It’s been a tumultuous few years in the bookselling world. The pandemic seemed to strengthen Amazon’s grip on the market, push Barnes & Noble (once the bogeyman of bookselling, now its seeming last champion) into transition, pull the rug from beneath the indie bookstore surge, and shrink independent distribution options (RIP Small Press Distribution), leaving most small publishers with fewer choices and worsening terms. Compounding all of this is the flood of new books to the market (based on data from Bowker, it’s estimated that 10 times more books were published last year than in 20051) while sales remain relatively stable.2 Looking at that landscape, many publishers are starting to wonder if getting books into the trade is even worth the effort, or if they should at least hedge their bets. Suddenly, many are considering an option they’ve long outsourced: direct sales to readers.
It’s easy to see why. Off-the-shelf e-commerce options and nearly free marketing and communication channels are increasingly available to even the smallest publisher. And as readers rely less on major media pushes and publicity efforts to discover new titles, doors have opened for smaller presses and self-publishers to reach readers directly through social media or online forums like Reddit. It all looks very attractive, but publishers would do well to tread carefully.
Benefits to Publishers
Selling direct to consumers offers what appear to be a number of benefits. In fact, it’s standard practice for publishers housed within larger organizations, such as media conglomerates with multiple verticals, nonprofit associations, and some university presses with commercial appeal, such as Chicago University Press. But those publishers have resources most small publishers do not, such as robust marketing departments and existing warehousing options that reduce the lift. “We do a lot of piggybacking,” says John Clark, director of books strategy and editorial at the American Diabetes Association. But for small trade publishers and hybrid/self-publishers, there are benefits as well.
(Note: For the purposes of this article, we’re primarily discussing print books. Digital bookselling is so thoroughly tethered to devices from Amazon and Apple (and, to a lesser degree, Barnes & Noble) that direct sales of e-books are largely not worth the effort.)
Better Margins
When you’re selling direct, no one else gets a cut. All revenue goes to you. This is offset, sometimes significantly (see below), by the cost of marketing and fulfillment, but in general, the publisher makes more per unit as compared to distribution and wholesale. And this is increasingly true as distribution options available to small and independent publishers continue to shrink. Those with long-standing relationships and grandfathered terms are weathering the turmoil, but for newer or smaller publishers, commissions and fees have risen significantly. Faced with a choice between shouldering a few fulfillment expenses and receiving payments from a distributor of 25-30% of MSRP, direct sales look attractive.
“Even with all of the costs and the staff and personal time it takes, we do a lot better selling direct. Two to three times better,” says J.C. Gabel, publisher at Hat & Beard Press in Los Angeles. “Some of that has to do with the books we publish—high-end art books and illustrated books—that most bookstores sort of stay away from, even though we try to keep prices pretty reasonable. But we have higher production costs. So, getting a check from the distributor for, like, 29% of the retail price is break even for us. Sometimes not even that good. So, we have to sell direct to stay afloat.”
Better Relationships (and Data)
The best customers are repeat customers, and selling direct gives publishers the opportunity to develop these relationships that a one-off bookstore purchase just can’t nurture. “We’re really trying to work from that ‘1,000 True Fans’ model,” Gabel says. “We’re pretty niche by design and we’re not going to ever have, you know, a romantasy book that sells a billion copies out of nowhere. But if we can build up a fanbase that really likes what we’re doing and get them coming back, we can make it work... But we need them coming to us directly to build that relationship.”
Even if your business model isn’t built on the higher margins from direct sales, creating these relationships directly can pay dividends elsewhere. “Our direct sales program really is more of a marketing effort than anything,” says Jennifer Drew, senior editor at Restless Books in Amherst, Massachusetts, a press that focuses on US editions of international titles. “It’s not so much about increasing our revenue; it’s about integrating with our community and having a footprint.”
A big part of building these relationships is building up a database of customers for an ongoing conversation and, importantly, using this information effectively. “[Our database] is not huge, because a lot of people don’t opt in, but we do use this list as much as we possibly can,” says Lydia McOscar, managing editor at Restless. Which is important. Having outsourced the selling part of publishing for so many years, effective direct marketing is often not built into book programs the way that publicity outreach and trade marketing might be. But with many of the low-cost customer management, marketing, and email tools available, including Constant Contact, Klaviyo, and Hubspot, to tools built into popular website platforms like Squarespace, it’s easier to grow relationships with your program’s biggest supporters than it was in the past.
For hybrid and self-published authors, these relationships aren't just a bonus; they're vital. “I’ve built a community,” says Mona Dolgov of You Live Right in Sarasota, Florida, a small hybrid imprint through which she publishes some of her own books. “A lot of these customers want to feel like they’re part of this community, that they’re getting personal care and insights with the books. They feel like they're supporting and connecting with me directly, which they don't when they order from Amazon.”
New Channels and Opportunities
In the current marketplace, diversifying revenue streams has become vital. Corporate sales and huge foreign rights and licensing deals aren’t realistic for many indie publishers, but selling direct opens many new channels that are accessible to even the smallest imprint. This includes reviving options that once seemed destined for extinction, like brick-and-mortar storefronts and book clubs. In a world of overwhelming virtual content, these human-scale options might be a great fit for current buying habits and a growing desire for curation as an antidote to unlimited options.
“Everybody subscribes to everything now,” Gabel says. “So, yeah, there’s some subscription fatigue. But also, I think people are just used to getting things this way now.” He says he was inspired to launch the Hat & Beard book club by the success of the Vinyl Me, Please record subscription model. “People like getting well-designed things. Physical things. And that’s what we’re doing.” A lot of the Vinyl Me, Please success was built on the idea of cultural curation pitched to a targeted audience via social media and pay-per-click ads. This strategy can get very sophisticated, but it’s economically within the reach of any publisher.
Drew agrees this handholding may be a reason why Restless’ relatively small book club is so well-received, with most subscribers staying on long-term. “It’s just a really nice way to offer access to international literature for people who don’t otherwise know much about it or have a way to seek it out.” And while it’s a small part of the program now, she feels it’s worth expanding once the resources are in place. “It just scales so well. Once you put the initial investment into setting it up and advertising it, you’re kind of doing the work each month. And if you double your subscribers, you’re not doubling your work at all. It’s a really good way to grow your income.”
Another retro direct sales channel benefiting from the slow/local/real wave? Good, old-fashioned handselling. Restless has a presence at two to three local events every year, and You Live Right, with footprints in Florida and Martha’s Vineyard, never misses an opportunity to set up a booth at local neighborhood events. While these are often break-even marketing opportunities, for a publisher like Hat & Beard that produces high-end art books, this handselling is crucial. Their program is built less on trade selling seasons than it is on art book fairs and events. “It’s crazy, but it’s where we make most of our money,” Gabel says. “Our stuff, you need to see it in person. Amazon doesn’t do it justice.”
Drawbacks and Things to Consider
Better margins, better relationships, and expanded sales channels all combine to make direct sales look very attractive. But there are downsides as well, and direct sales are far from a panacea. In fact, they may not even be a good fit for most small publishers.
Shrinking Net
At the top of the drawbacks list are, of course, resources and costs. The technology has improved and democratized enough that setting up an online store—in the past, a multiyear project costing tens of thousands of dollars—is almost as easy as flicking a toggle switch on the backend of your website. And a lot of these platforms have payment processing technology, such as Square and Stripe, that can be used in apps and devices for in-person sales. But that ease comes with ongoing costs. Your payment vendor takes a cut of each sale, and the platform will likely have commissions or flat fees built in, often adding up to between 3% and 5% of the sale. And then that order has to be fulfilled. A program large enough to justify a warehouse with fulfillment services is likely paying anywhere from $3 to $5 per order in pick-and-pack charges,3 and that’s on top of warehousing costs. Unlike fees deducted from distributor payments, warehousing and fulfillment costs are hard costs that need to be paid each month from cash reserves, which is no small thing for independent publishers.
For those relying on internal staff to fulfill orders, those are hours that could be devoted to something else. If the average order takes 10 minutes to fulfill and you’re paying an employee $20/hour, that order is costing you about $3.34 to fulfill. Regardless of how you fulfill, a direct order of a $20 book is likely to generate $15 in net revenue at the most. And that’s if you’re not offering free or subsidized shipping.
But, Why?
Which leads to the most significant challenge in direct-to-consumer sales: customer incentive. If that same product is available at a highly discounted cost with free one- or two-day shipping via Amazon (or a short car ride away with no shipping costs at a bookstore), why on earth should a customer order directly from the publisher? A certain segment of the population will happily pay more and wait to support what they feel is a worthwhile cause, but in the book world, those good intentions often go to supporting local independent bookstores. Even if those intentions were to go to direct-to-publisher sales, philosophical motivations usually don’t go far. For nearly all consumers, price and convenience are the primary factors in a purchase. That means you’re in competition with the most powerful and successful business in the world for selling your own product.
How do you compete with that? You often can’t beat Amazon on price, for both technological reasons (web crawlers designed to price match) or contractual obligations (Amazon’s often draconian terms with distributors and vendors that stipulate not selling elsewhere at a lower price). And as shipping costs have risen dramatically, free shipping is almost always a nonstarter (even using media mail, free shipping takes a $15 margin down to something closer to $10).
This leaves you with two choices: not sell through Amazon (and lose access to the 71% of book readers who buy from Amazon4) or build in incentives elsewhere. You Live Right bundles to get around some of the price restrictions tied to Amazon. You might be prevented from selling a $20 book for $10, but creating a new SKU that sells three books for $30 is a good way around that. Freebies and giveaways are also powerful incentives. If you offer a free download of a digital book, or even a free physical copy of a slow-selling backlist title, that additional value may be enough to convince a buyer that a higher price and slower shipping time is worth it. But in competing with yourself, your margins on direct sales continue to slip.
Adding It Up: 5 Questions to Ask
In the end, each publisher is unique, and each faces specific restraints, challenges, and opportunities. When deciding whether to build or grow a direct-to-consumer component to an imprint, publishers should ask themselves the following five questions:
1. What are your goals? Like all business decisions, your approach to direct-to-consumer sales must ultimately be matched to clear and measurable goals. If you see this as a marketing activity that allows you to connect with a small but motivated group of supporters, you can launch this with some garage space, a Stamps.com account, and an hour or two a week devoted to marketing. If you’re publishing 10-12 titles per year and looking to substantially augment your distribution and wholesale revenue, you’ll need to substantially augment your resources (see the following two questions).
2. Do I have the right platform? If you’re currently on a more flexible, modular platform such as Squarespace, GoDaddy, Wix, or Shopify, building out an e-commerce component can usually be done without any coding or technical expertise, which means relatively little time and money. Even older sites built on WordPress or Drupal platforms have relatively simple solutions that can be added quickly by a freelancer. If you’re working from an older, custom-built page that will require a major overhaul, that effort probably isn’t worth it just for e-commerce (though you could always look at building out a sister site).
3. How will I market, fulfill, and do the accounting for these books? Successful publishers excel at editorial development, production, publicity, and, often, B2B sales strategies. We’re good businesspeople! This doesn’t mean we know the slightest thing about direct marketing and fulfillment. If you’re looking to keep things relatively modest and don’t mind spending a few hours a week running reports, heading to the post office, and cranking out a monthly newsletter, you’re probably OK. Beyond that, you’ll need additional expertise, including someone who understands social, pay-per-click, and influencer marketing strategies, as well as a full-service fulfillment house that can handle warehousing, packing, shipping, and customer service. Considering that it usually takes 18-24 months for an e-commerce program to become profitable,5 you need to plan on borrowing or dipping into cash reserves to fund these capabilities. It also complicates accounting, adding complicated interstate sales tax concerns to the already byzantine world of publishing bookkeeping. Again, most off-the-shelf e-commerce platforms simplify this, but be prepared.
4. Do I have the right kind of books? In general, nonfiction books will perform better because nonfiction sales are print-heavy (~90% of sales vs. ~78% for fiction6) and tend to have a higher price point. In fact, the higher the price point, the more attractive direct sales become, as expenses don’t scale up like they do when they’re a percentage of the sale price. Let’s look at this more closely by comparing a $20 paperback and a $30 hardcover book sold either wholesale or direct. Through a distributor, these books will be sold wholesale to a bookstore at roughly 50%, and then the distributor will take a commission, usually somewhere in the neighborhood of 25%. For that $20 book, you’ll expect to receive $7.50 in gross revenue from the distributor; $11.25 in gross revenue per unit for the $30 title. Sold direct, your payment processing fee for the $30 book will be slightly higher than it would for the $20 (90 cents vs. 60 cents at a 3% fee), but for the most part, your fulfillment costs will be about the same. So, not including shipping costs, you’ll be looking at around $15 in gross revenue for the $20 book (75% of MSRP) and $24 in revenue for the $30 book (80% of MSRP). And it gets better the higher the price point. Higher-end books are typically heavier and more expensive to ship, so you’ll need to consider that, but in general, gift books, cookbooks, art books, instructional books, and other high-priced titles are better suited to direct sales.
5. What channels make the most sense? If you’re doing high-end, high-cost niche books that are easy to market through a PPC campaign, going all-in on an online store might make sense. If you’re a literary imprint focused on a relatively obscure category, your buyers might be more interested in a book club that curates hard-to-find selections. If you’re doing books with a regional focus, the few hundred bucks for a credit card reader and a table at a local market might get you the most bang for your buck.
Ultimately, these are questions that you should ask yourself not just in the planning or ramp-up stages, but also on an ongoing basis. Even though they have a multichannel program that includes handselling, book clubs, a bookstore on the ground floor of their office, and an online store, the team at Restless constantly ask where their priorities lie. Currently, they have no plans to grow these channels. A recent transition from Brooklyn to Amherst has constrained resources, but this decision is also based on management strategy. “I’m a big believer in allocating expertise where necessary or not necessary where appropriate,” Drew says. “Booksellers are good at their jobs. They do this well and we will not do it as well as they could. So, I’m very happy to pass that on.”
She and her colleague McOscar also wonder if fracturing book sales into a constellation of individual purchases across hundreds of different publishers is a good move for the industry as a whole. Some individual publishers might benefit, but book publishing and the culture at large might suffer because of it. “We’ve built a lot of relationships with stores,” McOscar says. “[Compared with an online sale], we’d vastly prefer to see our books on the front table of a bookstore.” Drew agrees. “The more indie bookstores we have, the better we are as humans. Keeping more sales there as opposed to online; I think it’s best for everyone.”
Sources
- Berrett-Koehler Publishers “The 10 Awful Truths about Book Publishing,” March 1, 2023. https://ideas.bkconnection.com/10-awful-truths-about-publishing
- Statista “Unit sales of printed books in the United States from 2004 to 2023,” Accessed August 7, 2024. https://www.statista.com/statistics/422595/print-book-sales-usa/
- Speed Commerce “What is the Average Order Fulfillment Costs?” June 28, 2924. https://www.speedcommerce.com/insights/what-is-the-average-order-fulfillment-costs/
- Statista “Amazon Dominates Book Sales Almost Everywhere,” April 23, 2024. https://www.statista.com/chart/28042/share-of-respondents-who-bought-books-from-amazon/
- Oyova “How Long Does It Take to Make Money with eCommerce?” July 8, 2024. https://www.oyova.com/blog/how-long-to-make-money-ecommerce/
- Statista “Unit sales of printed books in the United States from 2013 to 2023, by category,” Accessed August 7, 2024. https://www.statista.com/statistics/422648/print-book-sales-usa-by-category/
Abe Ogden is the lead strategist and editorial project manager at Paper Door Publishing Services.