As BookExpo America rages on in NYC, the front page of the Wall Street Journal today features a story that puts a spotlight directly on the gross inefficiencies of the bookselling system as we know it and, without saying so directly, makes a terrific business case for: a) print-on-demand as a manufacturing technology, and b) selling books via the Internet.
The article, titled "Shelf Life: Quest for Best Seller Creates a Pileup of Returned Books" (subscription required) centers on the economic dependence of the bookselling industry on the singularly anachronistic practice of returns. Bookstores, unlike other retailers, expect to be able to return their unsold inventory. The publisher has to then either destroy the unsold books or sell them at an enormous discount.
The inefficiencies begin, of course, with publishers ordering initial print runs of titles based on projected sales, which is always a gamble. In addition to warehousing these books and physically distributing them to retailers, additional print runs for titles that take off have to be ordered well in advance of the actual demand--a second round of gambling that is at least as likely as the first to produce great heaps of unsold books. These unsold books once again have to be shuffled across the nation's highways from warehouse to warehouse where eventually they are, as often as not, destroyed. What a waste.
Two elements of a solution:
Print-on-demand (POD) as a manufacturing technology (not to be confused with self-publishing, which is a business model) addresses the inefficiencies inherent in large print runs for titles with uncertain markets. POD manufacturing technology has developed very recently to the point where producing books on demand generates products that are sufficiently cheap and of sufficiently good quality to compete with conventionally produced books (which are manufactured through a process known as offset printing).
Internet distribution--which is the only really effective means of distributing print on demand titles--offers an answer to the inefficiencies of shipping books from one place to another. It also offers added advantages such as unlimited shelf space (see Chris Anderson's original Long Tail essay) and the ability to steer consumers to a greater variety of titles.
Need I point out that Lulu offers both of these? Which is why you'll see Lulu trying to push its services out to publishers more in the coming year. [Although I'm somewhat dubious about pursuing this business because Lulu's most compelling value is as a creator-to-consumer marketplace. But we'll see.]
And what about bookstores? What about the precious refuge of readers everywhere, a refuge that has already endured an almost unbearable siege from corporations bent on turning all of America into an unbroken, homogenous chain of retailers? I loved bookstores growing up. I relied on the recommendations of booksellers as a teenage reader. I worked in a bookstore in college--that's where I first met the woman who eventually (long story) became my spouse. Without reservation, I love bookstores. But there's no doubt that they are wedded to an inefficient way of moving products.
Perhaps the salvation of the bricks & mortar store is actually in its smallness rather than its largeness. BusinessWeek carries a story in the most recent issue on the survival of the independent bookstore as a haven for material on niche topics, "Indie Bookstores' Survival Stories." I like that idea, but I'm not entirely sure I buy it. The Internet's greatest strength, after all, is the ability it offers people to create communities of interest as opposed to geography. Your book club, in other words, used to be composed of other people within driving distance of your house. But now it can consist of the two hundred other people in the world who share your fetish for Havanese dogs. It's hard for a retailer to compete with that.
On the other hand, people still need places to go--to browse and shop and check one another out, or what essayists refer to as the "third space." That need will never leave us, but who will be able to make money from it --besides Starbucks--is anyone's guess.