buyers for these channels don’t usually deal with big intermediaries like Ingram, NBN or Baker & Taylor; they deal with the publishers themselves, or with specialty vendors. They don’t order off the frontlist or the backlist; they order the products they need for the customers they serve. And they often buy product at a great discount (35-50%) on a nonreturnable basis.

Consider, too, that most publishers completely bypass the direct sales market — selling books directly to customers, often at near-retail prices. Many publishers express concerns about channel conflict with retailers, and they often complain about the sales infrastructure needed to engage in direct sales. But once again, direct sales are nonreturnable, with the added bonuses of immediate payment and actual potential customer feedback. And while direct sales might have been difficult to make in the past days of mail-order vouchers and call centers, they’re incredibly easy to achieve today with the internet.

What about special sales events, like release parties and conventions? What about selling books to primary, secondary, and adult education programs? What about offering e-books and digital editions for e-reading devices like the Wowio and the Kindle? What about selling your book about dogs at dog shows, or your book about the local baseball team at local baseball games?

There are tons of possibilities out there, and you’re only limited by your imagination and your ability to implement your ideas. But what’s important to understand is that whenever you are developing a product, you’ve got to think beyond the bookstore. You’ve got to have a strategy in place to help you find those new channels, and you’ve got to have the willpower to make yourself break into them.

I challenge myself to think of four distinct distribution channels whenever I first come up with a product idea. For example, I’m developing an educational line of children’s graphic novels about nature. I’ve identified my target market as parents of children aged 6-12, since children rarely buy their own books, and I’ve identified my secondary market as educators and librarians. I’m positioning the book as something that children will enjoy reading (like a comic book), but with content that will teach them about natural predators and prey.

My first sales channel is direct sales, because I think the idea is unique enough that parents will be interested in ordering the book directly. I can make these sales through personal appearances, through my own website, through Ebay or through Amazon.com’s marketplace. In all cases, I will offer the book at retail price with an official autograph so that I can attract sales from consumers who aren’t concerned about getting the lowest price.

My second channel is comic book stores, because I believe that I can sell a profitable number of books through this channel. Though I don’t expect orders to be particularly high, I like the payment terms of this channel and the nonreturnable policy. Any sales I can make to comic book stores are receivables I can count on. I believe this channel will generate steady sales and help me create a staple series to offer the vastly underserved children’s comic book market a cool graphic novel series that parents will be happy for their kids to buy.

My third channel is bookstores, because I know that places like Borders and Barnes & Noble are where many parents will first go to look for my book. I also want my book to be available from online retailers directly so that people who are concerned about low price or free shipping will be more likely to buy. While this will certainly be my least profitable channel, it will potentially be a high volume channel, offering me a great chance to build up the reputation of my product line.

My fourth channel is educational distribution, likely with Scholastic. This is a tough channel to break into, but it’s worthwhile, since Scholastic deals directly with my primary and secondary markets and will make my books available through order forms and through book fairs. Scholastic also has a variety of marketing tools that will help to increase my sales, such as reading quizzes and frequent buyer programs. I believe this will ultimately be my highest volume channel and offer me the greatest benefits, since it is so well targeted.

Notice that with this strategy, I’m not putting all my eggs in one basket, nor am I placing an unhealthy emphasis on a risky channel. I have a balance between returnable and nonreturnable sales, and I have a strategy to help me make the most of each.

And beyond that, there are many other channels I can consider:

A fifth channel could be gift shops for zoos, science museums, natural history museums, and national parks.
A sixth channel could be government grant programs and after school programs that are trying to get children to read. The comic book style of my books, mixed with its educational content, makes my product highly attractive to this channel.
A seventh channel could be libraries and bookmobiles that are hosting summer reading programs.
An eighth channel could be children’s book clubs.
A ninth channel could be through a partnership with the Boy Scouts and Girl Scouts of America.
A tenth channel could be through partnerships with organizations that are trying to teach children about wildlife conservation and appreciation.

And while we’re considering the “place” element of the marketing mix, let’s consider how adjusting the packaging of the “product” could open up even more channels:

By adapting the book into an animated flash cartoon, I could sell access to the animated book for a nominal fee on my website.
By printing that same cartoon on a DVD, I could sell the video on my website for home and classroom use.
By packaging the book with a plush animal or action figure set, I could focus on selling gift sets during the holiday season.
By having someone read the book and record it on a CD, I could package the book as a read-along.
By taking the artwork and removing the color layer, I could simplify the book down into a coloring book.

The possibilities are amazingly vast. But all of them require me to think creatively and to look at my product as more than just a book.

As I’ve done my research on the world of publishing, I’ve been struck at how infrequently publishers try to break out of the bookstore mold. Most publishers only seem to focus on first runs, reprint rights, licensing, and the occasional backlist order. It’s no wonder that so many products fail; they’re got to compete with so many other products that are exactly the same. The content may be different, but the packaging, the promotional strategy, the price, and the place are all identical.

And that brings me to my final point. Obviously, I’m approaching this topic as a brand new publisher, and I’m sure I’ll receive some criticism for not understanding how things work in the “real world.” I can deal with that, and I’m sure that there’s a certain amount of truth to it. But what I’ve come to realize in the last six years as I’ve watched many small publishers who I’ve worked with crash and burn is that the current bookstore system exists not because it’s good, or because it’s right; it exists because it works for the people at the top, and it changes at their pace because they’re the ones who control it.

Small publishers don’t fail because they try to compete with the big guys; they fail because they attempt to imitate the big guys. And they just can’t win, most of the time, because they don’t have the resources. The only way a small publisher can be assured of success is to outmaneuver the big guys, to go where they haven’t thought to go and to sell what they haven’t thought to offer.

The most valuable person you can find to develop your marketing plan is not the guy who suggests that you advertise more, or that you raise your price. It’s the guy who tells you how you can introduce your product in places you hadn’t thought to introduce it yet.

Writing Scraps

by Sean J. Jordan