Ooligan special markets presentation


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Ooligan special markets presentation

  1. 1. Bookselling Possibilities:Reaching Special Markets PORTLAND STATE UNIVERSITY OOLIGAN PRESS MARCH 1, 2012
  2. 2. Market Overview—  Many publishers and their sales managers use categories such as the following to evaluate their sales and marketing: ¡  Bookstores ¡  Other large book buying accounts – e.g. Amazon, Costco ¡  Library / school ¡  Catch-all “Special sales”—  “Customer class” is the most common metadata tag
  3. 3. Categories generally considered “Trade Bookselling”—  Bookstores—  Other large book buying accounts – e.g. Amazon, Costco—  Library / school—  Generally purchased returnable ¡  Libraries and schools purchase non-returnable when purchasing directly; but more often they buy through wholesalers, who are returnable accounts
  4. 4. Generally considered “Special Sales”—  Can be anything and everything else—  Generally purchased non-returnable (but at higher discounts)Without breaking it down further, thiscategory is hard to target, difficult to marketto, and tough to build revenue projectionsfrom.
  5. 5. Where potential book buyers shop…—  Look at the entire range— ¡  Why they shop where they shop ¡  What they expect to find there ¡  What would drive them to purchase your book there—  Publishers should review their sales strategies— ¡  Do they match where their customers will be shopping? ¡  Are there markets that will repay more effort?—  Smaller publishers who work within a niche can do much better in special markets than large general houses, when they understand their customer focus
  6. 6. Where Books Sell Percentofsales 2%$ 3%$ 12%$ Bookstores$ 7%$ 48%$ General$retail$$5%$ Specialty$retail$ Gi:$retail$ 23%$ Ins<tu<onal$ School$&$Library$ Direct$to$consumer$
  7. 7. A Note About Statistics—  Sources for this breakdown: Publishing for Profit, Thomas Woll; reports of the Book Industry Study Group; the PubWest Book Statistics (Huenefeld) reports; and my own twenty years of bookselling experience.—  This generalized statistical breakdown of bookselling is of the industry as a whole, not any single individual publisher; also, this is in flux, changing over time.—  This breakdown is of physical books and does not include digital editions
  8. 8. “Less than half of all books are sold in bookstores” Percent$of$sales$ 2%$ 3%$ 12%$ Bookstores$ 7%$ 48%$ General$retail$$5%$ Specialty$retail$ Gi4$retail$ 23%$ Ins7tu7onal$ School$&$Library$ Direct$to$consumer$
  9. 9. Retail Booksellers—  National chains: Barnes & Noble, Borders (defunct)—  National online booksellers: Amazon, BN.com—  Regional chains: Books-a-Million, Hastings—  Independents: Powell’s, Elliot Bay—  90% or more of sales are coming from books ¡  May also carry magazines, stationery, toys, calendars, not to mention coffee ¡  This segment is in flux from bricks and mortar to online ¡  Although Amazon has no physical store, I place it here because it has similar market forces, supply chain, and competes for its customers with traditional book retailers
  10. 10. Bookselling is a Specialty Retailing Category—  In general, every large specialty retail category supports national chains, regional chains, independents, and in some cases, subspecialty retail categories, as well as its own wholesalers and distributors ¡  National chains can be central buying office, or franchises (e.g. Little Professor)
  11. 11. Retail Bookselling Subspecialties—  College bookstores (trade book sections)—  Religious booksellers—  Specialty retail bookstores: ¡  Children’s, Mystery ¡  Others subspecialties listed by the ABA: African-American, Art & Architecture, Feminist and LGBT, Travel, Mind/Body/Spirit, Sci-Fi, Science/Tech/Prof, Regional—  Traditional book clubs ¡  Book-of-the-Month, Literary Guild; now almost defunct—  Some mail-order catalogs ¡  (e.g. Edward R. Hamilton Booksellers)
  12. 12. Wholesalers (primarily books)—  Wholesalers who supply these retailers ¡  National: Ingram, Baker & Taylor ¡  Regional: Partners West, Books West ¡  Specialty: SPD, Christian Book Distributors
  13. 13. “I’ll get it at Costco” – General Retail Percent$of$sales$ 2%$ 3%$ 12%$ Bookstores$ 7%$ 48%$ General$retail$$5%$ Specialty$retail$ Gi9$retail$ 23%$ Ins<tu<onal$ School$&$Library$ Direct$to$consumer$
  14. 14. General Retail with Trade Book Sections—  Not solely in the book business, but enough of a selection that they are thought of as a source for books by the general public. Focused on bricks and mortar (although Amazon could be categorized here)—  Warehouse clubs: Costco, Sam’s—  Discount and department stores: Target, Wal-Mart, Fred Meyer—  Grocery & drug stores—  Newsstands, airports, terminals—  Military PX
  15. 15. Retailers with book sections—  Same dynamic as any large retail segment: national chains, regional chains, independents, subspecialty retailers, distributors—  National: Costco, Target—  Regional (to some degree): BJ’s, Fred Meyer—  Specialty: newsstands, airports, military. Kmart and Wal-Mart: primarily children’s books. Walgreen’s: romance—  Independent “general retailers” are almost defunct ¡  An example would be a small-town general store
  16. 16. Dynamics of General Retail—  These retailers have a book selection extensive enough that the some consumers think of this as a destination store for books, generally, across many categories (or the categories they’re interested in)—  For this reason, these accounts have book buyers (or a designated buyer who works with a book wholesaler) – either way, some expertise at merchandising books—  Thus, not usually categorized as special sales
  17. 17. Wholesalers to General Retailers—  National: Levy, Anderson, News Group, BTMS, Hudson Group ¡  Extensive consolidation here over the last two decades—  Regional: American West ¡  Regional can mean book content or market coverage—  Specialty: Military suppliersGeneral retailers often prefer to work with wholesalers; forany business, holding down the number of vendorsgenerally lowers expenses
  18. 18. Wholesalers vs. Distributors—  Purchasing decision may be made by wholesaler – distribution outlets, channels, pockets, displays may be controlled by this decision maker—  When the wholesaler controls the decision making for retail placement, it should be considered a distributor—  Buyers working in tandem and in layers, one at the retailer, one at the distributor—  True demand vs. promotional opportunities; push vs. pull
  19. 19. Trade Bookselling: 71% of sales Percent$of$sales$ 2%# 3%# 12%# Bookstores$ 7%# 48%$ General$retail$$5%# Specialty#retail# Gi3#retail# 23%$ Ins7tu7onal# School#&#Library# Direct#to#consumer#
  20. 20. Special Sales #1: Focused Content Percent#of#sales# 2%$ 3%$ 12%$ Bookstores$ 7%$ 48%$ General$retail$$5%# Specialty#retail# Gi5$retail$ 23%$ Ins7tu7onal$ School$&$Library$ Direct$to$consumer$
  21. 21. Retailers with Focused Content—  Specialty retailers who may or may not carry some books, but have a dedicated clientele who expects to find all support for their interest in this venue—  The #1 category most frequently called “Special Sales”—  Sales to this market segment can be kept in-house by specialty publishers even though they work with master distributors (PGW, IPG, NBN, etc.) for their trade distribution—  Retailers may expect higher margins, in line with their other merchandise
  22. 22. Examples of retailers with focused content not necessarily books—  Home improvement—  Outdoor recreation—  Body/Mind/Spirit—  Craft and hobby—  Pets; Farm & seed—  Biking, sporting goods—  Teacher supply—  Cooking—  Gardening—  Art materials—  Toys—  Office supply Almost any niche publishing program can find a matching retail channel
  23. 23. In specialty retail, books must add to the retail mission True-life examples:—  Home repair: books can sell other, higher-priced merchandise ¡  Home Depot eliminated book sections in Mar. 2012—  Pet care: some book buyers, but few repeat purchases—  Sewing machines: books move some merchandise, but may detract from bigger sales opportunities—  Automotive: repair books would detract from retail focus Tip: look for retailers who offer classes: teachers = authors
  24. 24. Wholesalers and Distributors—  Retailers more often buy through wholesalers in this channel ¡  Easiest to have single source for all books—  Purchasing decision may be made by retailer or by the distributor—  These wholesalers may focus on books for this content area, or focus on this content in addition to other merchandise—  Distributor may focus on subspecialty—  Wholesalers who focus on a channel and carry books as a sideline will often demand higher margins—  Major vendors sometimes start carrying books by accident, become wholesalers by default over time
  25. 25. Example of retail channel with focused content: Crafts—  National: Michaels, Jo-Ann, Ben Franklin ¡  Chains can be central buying office (Michael’s) or franchises (Ben Franklin)—  Regional: A.C. Moore, Hobby Lobby—  Independents—  Sub-specialty: fabric, yarn, scrapbooking—  Subject-specific mail-order supply catalogs—  Subject-specific websites ¡  May be paired with a retailer or a mail-order catalog, or stand alone—  Subject-specific book clubs (Crafter’s Choice)
  26. 26. Wholesalers in Crafts—  Two out of three national retailers purchase through distributors—  Books in different areas in store merchandised by competing wholesalers—  Distributors: BTMS, HDA—  Distributors who focus on craft books, in addition to other book subjects (HDA, Select)—  Wholesalers who focus on a specialty, carrying books in addition to other category merchandise (Checker, Brewer)—  Wholesalers who focus on subspecialty (Crafts Americana, Royal: fabric, yarn)
  27. 27. Specialty Retail Selling Dynamics—  May prefer to work with distributors (cost vs. selection)—  May be opportunities to distribute regionally (by topic or author); may be opportunities to test locally first—  Seek out commission reps who carry merchandise into the channel—  Create rack opportunities (where do books find a home within this environment?)—  Understand planograms and change-outs as well as category management—  A competitor may be the category manager (e.g. Leisure Arts in crafts)
  28. 28. More Specialty Retail Selling Dynamics—  Look for the same patterns as in bookselling: national chains, large chains, independents—  Home office buying vs. purchases at store level (franchise stores)—  Look for subspecialties, look for independents—  Look for the other retail opportunities within this channel: mail order catalogs, book clubs, specialty websites—  There will almost always be a specialty wholesaler—  There will generally be a specialty trade show for the category
  29. 29. Special Sales #2: Gift Retail Percent#of#sales# 2%$ 3%$ 12%$ Bookstores$ 7%# 48%$ General$retail$$5%$ Specialty$retail$ Gi1#retail# 23%$ Ins:tu:onal$ School$&$Library$ Direct$to$consumer$
  30. 30. Gift Retail—  Very different dynamics than Specialty Retail, though often the two are conflated in selling, marketing, and budgeting—  Here, books are unexpected surprises, adding to the merchandising mix ¡  This is different than a general retailer such as Target, where a customer goes to shop the book section—  Books as merchandise—  Stand-alone, single title opportunities—  Merchandising can be key: quirky counter displays, ‘store-within-a-store’, etc.
  31. 31. Retailers with book opportunities—  Department stores (national, regional, local)—  Gift and card stores (chains – Hallmark, Cracker Barrel -- and independents)—  Housewares and lifestyle stores (Urban Outfitters, Spencer Gifts, Anthropologie) ¡  At some chains, books have become such a successful part of the merchandise mix, that consumers now expect to find them there. Still, not a true selection by subject, just an edited collection—  Apparel—  Discounters (Burlington Coat Factory)
  32. 32. Gift sales – dynamics—  Books of general interest reaching the general public—  Impulse buys; humor and quirkiness—  Purchasing decision generally made by retailer, not a distributor ¡  Not enough book buying to warrant using wholesalers—  Buying direct, may ask for higher margins—  Retail strategies include pre-packs, merchandisers—  Testing is a possibility—  Commission groups and gift shows (local)—  Specialty retail and gift retail can use the same non- returnable discount schedule
  33. 33. Two Examples—  Pottery Barn ¡  No books at one time ¡  Then, branded books only; proprietary publishing (as all their merchandise is). Pendulum swung to a few books stocked ¡  Enormous opportunity, almost impossible to get into—  Restoration Hardware ¡  Originally had an extensive home décor and repair book section as part of its retail mission ¡  As their customer profile changed, this section was de- emphasized; changed from a specialty retailer into a gift retailer ¡  Throughout the store, books now help tell their retail “story”
  34. 34. Special Sales #3: Institutional Sales Percent#of#sales# 2%$ 3%# 12%$ Bookstores$ 7%$ 48%$ General$retail$$5%$ Specialty$retail$ Gi:$retail$ 23%$ Ins0tu0onal# School$&$Library$ Direct$to$consumer$
  35. 35. Institutional Sales: opportunities for bulk, non-retailer purchases—  Should be kept separate from school (classroom) sales, as marketing dynamics are very different—  Books for premiums or giveaways ¡  Someone who is not the consumer is making the buying decision—  Author’s own purchases for non-retail situations (training, teaching)—  Corporate training programs—  Corporate, institution, or government gifts—  Other situations where a decision-maker is buying books in bulk for a non-retail use
  36. 36. Real-life examples of institutional sales—  Author purchase, giveaway to lecture attendees (biography)—  Corporate new employee orientation classes (business)—  PBS premium with program tie-in (performing arts)—  Office of the Mayor presents for visiting trade delegations (photography)—  Real-estate sales office thank-you baskets to new homeowners (regional interest)—  Holiday gifts for sales force (self-improvement)—  Cruise line “bon voyage” gift in each stateroom (travel)
  37. 37. Institutional Sales Strategies—  Brainstorm early as possible in book life-cycle, pre- printing—  Reach out to appropriate corporate, educational, government possibilities—  If possible, offer to customize, personalize, re-bind, excerpt or abbreviate content—  Inquiries on smaller orders, quote a standard discount —  No need for a tiered discount schedule; their quantities won’t be price sensitive—  But for large orders, be flexible, price to make the sale and make a profit
  38. 38. Institutional Sales Strategies, continued—  Weigh time spent against potential sale (opportunity cost)—  Will this be repeat business? Generally, not, though the occasional exception can be very profitable—  Even in this area, there are wholesalers (e.g. The Book Company, Delray Beach, FL) commission agents (The Jenkins Group) and trade shows (PPAI)
  39. 39. Market Segments and Digital Books—  Book retailers: YES—  General retailers: Not yet—  Specialty retailers: Not yet—  Gift retailers: No ¡  Though, note the Starbucks free download cards for iBooks—  Institutional sales: Generally, no—  School and library: Growing—  Direct to consumer: YES
  40. 40. Special Sales 1, 2, 3: a profitable 15% Percent#of#sales# 2%$ 3%# 12%$ Bookstores$ 7%# 48%$ General$retail$$5%# Specialty#retail# Gi6#retail# 23%$ Ins8tu8onal# School$&$Library$ Direct$to$consumer$