No, bookstores don't get their books from Amazon

Where do bookstores get their inventory? That’s a big question for anyone thinking of starting a bookstore—the first question Stacy sees from anyone even dreaming about starting one. It’s also a question that many readers don’t know the answer to—sometimes we get customers who walk in, see our prices on the books, and assume that we’ve bought our books from Amazon and then jacked up the prices. 

But that’s not how any of this works! In this episode, we dive into where used and new bookstores get their books, how wholesale pricing works, and more.

Links:

For more information on the American Booksellers Association: https://www.bookweb.org

Transcript

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a weird misconception that I'm seeing nowadays is that Amazon runs all books and that all bookstores get their books from Amazon which ... it's a weird misconception and absolutely not true because Amazon gets their books like any other bookstore from the publishers and distributors however I can see why this might be confusing because a lot of people think that Amazon is the only bookstore left which is absolutely bonkers not true welcome to the Curious Cat Bookshop Podcast the podcast of the independent bookstore of Winsted Connecticut creating a literary community in Northwest Connecticut bringing our local authors to the world and the world to our community in Northwest Connecticut hi and welcome to the Curious Cat Bookshop Podcast I'm Stacy Whitman and I'm the owner and we are a local bookstore in Winsted, Connecticut, which is up in the northwest corner up by the Berkshires but we're also an online bookstore and we would always be happy to ship if you're not local so this is part of a series that we've started to do to demystify the whole book world from the writing world to the publishing world to the bookstore world and today I've been thinking a lot about the questions that new or want-to-be booksellers ask in various online groups one of the biggest questions that I see over and over again is where does a bookstore even get their books I've been working in publishing for more than 20 years and so it was a given to me where I would look because I knew that we worked with distributors I knew who the other publishers were but for somebody who hasn't been steeped in either the bookselling world or the publishing world this is a pretty obvious question because the book world is kind of opaque it's hard to figure out if you Google where does a bookstore get its books? the answers are kind of not always the most helpful the easiest answer is if you are a used bookstore you can take donations from your community you might even have a room full of books that you've decided you want to sell and so you might already have a bunch of used books that are starting the collection that you are going to be selling in your used bookstore or you might have a certain amount of money that you're going to start with and you might buy them from places like online auctions and estate sales and yard sales and the thrift store, whatever whether you're doing used or new, though there is a curation process that has to be involved when you're bringing in books into your bookstore because you have to understand your community and know what people want to buy and bring that into the store so that the people will follow and buy them from you like I said, we're also online so when I say you have to stock your bookstore with the books that people wanna buy I mean both in the store physically and online and what that means for somebody like me who is stocking my bookstore with new books that means I need to know where to buy new books a weird misconception that I'm seeing nowadays is that Amazon runs all books and that all bookstores get their books from Amazon which it's a weird misconception and absolutely not true because Amazon gets their books like any other bookstore from the publishers and distributors however I can see why this might be confusing because a lot of people think that Amazon is the only bookstore left which is absolutely bonkers not true so whether we're talking about independent bookstores which are growing in number again they dipped in the early 2000s if I remember the numbers right they went from about in the 5000s to about 2,000-something in the early 2000s but now we're approaching 4,000? I wanna say I know we're over 3,000 independent bookstores in the United States again but don't quote me on that because I can't seem to find an article that gives us the exact number and it's been a while since I've read it I'll see if I can find it and I'll update you if I find it but anyway, the bookstore landscape looks a lot like Amazon with 80% of the market selling to the consumer and we're working on that between bookshop.org and libro.FM (because you know Amazon owns audible) and all the independent bookstores who are pushing back against this I don't remember the exact number but I believe we're encroaching on it so that they might be down closer into the 70s of the book market sales to the consumer at this point and like I said, a lot of people think that all books come from Amazon but that's because Amazon has trained readers to think that the only way to get a book is from Amazon anyway that is a big misconception but it is based on some facts such as Amazon holding about 70 to 80% of the consumer market direct to consumers and that is something that we really need to work on because does a billionaire really need us to be buying books from him or maybe we should be thinking about buying from our local bookstores and that might be a Barnes and Noble, and yeah that's another corporation but if that's all you've got right now a Barnes and Noble, a Books-a-Million, or your local independent bookstore even if that local independent bookstore isn't so local and you buy from them online might be more ethical considerations to get your books from in the long run at any rate, no, bookstores don't get their books from Amazon. why? Number one, they're a competitor they are a bookseller not a book distributor somebody's gonna come and say in the the comments that they distribute books for self publishers--that's not the same thing and I still can't order your self-published books from Amazon at a wholesale price and this is the most important piece of why we get our books where we get them is because you have to be able to buy a book at a wholesale price, not at retail the reason why books are as "expensive" as they are in an independent bookstore is because that is the price of the book that is how much it costs to make that book a lot of people are like oh well I can get it for half the price on Amazon do you know why they can get it for half the price on Amazon? because Amazon has the bullying power to make publishers get paid less for the cost of making that book which of course means that the publishers are making less on that book which means that their editors and their authors and their entire staff overhead of the cost of making a book if they get less percentage of the cost of the book from the wholesale price that Amazon is paying that means that Amazon has devalued that book not that that book cost less to make so keep that in mind when I'm talking to you about pricing so the price of a book is printed on the book that $15.95 there is printed as an expectation that everyone along the chain is going to get a set percentage of the price of a book and it's done in the form of discounts when I am buying a book from either a wholesale distributor or from the publisher directly I am getting a wholesale discount off the price of that book that is printed on the book and so let's say this $15.95 book I bought at a 50% discount most publishers don't give you a 50% discount anymore but let's say I bought it at a 50% discount from the publisher that means that I pay the publisher half of $15.95 which let's just round it up to $16 let's say I pay the publisher $8 for this book and then I sell it at $15.95 that means that roughly now let's say we're thinking about this in terms of round numbers let's say that I sell the book for $16 50% of the price that I receive for the book and the publisher uses that money to pay the editors, the designers, the author usually gets somewhere from 10% to 15% of that price which some of you might be saying well that's very low but that is the the cost of a book the publisher is paying the sales team, the marketing team, the public relations team they're paying the production team that got the book to the printer, managing editorial, and everyone on staff that fills orders the operations team--you can't fill orders for books without having a team that's actually you know typing those orders in or receiving those orders and sending them out to the warehouse the price that we're paying pays for the warehousing of the book and the shipping of it to us to have it in our store so that is 50% of every book that we buy 60% sometimes 50 to 60% of every book that we buy to sell new goes to the publisher or the distributor now when we're talking about distributors that means that there is a middleman between the publisher and the distributor there is only one independent distributor in the United States right now that is major there are two or three minor ones that don't have quite as large a reach they might not have all the books that you're looking for but Ingram is the major distributor and they're in the middle so when we ask self publishers can you make sure that your book is on Ingram, that's why because it's easier for us to order from Ingram then it is from every single tiny publisher because a self publisher is a publisher on down the line at least with Ingram we can have returnable terms and relatively okay ish terms you might get somewhere in the neighborhood of a 40 or 45% discount depending on your relationship with Ingram how much you buy and what your contract looks like with them it really just depends and whether you're buying something early so you might get an extra discount all sorts of terms but the reason why I'm saying that we ask independent publishers to have a relationship with Ingram so we can order their book through Ingram is because that makes it easier for our ordering systems and billing systems and all that kind of stuff to be able to order it from Ingram but here is where the really frustrating part comes in for purchasing self published books through Ingram because the numbers don't really add up one part of it is that I see a lot of self-published authors who are not pricing their books correctly for the market and so a lot of them are like you know I only make a dollar through Ingram I only make 50 cents through Ingram and then if you return it then I'm losing money I completely understand and that is a big problem but they also are not choosing the right discount on Ingram because they think if they set it at a 40% discount that the bookstore gets that 40% discount and that is not actually true if you set it at a 40% discount the bookstore gets a 20% discount or something to that effect that there's a difference between the discount that you set it at and the discount that the bookstore receives and so you have to set it at the highest possible discount so that Ingram makes its money and that the bookstore has a decent margin to sell your book at and what that means when you're talking about a self published book that might have a short run or be print on demand, it will (*should!) cost more because the price of a book is based on the costs of the book and then you're adding layers on top to account for distribution and the selling of the book in a bookstore we talked about the $8 that goes to the publisher the other $8 if we're doing a straight 50-50 discount which as I said, sometimes it's 60% goes to the publisher sometimes it's 50% sometimes it's somewhere in between but let's for ease of numbers let's say we're talking about $16 total and eight goes to the publisher and eight goes to the bookstore how does the the bookstore use that $8? well they're using it to pay for rent every book in a bookstore basically has to pay the equivalent of its own rent on that shelf it needs to be worth it to the bookstore for that book to be spending any amount of time on that shelf and turning over itself in sales and so they'll be paying rent they'll be paying utilities they'll be paying their employees they'll be paying for marketing and whatever systems that they're using like a point of sale system or an inventory system there are all sorts of costs associated with that and when you really look at the numbers for a really successful bookstore the margins are super thin the owners usually come away in a profitable bookstore the owners usually come away with less than 5% of a profit so let's say you're like like I've said before in a previous episode let's say that you are Kathleen Kelly and Joe Fox says to you I think that you sell $300,000 worth of books in a year that means that if she's super profitable Kathleen Kelly in 1998 in New York City was making $15,000 a year she had to have had family money to be able to continue running that bookstore in New York City even before Joe Fox shut her down so there's Ingram and there's Bookazine there are a couple other smaller distributors I believe but I've never worked with them and then many of the Big Five publishers actually distribute books for smaller publishers that are independent of those Big Five so like Chronicle is distributed by Hachette Abrams is distributed by Hachette it might be part of Hachette now things keep changing, so you have to keep an eye on all the different mergers and everything to really understand whether they're being distributed by or now part of the larger publisher but then PRH distributes Charlesbridge and Candlewick and a whole bunch of others as well out of print clothing is distributed by PRH so having a relationship with a big publisher gives you access to the distribution channels for a lot of smaller publishers too depending on what publisher you created a relationship with and then there are publishers that you might have opened a relationship with directly and like I said the Big Five they all have accounts that you can open and the publisher that I work for Lee and Low, you can open a direct account with them or you can get their books through Ingram you can open up accounts through a whole bunch of different publishers there's also Ingram Publisher Services so if you have an account with Ingram a separate part of Ingram is Ingram Publisher Services you have to order from them separately if you want to get the books from the warehouse that is the publisher services versus the book company/distributor and sometimes you get better terms when you're ordering from IPS because IPS is more of a direct distributor situation for many small publishers I don't really understand the difference between Ingram Publisher Services and Ingram Book Company when it comes to their relationship with the publishers but I do know that you can get slightly better terms with Ingram Publisher Services versus Ingram Book Company and so I try and save my orders for those publishers for all being on one order so they can come from that warehouse at any rate what this means for the bookstore is that you are opening accounts and either pre paying and that's usually when you're first starting out you're prepaying for your books with you know credit card or you know debit card or whatever directly with whoever you've made a relationship whether it's a distributor or a publisher and eventually you can get on what's called terms which means that you have a certain number of days to pay the amount due once the books have been delivered and that means that you can do seasonal ordering in June but your terms don't start until September October November when the books arrive you get the invoice with it and then the clock starts ticking for your 30 days that can be tough on bookkeeping to be quite honest it's really hard to create a system where you're like okay I'm getting an extra 3% for ordering early in this much amount but the books don't come and I'm ordering $1,000 of books here but $300 is gonna come due in October because the book comes out in September$300 of them are gonna come in November and the the amount won't be due until February it's a little bit complicated and I'm actually building with a couple of colleagues right now for myself, an internal system to be able to handle all of these different variables so that I can keep an eye on the budget more because you can have a budget and then realize that what you thought was coming due in September or October is actually due in January and January is the worst month for all the bills to come due so that's just something that's tangential to our topic today but it is hard so, how do you know which bigger publisher is distributing which company or how to get a relationship with a smaller company or do you just start with Ingram and then maybe open up all your accounts with the bigger publishers as you come now, this is a really important thing to think about because you can get specials as a new bookstore with a lot of the bigger publishers and you can get what's called a ROSI I forget what that stands for it's ROSI--something something something inventory they help you curate your first inventory at Ingram, the ROSI, and that comes with special terms as well like a certain amount of discount I'm not sure cause I didn't use the ROSI myself I started as a pop up store so I didn't have a large inventory to start with and I slowly grew it over time as we grew the store and then went into the brick and mortar store so each of the publishers or distributors that you create a relationship with have different terms that you're going to agree to different ways of payment different-- some of them are still requesting checks, heaven forbid and sending paper invoices some of them are using a system called Batch which makes it so much easier because all of your invoices come in one spot and then you can know what you owe and take care of it all at once but how do you know how to even create a relationship with these [publishers] and that's where a membership with the American Booksellers Association and as I've said before this is a very US-centric set of information that I'm giving you because I don't know how it works in other countries and every bit of information that I'm giving you might be completely different in Australia or the UK or Canada or France or whatever so in the US though how do you know where to go for making these relationships and that's where becoming an a member of the American Booksellers Association is so valuable they've got so many valuable resources for booksellers that it's always well worth it especially because if you're an American Bookseller Association member as a store as a brick and mortar store you can be an affiliate with bookshop.org which always ends up paying for the membership in one seasonal payment and they do the payouts for bookshop.org twice a year and you can get orders through bookshop.org throughout the year that you don't even have to fulfill though there this is another topic so I'm not gonna get into the depths of this but an ABA membership and having an affiliate account on bookshop.org as part of that ABA membership they cancel each other out at least if not more and then on top of it ABA has all these resources including and this is why I'm telling you this today the American Booksellers Association Book Buyers Guide it's often out of date I wish that publishers kept them more up to date but that will give you email addresses that you can reach out to and say, I'm a new bookstore, I'd like to open an account can you get me in touch with the right person and I've never had that fail and once you start establishing those relationships with publishing houses they will either have in house sales reps who will be reaching out to you to introduce you to their catalog every season or if they're a smaller publishing house they might have an independent sales rep who then represents a whole bunch of different houses and can then introduce you to a bunch of places that you can create relationships with as needed I have several independent reps who reach out to me and say have you started your ordering for Abrams have you started your ordering for Sourcebooks have you started your ordering for whatever and then they will give you the whole list of who else they represent who might have something of interest to you depending on your needs in your store and those reps those sales reps whether they're in house or independent are really wonderful at knowing your community the things that work for you especially as you get going in your business and seeing the things that work for you they'll have a relationship with you and be able to suggest things that might also work for you in that store so there we go, myth dispelled no, bookstores do not get their books from Amazon But they do have relationships with everybody who publishes books and even a few distributors of books that are left the days are gone where there were multiple distributors in high competition and then you could you know always look for the best deal independent bookstores often kind of just get stuck with the terms they're offered and that's why Amazon has such a competitive advantage on pricing because they're big enough that they can get those discounts however, I just want to leave us with the thought that books are art it is a human to human interaction sometimes over years, decades, centuries and the 20 or 30 dollars that you might spend on a book for five hours, 10 hours, 20 or 30 hours of enjoyment with a movie playing in your head isn't that worth 20 or 30 dollars there are things that you might spend that kind of money on that give you a lot less of that kind of enjoyment so think about how many people went into the making of that book and like I said, we'll be talking about the whole process of making books and why each person in that process matters but I want you to think about how many books you read were touched by 10 or 20 people over the course of the making of that book to make it what it is think about that and why the price that is printed on the book might be the price that the publisher chose considering all those percentages we just talked about it would be very hard if not illegal in some places for bookstores to increase the price of a book just to survive and in some countries like Germany books have a fixed price and cannot be discounted in the United States there's no such law and I personally feel that that means that we have come to devalue the great amount of work that goes into bringing every single book to a reader yes there are millions of books published every year and you can't read all of them if I wish I could there are all sorts of arguments about the pricing of books and I get it because we are all strapped right now we are all going through very hard times and it can seem like a luxury to pay cover price for a book especially if you read a lot but I just ask you to think about that long line of people in the production of a book and the selling of a book in a bookstore that bring that book to you and make that book possible every person along the way is a member of a community that benefits from their work so rather than sending a billionaire to space yet again I'm just thinking that we need to be more deliberate about where we buy our books hopefully now that you see the whole distribution system at work for books and how complicated it can be I've demystified it a little bit for you and if you have any further questions about where this information can be found I've got links in the description below of course but you're welcome to ask further questions in the comments thanks for watching and/or listening we'll see you next time