Returns to Sender

Recovering From the Returns Crunch

Publishing has always been a chancy business; indeed, it has even been called the "worst business in the world to be in." But rarely has it been as undesirable as in recent months. The book industry writhes in well-publicized turmoil as Ken Auletta and other media worthies ask "Is Publishing Alive or Dead?" Wall Street, which loves the stability of educational publishing (captive audience, lots of federal and local support) but frowns nervously on the instable, "hit-driven" world of trade publishing, complains with incoherent crankiness of the need for "consolidation in the segment." And in June of this past year, Anthea Disney, CEO of Murdoch-owned HarperCollins, made news by slashing over 100 titles that were under contract.

Possibly no other business is as plagued by arcane, byzantine practices. One of those practices is the little-discussed practice of returns, now receiving attention as the bête noire of the industry. Returns reputedly were invented in the mid-Thirties by the publishing house of Simon and Schuster as a tactic to convince booksellers to place larger orders and to take risks on unknown mid-list titles. The idea was that any book that didn't sell could then be returned for a refund or for credit on the next order. And back when most general bookstores were small independent operations, and most publishers not much bigger than their patrons, the concept had the sweet civilized appeal of a gentleman's agreement.

But we live in an age of giants. Simon and Schuster has, like almost all the great publishing houses, been swallowed up by one of eight media conglomerates. This was not the tragedy that some thought; even as Simon and Schuster and other houses abandoned mid-list literary fiction to focus on bestsellers, numerous small and independent publishers, enabled by new publishing software, rushed in to fill the vacuum. And both small and large publishers salivated at the prospect of filling the thousands of feet of shelf space that would become available as superstore after colossal superstore went up, pushing most of the small general bookstores out of the way.

"It's an exciting time to be in publishing," enthuses Keri North, publicist at UT Press. "The industry is getting more and more complex." But even she admits that there have been difficulties. Since the advent of Book People and Barnes and Noble, she says, "We are placing more books, but we're also getting more returns." Everybody is: According to Paul Elitzik, publisher at Lake View Press, returns reached staggering heights in 1996, when anywhere from a quarter to a half of all sales were eaten up by the costs of freight and processing as well as by the refunds for the books themselves.

Returns hurt most severely the smaller or independent presses. A large, conglomerate-owned publisher such as Random House has financial backing to diffuse the impact of losses. But the independent presses have no such cushion to protect them. There are stories of distributors who return cases of books unopened, only to order the same books on the next order. And the smallest presses print mostly softcover books. Softcover books are the most prone to damage through handling. There's only so many times you can ship such a book back before it simply becomes unmarketable. With no product, last year some small presses found themselves unable even to pay their printers.

The rise of superstores shifted the economic balance of power. But returns have always been prone to abuses (a gentlemen's agreement being only as good as your average gentleman). A canny distributor or bookseller can easily work the system to his or her benefit, returning books and rolling the credit over to pay for the next order. If the books are sold through a distributor, sometimes the distributor will sell the returned books to a discount or secondhand chain rather than return the books to the publisher - thus forcing the publisher, who has placed the books in other stores at list price, to compete with its own discounted book.

Like many other publishers, UT Press offers a larger discount if booksellers purchase their orders on a non-returnable basis, "but most stores don't take it," North says. And it's easy to see why, after talking with Book People's frontlist buyer, Craig Axelrod. As frontlist buyer, Axelrod is responsible for stocking Book People's approximately 20,000 square feet with new books every spring and fall. Returns are a "safety," he says. "But it doesn't benefit us to buy books that have to be returned," he adds, "since in many cases we still have to pay freight and labor costs."

To avoid having to return books, Axelrod does everything but read tea leaves: With a previously unpublished author, he studies the catalogue to find out how large a print run is planned and how much money has been committed to publicize the book. This, he says, illustrates to him the depth of the publisher's belief in the book. For previously published authors, he considers how well the author's other works have sold at Book People. When he orders, he orders cautiously, and tries to keep the books on the shelves for nine months to a year. And even then there are still returns. He cites Kitty Kelley's book The Royals as an example. Expecting large sales after the death of Diana, Princess of Wales, Book People purchased 200 copies, "but only 47 of those sold." Over 100 books were returned to the publisher, Little, Brown, now a division in Warner Books, which is presently owned by cable, radio, magazine, and theme park conglomerate Time Warner.

UT Press' North says that, in the future, they will be reducing the size of their print runs, printing only as much as the market will immediately bear. "We'll do more reprints," she says. She points to the success of online bookselling, where a much more direct ratio of production to sales exists. This strategy of conservative printing is becoming more widespread as publishers battle to recover from the returns crunch, and it, too, promises further repercussions. As Book People's backlist buyer, Peggy Hailey is responsible for ordering reprints. She is already seeing at least one of those repercussions. "Sometimes, when I order a book I find that it's not available, because the publisher only printed a small number. I have to wait for new copies to be printed."

As publishers print fewer books at a time, fewer of which are falling into that troublesome mid-list category, and booksellers strain to avoid returning books by choosing very carefully what has the best chance of selling, what happens to the mid-list? What happens to literary fiction, essays, poetry? Small presses, who for the most part have taken over the hard-to-sell mid-list from the giants, and who do not have the financial strength that either university presses or the larger independents have, are feeling the crunch most painfully.

Bobby Byrd and the Byrd family own Cinco Puntos Press in El Paso, a small press whose average press run ranges from 1,500 to 5,000 copies. Last year Cinco Puntos made $47,000 off of all copies, hard and paperback, of a children's book titled Watch Out for Clever Women. Just last month, Byrd had to pay out $3,700 for one shipment's worth of returned books. Total returns for the year, on that one book, amounted to sixteen percent of the total sales. Typically, the figure is much higher for mid-list fiction and poetry. "They kill us," Byrd says. "Returns just absolutely kill us. We're a small operation, and all that money is allocated. I don't know what we're going to do."

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