Specialty Distributors Dominate Markets Publishers Can’t Touch
Last month’s profile of distributors into the traditional book market only revealed the tip of the sales iceberg, as publishers expand their special sales departments in hopes of reaching a broader (read non-bookstore) array of consumers.
Enter the specialty distributor.
In a retail landscape where books are accessories to cabinets, carburetors, cutlery, and Cabernet rather than destination items, distributors wheel and deal their way through a maze of conflicting policies to deliver their clients’ titles.
As books continue to crop up everywhere from Kroger to Bob’s Feed Barn, these distributors are coming to terms with retailers’ demands. While Borders introduced publishers to “category management lite,” in the non-traditional market, specialty distributors and their retail partners have been effectively practicing it for years. Many of these distributors carry ancillary non-book products and operate in an arena where consignment terms — and therefore returns — are not the norm. The real problem is often getting the retailers to pay attention to a segment of the business that doesn’t fit their traditional model. Here’s where specialty distributors, in all their glorious complexity, come to the rescue.
Who’s Who
Sterling, a frontrunner in the craft and how-to publishing arena, deals with specialty distributors in order to service certain mega-retailers like Home Depot, Lowe’s, Jo-Ann’s, and Bed, Bath & Beyond (all of which operate through one, or at most two, distributors for books and magazines). In an interview with PT, Ron Davis, VP Special Sales, quickly rattled off some of their distributors, forming a list of the major players in the field — HDA, Select, Time Media, CHP (Creative Homeowner Press), Soho, Wine Appreciation Guild. “The retailers are looking for service and ease, and don’t want 15-20 publishers attacking them,” Davis said. Because a single distributor for every chain predominates, each retailer has a distinct relationship with its distributing partner, in turn affecting the relationship between the publisher and the store. Davis said, “For example, with Michael’s, where we distribute through SLS, we have a direct relationship with the buyer. Select Media, however, works much more closely with A.C. Moore on product selection.”
There are as many models for doing business as there are chains — although the better the relationship between publisher and distributor, and distributor and chain, the better the sell through; and as most titles are sold non-returnable, and given the low margins, this is key. With Soho (the primary distributor of 100+ publishers into 900+ Jo-Ann’s fabric stores, and soon, Hancock stores too), there are no sales reps — the entire process is maintained by vendor managed inventory (VMI) software originally developed in conjunction with Mike Shatzkin of the Idea Logical Company. “We buy and merchandise based on consumer demand,” said Carrie Kilmer, Managing Director of Book and Quilt pattern distribution, “so there is no buyer or editor making the decisions about what should be bought or sold.”
In another model, HDA is the primary distributor of books and magazines into Lowe’s. “We started as a home plans publisher who developed house plan books that were distributed into lumber yards and home center retailers,” said Michael Kirschwehm, VP Sales and Marketing.
In 1997, HDA acquired National Plan Service which was distributing into independent stores like ACE Hardware and True Value, providing the first major push into expansion by helping them to forge relationships with publishers like Sunset and Meredith. The following year, HDA became Lowe’s overall book supplier after making a bid and beating out other publisher-distributors in a review. “From there we figured that if we can do it with house plans, we can do it with other books,” said Kirschwehm.
HDA now has a full team of national account managers, 12 regional sales managers, and a service merchandizing force of 425 people, who service stores, stock shelves, run promotions, handle returns and so on. Their reps spend about four hours a week improving displays and training employees. Not only the main supplier to Lowe’s, HDA is also Lowe’s category manager (for about 85% of the 1,070 Lowe’s stores. Creative Homeowner, who used to act as category manager and primary supplier to both Lowe’s and Home Depot, now handles about 15-18% of Lowe’s stores).
On the other side of the home improvement divide, Meredith is category manager for Home Depot, but not the main distributor (although many refer to it as such). Respecting each other’s domains, Meredith and HDA operate without considering themselves direct competitors. Rather, Kirschwehm listed Time Media Direct, Media Solutions and Select Media (who are the wholesalers from Home Depot, handling distribution, restock and general maintenance) as competitors.
When asked how a particular distributor comes to dominate a store, and whether or not publishers could sell directly, Kirschwehm gave Bed, Bath & Beyond as an example — a store in which HDA doesn’t have the “full, main-line program” but where they are the chosen wholesaler. “[With] the amount of time it takes to understand the supply chain and publishing industry,” he said, “for a retailer to take the time to buy one book from Chronicle, for example, it’s just not worth it. Our retail partners therefore push publishers to us, and in turn, we bring publishers to the retailers. We’re a facilitator.”
Still other distributors find that a large chunk of their business is comprised of catalog sales. Both Wine Appreciation Guild (WAG) and MBI (Motorbooks) — the largest specialty distributors into the wine and transportation markets, respectively — conduct a high percentage of sales through catalog. Mike Hejny, VP Sales and Marketing said, “There are companies that distribute, say, all things Corvette, for example. Mufflers, transmissions, key chains, calendars — but they don’t necessarily have a storefront.” Elliott Mackey of WAG (who noted that retail sales comprise less than 1% of their total revenue) said that even without a retail presence, WAG will frequently sell more copies of a wine book than “all of the other publishers’ outlets combined,” 5,000 to 10,000 copies not being unusual.
Booklegger, distributor of all things golf (including an array of non-book golf related items) once had about 40 commissioned reps, but now handles all of their sales through a telephone call center. “The industry has changed a lot, and we’ve found that we can handle things better internally,” President Robert Kraut said. “Retail is a tough business and books in these stores are impulse items, not destination products, so the retailers don’t have to know very much about them, which places an enormous emphasis on display and placement within the store.” Booklegger advises on book displays and sends a listing of top sellers to all of the stores. It is then the job of the telephone division to follow up, sell, restock, etc. Numerous specialty distributors noted that their highest sales come from cross-marketing books with related products.
“These retailers don’t think of books as a product line, it’s the lowest thing on the totem pole,” said HDA’s Kirschwehm. “We’re out trying to change that. We emphasize that it’s not about selling books, or selling magazines, it’s about inspiring, instructing and enriching consumers’ lives. People that have more information do more projects and buy more products and we try to emphasize that to our retail partners.”
The Mystery of Modell’s
In the world of distribution into sporting goods stores, Booklegger is a prominent presence in this notoriously difficult market. Although numerous publishers say flat out that sporting goods stores are impossible to reach (especially since the demise of Contemporary Specialty), golf books (thanks to Booklegger) have been widely distributed into stores like Gaylan, Copeland Sports, Sports Chalet, and Dick’s for up to 15 years in some cases.
Online, the selection of both partner stores, as well as Booklegger titles, is even greater. Thirty-four titles stocked by Booklegger can be found at Modell’s on-line, for example, even though Booklegger doesn’t distribute into Modell’s stores. In fact, in a curious turn of events, Booklegger doesn’t technically distribute into Modell’s on-line either. Confusing, as Booklegger titles are easily searchable and purchasable not only at Modell’s, but at other on-line, non-partner stores as well. Unsure exactly how they got there, Kraut and Director of Special Sales Libby Bonomolo guessed that they were placed there by an e-marketer that Booklegger uses: Global Sports (www.gis.com).
Further virtual-sports browsing makes it apparent that Booklegger wasn’t the only one with mysteriously distributed books. Other than golf, one of the most widely accessible categories in the on-line offerings of Dick’s and Modell’s is hunting — with all available titles from Creative Publishing International (formerly Cy de Cosse) and now owned by Quayside (formerly Rockport) listed. CPI’S Kevin Haas believes that sporting goods stores may be setting up their websites with information from Ingram. CPI also distributes some Quayside titles directly into some sporting goods stores including Modell’s, Gander Mountain, Bass Pro and Cabela’s.
Other virtually represented publishers like Rodale (whose South Beach Diet was found in nearly all on-line sports stores, along with one or two select titles) had no idea how the books got there, claiming repeatedly that they couldn’t, and had never been able to, get into the sporting goods market.
And the last word from special sales consultant Elaine Panagides, “The benefit of working with these specialty distributors is an unparalleled gift to publishers in selling their backlist.”
