Distribution: the key to effective publishing

Distribution is perhaps the key to publishing. Without effective distribution, books do not get into bookshops or online databases. Most publishers rely on this ability in terms of contracting with authors. While independent booksellers are still a major part of the book market in Australia, booksellers recognise that large megamarket chains such as Myer, Target, Kmart and Big W have been able to negotiate big discounts with publishers on titles used as loss leaders. Some of the major bookselling chains demand similar discounts and operate their own marketing campaigns that require a publisher to subsidise the shelf and signage placement for books.
These discounting practices and extra marketing costs have an impact on sales. The success of Dan Brown’s books and the Harry Potter series has been bolstered by the fact that they are available in many locations at discounted prices. Australian author Bryce Courtenay has encouraged his publisher Pearson (Penguin) to offer his books in a wide variety of locations and sales of his books are very impressive.
Online booksellers are beginning to have an impact though. In the case of Amazon, this is a threat to the Australian industry as the sales take place overseas. Amazon also does not pay GST on sales of books online. Since they are also based off-shore, they are unlikely to offer Australian editions for sale, which is not good for Australian authors. Fortunately, the online operations of Dymocks and other Australian suppliers are begiining to match those of Amazon. Independent bookstores like Gleebooks in Sydney also offer very good online facilities.
For authors whose royalties are calculated on the Recommended Retail Price, this discounting should serve to increase their potential earning. However, many publishers are introducing clauses that change royalty rates where discounts in excess of a certain amount (50% is generally the base at present), and this may well have an impact on an author’s potential and real earnings.

Self–publishing
For self-publishers, it is advantageous to have a distribution agreement in place before incurring any publishing costs. This allows self-publishers to cost their books around the most crucial part of the publishing process. Self-publishers should seek distribution options. These may be difficult to come by.
Most distributors (these may be traditional publishers or firms that specialise in placing products in retail outlets) seek to acquire stock for distribution at 30-35% of the RRP. As an example, on a book with a RRP of $24.95 and purchase priced at 30% a distributor would pay a self-publisher $7.49. For the self-publisher to make the equivalent of a 10% royalty, the total cost price of the book to the self-publisher needs to be $4.99 or less ($7.49 minus royalty of $2.50). Total cost price includes editing, typesetting, printing and binding costs.
Distributors will offer the self-publisher's book to bookshops at somewhere between 45-60% of the retail price. Bookshops are unwilling to stock books by unknown authors and will seek the most favourable terms. These terms mean the distributor will make between $3.74 and $7.48 on the self-publisher's book, but in doing so the distributor will incur costs for storage, freight and returns. A distributor may also ask a self-published author to contribute to the costs of marketing. That may mean providing material for sales representatives, cover blurbs, printing of sales material etc. These costs should be outlined in any distribution agreement so that self-publishers are aware of what they are liable for.
Booksellers will sell the book at $24.95 (or perhaps at a discount) and gross somewhere between 40-55% of the retail price. Again, although booksellers are buying on sale or return terms, they will incur costs for rent, labour, stock control etc.
Self-publishing authors should investigate distribution options before they commit to any production process. So-called publishing enterprises that provide editing and book production services without the surety of books being promoted and distributed to bookshops are not offering a bona fide publishing service. These enterprises leave the crucial task of promotion and sale of the book to the self-publisher.
Self-publishing writers seeking to use the services of such enterprises should question them keenly on their success rate in distribution and request evidence that the enterprise has successfully served other self-publishers in delivering sales.