Do You Need a Distributor/Wholesaler? Look Before You Leap Stephen Blake Mettee TheWriteThought.com
Distributors: • Warehouse some of a publisher’s print run. • Present titles to retailers and libraries via live calls, catalogs, and other means. • Often require you use them for e-book sales as well as print books. • Pull, package, and ship orders. • Invoice the retailers and libraries. • Collect the accounts. • Usually pay 120 days after a sale is made.
<ul><li>Wholesalers: </li></ul><ul><li>Often warehouse some of a publisher’s print run, other times, only order when they get an order. </li></ul><ul><li>Present titles to retailers and libraries via catalogs, often at an additional charge to be in the catalog. </li></ul><ul><li>Usually don’t get involved in e-book sales. </li></ul><ul><li>Pull, package, and ship orders. </li></ul><ul><li>Invoice the retailers and libraries. </li></ul><ul><li>Collect the accounts. </li></ul><ul><li>Usually pay 90 days from date of shipment from publisher </li></ul>
Read your contract and make sure you understand what you are agreeing to.
This clause appears to broadly limit a distributor’s requirement to perform. ___________________ “ Publisher accepts that its publicity and PR efforts in support of its title(s) are crucial to its (their) success, and understands that [distributor’s] efforts to market any title must be proportional to that publicity and PR effort, the adequacy of which will be determined by [distributor’s] sole judgment; and further Publisher holds [distributor] harmless from any allegation or claim that [distributor] did not use its best efforts, or did not perform any duty arising from any provision of this agreement, or meet any supposed standard or custom of the book trade, to market Publisher’s title(s).”
This clause appears to limit a publisher’s right to sell a hot title to a larger publisher. ___________________ “ Publisher will inform [distributor] of any contemplated sale of rights of Publisher’s books that could substantially affect [distributor’s] distribution efforts, and will not conclude any rights sales that would in [distributor’s] sole judgment substantially adversely affect sales of the books during the term of this agreement. Rights sales include the sale of the rights of the book to be published by another publisher in any format.”
This clause in a wholesaler’s contract spells out a reality of the book trade. ___________________ “ Returns Policy: BOOKS ARE FULLY RETURNABLE FOR FULL CREDIT (including stickered, damaged, and unsalable books).”
Profit Analysis with All Trade Sales Going Though a Distributor Retail Price of book $14.95 Price at which distributor sells a book @average discount of 53% $ 7.18 Less the publisher's estimated costs: Print cost $ 1.50 Author Royalty @ 8% $ 1.20 Freight to distributor ( at $10 per 40 copies) $ 0.25 Distributor's fee at 30% $ 2.15 Distributor's fee on returned copies (20% returns, 10% fee) $ 0.18 Total costs $ 5.28 Gross to publisher $ 1.90 Gross to publisher on 2,500 print run $4,745
Profit Analysis with All Trade Sales Going Through a Wholesaler * Retail Price of book $14.95 The discount to a wholesaler is usually 55%, publisher keeps 45% $ 6.73 Less the publisher's estimated costs: Print cost $ 1.50 Author Royalty @ 8% $ 1.20 Freight to wholesaler ( at $10 per 40 copies) $ 0.25 Wholesalers often have nickel and dime fees, let’s say 0.5% $ 0.03 Wholesaler’s fee on returned copies $ 0.00 Total costs $ 2.98 Gross to publisher $ 3.75 Gross to publisher on 2,500 print run $ 9,375 * Actually, this is a bit skewed, if you don’t use a distributor some trade sales are bound to be made directly, usually at a lesser discount than the 55% that wholesalers require, allowing for a greater gross to the publisher.
In Case You Missed It… That’s $4,745 versus $9,375. How much more marketing can you do with an extra $1.85 per book?
• E-book retailers, like Amazon or Apple, wish to have the largest selection possible, so there is little to no sales effort involved to getting them to offer a publisher’s books. • Publishers can choose to take on the burden of placing their books into the e-book stores themselves or paying someone a flat fee to do it for them. Let’s Add E-Books to the Mix
With a Distributor E-books 750 $2,873 Print books 1,750 $3,325 Totals 2,500 $6,198 Without a Distributor E-books 750 $5,224 Print books 608 $1,541 Totals 1,358 $6,198 ____________________ Assumptions on the e-book transactions: retail price $9.95; e-retailer retains 30%; distributor fee of 20% on the remaining 70% if distributor is used; royalties 25% of net from e-retailer; no costs for printing or freight, no return fees. With Constant E-Book Sales, even Fewer Print Book Sales Sans Distributor Are Required to Return the same Revenue