Book Return Economics

I tried my first video for self publishing today, company spokesman needs work. The subject is the economics of book returns, in response to a question from Jason of Hood Press. In this text version, I'll hit some of the specifics that I plan to leave out of the video.

I accept returns for my Lightning Source printed books, and I pay to have them returned to me instead of destroyed. The reason I accept returns is that no bricks-and-mortar bookstore will order books for stock unless the publisher accepts returns or it's a college bookstore where a professor has insisted a book be ordered for a classroom text. Jason specifically asked whether college bookstores are the worst return risk. I'd say yes and no.

Yes, because they prefer to order books to meet the maximum possible demand so they don't get yelled at if they run out. However, I offer college bookstores a higher discount to buy direct from me, pre-paid, on a non-returnable basis. Most college bookstores would rather do that than buy at or near the cover price through Ingram to get the returnability.

No, because college bookstores, at least individually, order a limited number of books. The largest order I've had from a single college bookstore (non-returnable, 35% discount) was 50 copies. Your biggest return risk is convincing a Barnes&Noble or a Borders to model two copies in every store, and then getting most of them back a couple months later, thousands of books. Or, if you are printing offset and using a distributor, your biggest risk is getting all of the books you shipped to the distributor back, on pallets.

When you accept returns at Lightning Source, they debit your account the profit you earned on each sale, plus the printing charge for each book returned. The profit on the sale was already paid to you, so that's not really a cost, but the printing charge is out of your pocket. That's if you have the book destroyed (and hopefully recycled). I pay an additional $2 per book to have them returned to me. Judging from the mint condition they come back in, I suspect they destroy returns as they come in and then print new copies once a quarter for publishers who pay to have the "returns" sent back. In my case, since I sell books direct as well as through distribution, when I pay to get the returns back, I'm really buying my own books for $2 more than they would otherwise cost me, or closer to $1.50 if you take the S&H and minor "for purpose" pricing differences into account.

I did get my biggest batch of returns ever in September, some 52 books, which knocked my September net down by $683.22. I don't know if the majority of the books came from bookstore special orders that never got picked up, from Barnes&Noble who was still stocking one of the titles last time I checked, or from one or more college bookstores who chose to order from Ingram rather than from me. You just don't get that kind of visibility when you deal through Ingram, which is part and parcel of the Lightning Source deal. Still, my year-to-date returns are barely 2.5% of books shipped, so it's just not worth getting excited over. The major trade publishers would kill for return numbers that low.


Hood Press said...

Morris, Thanks for taking the time out to give a well-explained answer to my question (and adding new technology--Youtube video). The thought of getting a thousand returns--with each unit costing over four bucks--is mind-boggling and could ruin a brand-new publisher like me.
Have you heard anywhere through the publishing grapevine whether the returns policies of distributors might limit bookstores from such dastardly practices?
Returns seem a very antiquated wasteful paradigm, considering the trend is shifting to new printing techniques like POD.

Jason, Hood Press

Morris Rosenthal said...


In order to get a thousand returns as a Lightning Source publisher, you'd have to convince a thousand bookstores to order the book for stock and not sell any. I don't know any self publishers who have had that problem.

When you hear large trade publishers complaining about returns, it's because they are following a push model. They print 50,000 or 100,000 of some book they have picked to be a hit, spend serious money pushing it into stores in quantity, and if it doesn't sell, they can get practically all of them back.

I don't consider returns dastardly, maybe you were joking there, I have a tin ear for humor when I'm online. It's part of a business model the publishers dreamed up back in the depression to get their wares onto store shelves. Without returns, bookstores couldn't stock a fraction as many books as they do now, and they would end up on the Hollywood system - big names and remakes. Returns allow sales reps to talk bookstores into stocking books from new, unknown authors, on odd subjects, and giving them a chance to sell.

Big distributor returns probably never make it onto bookstore shelves. Some distributors simply insist on a large quantity of the book, it doesn't mean they'll succeed in getting any stores to stock it, they may not even try. The whole idea in some cases may be to get the publisher to commit to such an expense that the publisher will be more aggressive marketing, making life easier for the distributor.

With POD, you don't have to accept returns, I do it in part out of courtesy to bookstores. I don't want them having to eat a book if a customers special orders and never shows up, and it's that acceptance of returns that has won me some shelf stocking.