Discussing Ideas to Help Stores Survive

Both formally and informally, booksellers at the ABA's Winter Institute were talking about, and listening to, ideas for how stores can preserve their essential role during the digital transition and drive revenue from more than sales of printed books.

On Wednesday Dan Clancy from Google tried to open the door to brainstorming how Google can help retailers sell ebooks from physical stores. The starting principle is that "when you buy a digital book from a physical store, it needs to be simple." A sample notion was to ask, what if it's as simple as taking a digital picture of the book's bar code with a phone (and credit the store for the sale). Though cards redeemable for ebooks (like Symtio's product) have not taken off and present limited inventory, he suggested there could be a kiosk to produce such cards. Most importantly, he underscored that if bookstores are capturing customer e-mail addresses it makes it a lot easier to sell ebooks or fulfill e and print bundles, since they can email the customer a unique link in order to download their ebook. And that emphasizes stores' core goal, which is "how do you maintain your relationship with the customer even on the device" instead of turning them over to the device manufacturer.

Clancy also believes "bundling is a key component in this blended world." (At the panel of publishing executives, however, Madeline McIntosh from Random House said they were still "wrestling with what is the value of that digital file" and are still stuck on the idea that giving away an ebook along with a print book, or selling it as a cheap upgrade makes it hard to "turn around and say that the ebook in and of itself has value, and we don't want our ebooks to be low priced.)

Clancy also predicated that "personally, I think the tablet--not just the Apple tablet--is the way of the future in ereading." To that end, ignoring the issues of small retailers selling expensive electronics, he speculated that stores could sell tablets and be established as the default place the customer buys ebooks from those units.

But Clancy did acknowledge that earlier visions of how the revenue splits might work for Google Editions has changed and while Google can help stores, it can't save them. "The margins on digital books are going to be less than the margins on physical books. Even if Google takes a small amount, the margin is still shrinking."

At a booksellers panel on Thursday, Mitch Kaplan of Books & Books, Roxanne Coady of RJ Julia, and Steve Bercu of Book People presented new ventures that are working well for their stores. Kaplan's presentation was both the most conventional and yet the most challenging--since he ultimately called for scan-based compensation, or true consignment. Picking up on the theme that has dominated ebooks this week, he said that he was "heartened to hear people talking about agency plans" and hopeful that they "might be able to do it in our sales channels as well."

"The value we bring to the table is far greater than the way its expressed these days," Kaplan said, suggesting that if stores are valuable partners to publishers "then they need to get off our backs a bit from the credit side." Kaplan noted his biggest business challenges have been "the price of our rents and cash flow; keeping the levels of inventory high, so that we can sell those books we need to sell without being hassled perpetually by credit departments."

Kaplan has pursued his new model successfully with illustrated books publisher Assouline, which initially "rented" a boutique space within his store, along with paying a small commission on sales, which helped Kaplan meet his monthly rent. But over time it has evolved into more of a pure pay-on-sale model. Since Assouline's books are expensive Kaplan previously could not afford to carry much of their inventory, even if it turned. Under their evolving new arrangement, the store went from selling $7,000 of Assouline books a year to selling $30,000 worth in January alone, and closer to $130,000 worth of titles a year.

Kaplan said that he has been talking with publishers about his vision for this new way of selling. While it may be well suited to expensive inventory (like Assouline's) and selected backlist programs (like an entire line of classics), whenever I have asked publishers about scan-based compensation, they literally shriek (or grimace)--in part because of the major accounting challenges in switching over. But the new ebook sales model has definitely put the idea back on the table. Agent Andrew Zack writes today at the Huffington Post: "Imagine if publishers turned brick-and-mortar bookstores into 'agents' who got a thirty-percent commission?"

Coady's new idea is a web-based venture, Just the Right Book, which sells personalized book-of-the-month "subscriptions" to regular mailings of books, and one-time "libraries" of books for kids of particular ages and newborns, all selected by her booksellers. She says that "it's basically waiting on a customer, online."

Coady came to the idea after a four-month sabbatical of rigorous study and interviews examining, and thinking about how to reinvent, her business. She realized that "what we knew how to do was put the right book in the right hands. We're not so good at operations or technology."

Ron Johnson--who led a turnaround at Target that included their emphasis on design--was the one who suggested that "you are in the ernichment business" and told her to "think about adding value to your customer's experience."

One surprise so far has been "a higher average ticket" than she projected, with an average sale worth $199.

In third presentation, Bercu described the development of literary summer camps for kids--regular summer camps which also feature books, and "counselors" who include a classic professor from the University of Texas teaching about greek mythology. The program was suggested by a store employee, and benefited from "a big assist" from author Rick Riordan. Camp Half-Blood uses the Percy Jackson & the Olympians series "to engage the imagination, mind and body," and there is a Rangers' Apprentice camp as well.

Bercu made it clear the programs were not an instant success (with 51 attendees the first, year, and net revenue of $789.) But it has grown to the point where the programs sell out as soon as they are offered. "This year we had a line outside the store of desparate parents wanting to get their kids into the camp."

The following panel presentation added the experiences of Village Bookstore and Northshire Bookstore with the Espresso book machine. They underscored, as has been reported before, that nearly all of the business with the machine is for self-publishing. Village Books also has their own imprint, putting regional titles back into print. As we have pointed out before, bookstores don't need to make the $100,000+ investment in their own machine to get into either the local publishing business or the self-publishing business. It's easy to contract for the printing off-site and still offer the exact same services in your store.