Returns, Discounts, You and Me

Recently I’ve been keeping an eye on the Bookseller site, over Waterstone’s proposed central distribution centre that will attempt to combat the bane of publishers everywhere, and dare I say it, writers too: the book return.

The process of returning an unsold book to the publisher, which has been quoted at "23%" of all books sent to Waterstone’s, is something I wasn’t aware of until last year when several of the Macmillan New Writers were suddenly hit with a large negative on their second royalties statement. Without getting too embroiled in financial matters, the first royalty statement included all books taken by the bookseller, not just those sold by the bookseller. In some cases authors believed they had sold a great number of books only for the next statement 6 - 12 months later to tell them that actually no that wasn’t the case, and they’d sold a lot less than that - due to the returns policy.

At the end of this month, I get my second royalty statement, and I have absolutely no idea how much it will be. It should include the second half of the German deal, but this could be severely dented by the returns if there are any (and again, I have little idea how well The Secret War actually sold last year). So yeah, the returns policy is something I’m just a little curious about.

Now Waterstone’s has come up with a good idea to combat this problem in the industry by using a central distribution centre that will store and then redistribute books that are not selling so well in various stores. That is, instead of returning the books to the publisher for either pulping or so they can be sent back to a store where the book is doing well. So it looks like common sense is prevailing at last – but at a cost.
The cost is a further discount of up to 5% on each title between the publisher and Waterstone’s.

Which is something I’m also curious about.

The discount between the publisher and the bookseller won’t mean much for the consumer because I doubt any of this will be passed on in terms of a reduction in pricing. You’re not going to find your favourite author suddenly with a red sticker stating “an extra 5% off”. This discount will most probably be absorbed by Waterstone’s redistribution of the books, which is fine if you’re a writer selling say 1,000 books a week, or even a month.
Anything less than that, and a writer’s profits start to suffer.

Macmillan New Writing caters for debut writers, and debut writers in hardback. Their print runs are quite small – less than a few thousand in most cases – even smaller in others. The returns policy is a bit of a shock to the system, but quite fair (why should a writer get paid for a book they haven’t sold?). In the new Waterstone’s world, fewer returns will appear on the royalty statement, but counterbalanced by lower real-term profit too. If you’re selling just 1,000-2,000 books every six months, taking around 5% of that profit away doesn’t seem like much, but hey the writer earned it – all for the sake of tackling a problem in the publishing industry.

I guess what I’m saying is that while Waterstone’s approach to tackling returns is sensible, 80% of published authors will still suffer some pain from it. As will publishers (though comparatively less as the discounts should be off-set by the gains in not having to personally redistribute returns or the pulping of unsold books).

How this all pans out, we’ll have to see. It’s just a small footnote in the great scheme of things, worthy of perhaps a paragraph somewhere and probably only a single blog entry here, but Waterstone’s is the biggest high-street bookstore in the UK and where they lead others often follow.