Barnes n Noble is Practically Publishing Bookstores

I thought I'd go with the folksy Barnes ‘n Noble spelling in this post to accent the point that they aren't just another neighborhood bookstore. According to their last quarterly filing, they are now up to 684 of the big stores for a total of 17.1 million square feet. That's about 60% of a square mile worth of bookstore, or about 393 acres, a little over a half an acre per store. I haven't made any attempt to visit them all, but it seems to me that they are similar enough to have been run off on some giant bookstore printing press.

Barnes & Noble is also in the book publishing business, primarily through their Sterling Publishing subsidiary, which has passed 5,000 titles with several hundred new titles appearing every year. That's makes them a large trade publisher. Sterling specializes in "books for enthusiasts," which is another way of saying, books with predictable demand. That means the folks running Barnes & Noble are pretty smart. Their annual report makes clear that almost 50% of their books comes from their top five suppliers, probably a couple of the biggest trade publishers, plus Ingram and maybe another distributor or wholesaler, where the largest of the five suppliers provide about 14% of their books.

Since Barnes & Noble is the biggest retail bookstore chain, many self publishers believe this is the nut they have to crack. With one of the largest book warehousing operations in the world, Barnes & Noble says they maintain regular B2B ordering relationships with over 1,700 publishers, which covers a pretty good share of the commercially viable trade publishing universe. The vast majority of self published books purchased by Barnes & Noble are probably obtained through the 20 or so wholesalers and distributors they do business with. They've occasionally ordered a book direct through us, which we're happy to provide because they pay for shipping. But for the main part, they draw our titles directly from Lightning Source or Ingram.

What got me going on Barnes & Noble today and their success in replicating (publishing) a successful bookstore model all over the country was seeing a popular financial show covering them in the context of Amazon and Borders. While I follow Amazon extensively, I think I've been in a Borders just once in my life, and I've had customers report problems with ordering my self published titles through Borders. Barnes & Noble, much like Amazon, is focused on growth and plans to open another 30 to 40 stores this year. That's about a 5% growth rate in stores coming from the chain that's already #1.

If I were to go nuts and return to offset printing and drop print-on-demand, I would make Barnes & Noble stocking my primary goal. My preference would be to deal direct with their warehouse, whatever the requirements. Going through one of those 20 odd distributors means giving up 55% or 65% of the cover price and accepting returns that have been shipped so many times they probably aren't salable as new. Distributors also tend to manage their inventory in a manner most advantageous to them, which can result in extra shipping and handling expenses for you, not to stocking requirements you may not want to finance. The main downside to playing with the big boys, like Barnes & Noble or Amazon, is that you may find that your whole business is dependent on the continuation of the relationship. That's easy to say, but it's not just painful if it goes wrong, it's potentially deadly.