Distribution
Derby
Random Redux,
Freese Helms PGW: Client Distribution Biz Jostles and
Grows
FROM PUBLISHING
TRENDS (JULY 2003)
Don
Fehr, nearly a year into his tenure as Director
of Smithsonian Books, needed a distribution fix.
The august publishing concern (formerly Smithsonian
Institution Press) was gunning for trade sales growth
— aiming to reverse its mix of 80% academic and 20%
trade-bound titles — and outstripping the reach of fulfillment
partner Books International and a road-weary
sales force of independent reps. “We weren’t able to
grow at the pace we were being asked to grow by the
Smithsonian,” Fehr explains. The company, of course,
was a plum for those publishers vying for the profitable
business of distributing other publishers’ books. “Holtzbrinck,
Penguin, Harper, they were all interested,”
Fehr says, what with the blockbuster brand (studies
say close to 90% of Americans know the Smithsonian name).
The lucky winner? Norton. “Aside from the fact
that they gave me a great deal, they had representation
in the academic marketplace as well as the trade,” Fehr
says. Moreover, the Smithsonian’s nascent line of books
for young adults filled a niche Norton was eagerly eyeing.
Sweetening the deal, Fehr notes, Norton affiliates are
handled by a special marketing staff, and topping it
all off was the palpably excited Norton sales team when
they found the backlist bonanza in the bags of Fehr’s
former reps: “When they looked at our backlist, they
were like kids in a candy shop.” Advance print runs
will now hit as high as 20,000 copies, where they previously
had peaked at 6,000. Bottom line: “We’re looking at
possibly a 25% increase in sales this year,” says Fehr.
“It’s a good shot in the arm.”
‘The
Age of Distributors’
With
Random House back in the client distribution
biz — which it had all but abandoned in 1999 — and the
announcement last week that former Motorbooks
CEO Rich Freese would take the helm of Publishers
Group West, what you might call the “competitive
metabolism” of the book distribution business seems
to be getting booster shots all around. As PT’s
survey of selected distributors shows (see
chart), despite languishing overall book sales and
ever-jostling competition, many distributors are grabbing
double-digit sales growth — and they’re bullishly predicting
a profit-filled future. “The market for distribution
in the book business is so strong, and the arguments
for working with distributors are so compelling that
there’s enough room for everybody,” Freese tells PT,
as he shoves off for the Bay Area. “CDS is starting
to grow. Consortium is starting to grow. There
are so many publishers that need these services and
the economies of scale these services represent. This
is the age of distributors. I think it’s only going
to get stronger.”
Word on the street can be almost surreally cheery, with
so much growth one feels one’s stepped through some
book-world looking glass. “As of the end of last month
we’re up well over 25%,” reports Curt Matthews,
CEO of Independent Publishers Group, “and unless
the world goes to pieces we’re going to be up a bunch
for the year.” Matthews’ total number of clients is
stable at 300 — core larger publishers number about
50, and the largest client kicks in between $4 and $5
million in sales — but those clients are building business
by the minute. “A lot of them are just simply growing,”
he says. “They’re just plain publishing more books and
getting better at what they do.” A dozen in-house sales
and marketing staffers handle major accounts, augmented
by 23 commission reps, all of whom are profoundly grateful
for the growth of smaller houses. “It absolutely continues,”
Matthews says about the burgeoning small presses (see
PT, 4/03). “The little guys are taking market
share from the big guys. It’s a fact.”
Like IPG, National Book Network is looking to
boost revenues among its existing clients, says Miriam
Bass, VP Marketing and New Business Development,
while being “much more careful” about reeling in new
customers. The majority of NBN’s 85 active clients fall
into the $500,000 to $1.5 million range. Despite the
emphasis on internal growth, the distributor is delving
into the children’s market, taking on publishers such
as Child & Family Press. Meanwhile, NBN division
Biblio continues to barnstorm though the small
press world, now at 575 clients and counting. “I wouldn’t
be surprised if we ended up signing 150 publishers as
a result of BEA,” says Director of Sales and Marketing
Jen Linck, who adds that Davida Breier
has been brought on as Marketing Coordinator. Unfortunately,
Linck reports, some clients have been shocked to learn
that they’ve initially racked up negative sales with
Biblio, because booksellers sitting on unsold copies
have been only too happy to return them for an NBN credit.
Nonetheless, sales are on track to more than double
this year, with the 1,000th-client mark on the horizon.
Even in the face of downshifting chain bookseller orders,
business is swell, says Aaron Silverman, President
of SCB Distributors, which services an eclectic
mix of 60 clients from its Gardena, CA distribution
center. “We grew 25% last year,” he says. “More books
are being sold, even if the chains say their business
is anemic.” Borders’ category management initiative,
he notes, effectively boosted SCB’s sales at the chain;
fewer titles are being purchased, but quantities are
up on those that sell, like the Ultimate Unofficial
Guide to the Mysteries of Harry Potter (SCB has
shipped 53,000 copies). Though Silverman receives up
to 1,000 submissions every year, he lets only half a
dozen in the door. “We’ve always been very cautious
about taking on new publishers,” he explains. “This
is not a quick dollar.”
Strong internal growth may soon be followed by a notched-up
public profile at Midpoint Trade Books. “Our
biggest clients have been producing wonderful growth
in sales year in and year out,” says President Eric
Kampmann, whose revamped booth at BookExpo America
drew raves from clients, particularly after a lackluster
show last year. For Midpoint, where gross sales stand
at $12-$13 million, the successful BEA can be read as
a bid to join the big leagues. “We have been really
quiet about who we are and what we do,” Kampmann says,
“and that’s going to change very shortly. We think we’re
ready to be considered seriously along with PGW, IPG,
and NBN.” Midpoint aims to seamlessly integrate a number
of core services (what Kampmann calls “in-sourcing the
out-source,” or simulating distribution services as
if they were done by the publishers themselves) and
its stripped-down sales philosophy — selling chiefly
to national accounts — and “extremely competitive” pricing
are pitched as a sensible solution at a time when clients
rule the bargaining table. “The publishers are more
in the driver’s seat in terms of demanding and getting
better pricing and better service,” he says.
Price sensitivity is also a key concern for CDS, which
is now up to 35 clients, according to COO Stephen
Black. “Given the difficult economic times, people
are really looking at their operating costs. We are
extremely competitive in our pricing, and that’s given
us an opportunity to talk with people.” Black says sluggish
sales have been offset by the explosive “manga” and
“anime” segments. “We’re probably the largest provider
of graphic novels, and that business is going through
the roof,” he says. “Marvel and TokyoPop are
really leading the way.” TokyoPop has been growing at
least 200% each year for three years running, according
to Steve Kleckner, TokyoPop’s VP Sales and Licensing,
who adds that the growth may be slowing but it ain’t
over yet: “We think we’ll double again this year.”
Throwing another option into the ring is Baker &
Taylor, which opens next month with the first client
for its new Distribution Solutions Group,
according to VP John Phillips, who says he’s
spent the past 18 months developing a suite of “value-added”
services for clients — everything from printing a book
to freight management. The latter service is a typical
B&T forte, Phillips says. “We do over $30 million
a year with UPS. Since we do the volume, we’re
able to create a revenue channel for publishers within
the shipping and handling area.” A key selling point
is the program’s “à la carte menu” of services; sales
representation is available via independent rep groups,
but the option to use one’s own sales force is pitched
as a competitive plus. “If you go with NBN or PGW, you’re
really locked into their sales force,” Phillips says.
“With DSG, your inside sales team can handle 90% of
your business, and rep groups can cover the rest.” The
division targets clients with at least $750,000 in sales,
aiming to sign on six in the first year: “We’re looking
over the long term to make this a significant chunk
of Baker & Taylor’s income.” (They’ll be battling
Random House Distribution Services, where there’s capacity
for the taking — 1.8 million square feet of it — and
the gamut of supply-chain services. Still, Random’s
keeping the door open to offer sales as well. “Random
House sales support for a prospective client’s book
is an option which we’ll offer to the right fit among
prospective clients,” a spokesman says.)
For most publishers, the distribution truism is this:
if the right client complements what you’ve got in your
bag, it’s a no-brainer. “We’re always looking for new
client publishers,” says Lynne McAdoo, Director
of Client Publishers for Andrews McMeel Publishing,
specifically houses topping the $1 million mark in sales
who jive well with the Andrews McMeel forte: gift and
other special markets (the last catalog mailing went
out to 14,600 accounts). Book clients include Carlton
and Welcome, with a number of others on board
for calendar distribution. Fulfillment comes via Simon
& Schuster’s Bristol, PA distribution center.
“For our distribution clients, it’s the best of both
worlds,” McAdoo says. “They enjoy the one-on-one personal
relationship with Andrews McMeel, but then they also
enjoy the state-of-the-art distribution facility that
Simon & Schuster offers. They’re getting a lot of
bang for their buck.”
That’s certainly how S&S would put it, as they boost
their own distribution biz. “We’re very committed to
this business,” says spokesman Adam Rothberg.
“It’s a major source of income for us. We’re absolutely
on the lookout for new clients.” Simon & Schuster
handles full-service distribution for 10 clients including
National Geographic and Reader’s Digest,
while offering back-office services to the likes of
AMP and Millbrook. Next year S&S adds Hodder
Headline’s US operation, according to Larry Norton,
President of S&S’s Sales and Distribution Division.
“We do want to leverage our infrastructure and we do
have some capacity,” Norton says, cautioning that clients
must meet a minimum sales threshold. Distribution at
S&S logged double-digit growth last year, as it
did at Holtzbrinck, according to Patti Hughes,
VP Sales and Marketing for Distributed Publishers. Her
eight clients include Rizzoli and Rodale,
and Hughes oversees a staff of 10 supporting distribution
clients. “We focus actively on the distribution lines,”
Hughes says. “We will definitely look to grow the business,
selectively and intelligently.”
Even
in the museum world, players such as Yale University
Press are moving to beef up relationships with key
distribution clients and bring on new ones when they
find the right fit. “We’ve expanded the number of museums
we’re working with on an exclusive basis,” says Publishing
Director Tina C. Weiner, noting that Yale’s 14
such partners include the Metropolitan Museum of
Art and London’s National Gallery. While
Yale has previously worked with many museums on a single-book
basis, its growing roster of exclusive deals is a full-service
program. “We’re doing the whole package,” she says.
“Sales, marketing, fulfillment, publicity, and promotion.”
Illustrated book distributor D.A.P., meanwhile,
just added the Guggenheim to its list of 100
active clients (200 total), and recently had a year
of 70% growth (chalk it up to MoMA’s Matisse
Picasso, among other titles), says VP Trade Sales
Director Avery Lozada, who adds that average
growth over the past five years has been about 15%.
For an extremely selective take on distribution, there’s
Sourcebooks, which recently signed as its sole
client startup Reed Press. Publisher and CEO
Dominique Raccah explains point-blank: “We are
not in the distribution business, nor do we want to
be. The only time we look at distribution is when it
has real strategic impetus.” Hence Reed Press, whose
access to 120 Reed Business magazines fit well with
Sourcebooks’ reference business (i.e. the U.S. News
Ultimate College Directory), expanding Sourcebooks’
library and specialty retail business, while taking
Reed into the trade channel. Reed Press Publishing Director
Nicholas Weir-Williams notes that Sourcebooks’
special sales force has already been a boon: “Our first
book, Oscar Fashion, is being looked at by Costco
and Target and a whole range of catalogs that
most book sales forces don’t reach.”
©2003
Publishing Trends
