In the publishing industry, getting a book on the shelves at a retail store is a reason for celebration, as it is often the primary avenue for selling books. In an ideal world, a bookstore has enough copies of books to meet demand, but when the demand is not there, next steps are taken. If a book is returned, the refund is now the responsibility of the publisher.

John Koehler, president and publisher at Koehler Books, says he recently started to notice his return rate jump between 25% and 40%. When he reached out to Ingram, he was told the returns were due to Amazon starting to inventory its books, a strategy typically used only for physical bookstores, not online stores. Koehler says this caused him to rethink his publishing strategy.

“Online bookstores such as Amazon, Books-A-Million.com, and barnesandnoble.com typically use what is called ‘sell-through’ book purchases, meaning books were bought directly by readers versus orders from stores. We like that. Correction: We love that,” Koehler says. “Online stores historically do not inventory books. Koehler Books uses the globally recognized ‘just-in-time manufacturing’ guidelines to keep inventory low and respond quickly to buyers. Print-on-demand (POD) makes this possible.”

The Need to Reduce High Book Returns

For many independent publishing companies, brick-and-mortar book sales account for 5% of their sales but 80% of their returns. For bigger publishing companies, it comes as no surprise that they can financially support bigger returns in order to get their books into stores; however, for independent publishers, that is not always the case, leaving them vulnerable to the highs and lows of the publishing marketplace.

“Ninety-five percent of our sales come from online,” Koehler says. “Our goal is to reduce the returns. When I started the company in 2010, everybody in the business said you have to allow for returns or else the bookstores won’t buy it.”

Alesha Brown, CEO and founder of Fruition Publishing Concierge Services, says the Amazon inventory situation does not worry her.

“Publishers should utilize multiple sales and distribution platforms, book formats, and pivot accordingly, especially with today’s supply chain challenges and pandemic environment,” she says.

“The Amazon situation also stresses the importance of community and personal connection, which authors need to be the champions of. Less returns occur from books bought from their personal supporters versus orders from unknowns at any retailer.”

The Effect of Amazon’s Move to Inventory

Koehler says that Amazon inventorying books has caused his company to have to pay instead of it being the other way around. With this in mind, some indie publishing companies may opt to reduce their wholesale discount or even mark their books as nonreturnable, a difficult decision to make that could deter retailers form purchasing the book.

“We are going to remove returns as an option on the books with our hybrid deals,” he says. “With our traditional deals, we don’t know how we are going to handle that, because traditional authors tend to be more involved with bookstores doing tours. But we may get to the point where we don’t take returns.” 

Brown says as powerful as Amazon is as a retailer, authors and publishers should seek out and utilize other platforms that can lead to sales outside of Amazon to minimize the chance of huge returns.

“Although Amazon is a go-to for many book buyers, especially Prime members and gift card holders, many buyers would gladly buy from the author to support them and receive autographed copies.” 

An Alert for Independent Publishers

For other independent publishing companies experiencing this situation, Koehler believes Amazon’s decision to inventory books could be a red flag.

“This should be an alert to publishers who are using POD and selling a lot of books through Amazon. If you are allowing for returns, the possibility is greatly increased that they [Amazon] are going to inventory your book. Inventory is expensive. If they are starting to inventory, beware,” he says.

For some, this may not be a problem, especially if their distributor is not experiencing this, but Koehler says that this could have a dramatic impact across the board eventually and is good information to know.

“We don’t know what Amazon is doing; all we know is that they are hitting Ingram. So, there are other distributors that it would not affect. It’s going to be problem for IPG. They are more involved with brick and mortar,” he says.

“IPG can sell as much as they want, but it’s going to be a conundrum for publishers who are working directly with them; they probably have the same ability to make the books nonreturnable.”

Koehler suggests indie publishers take a close look at their sales reports and start planning now on how they may want to handle returns should this affect them in the near future.

“This is a seismic shift in the book industry for indie publishers. If Amazon continues to inventory books, then you can expect that your return rate will go up,” he says.

Tips for Independent Publishers

• Plan for future returns. Returns are inevitable in this industry. There is nothing wrong with hoping for the best but planning for the worst. Your book is not considered officially sold until it’s bought by a reader. This means anything bought through a bookstore has the real potential to be returned down the road, usually around six months post publication or earlier.
• Decide what publishing strategy is best for your company. If you choose to have returns, plan for approximately 30% of what you sell to be returned. If you choose nonreturnable, be cognizant of how that could deter retailers from purchasing a product they don’t know will sell, and thus couldn’t return.
• Consider POD. Test out the market first before printing too many copies. You can always go back and reprint if you need additional ones.
• Know the market. Know your competition and what buyers will pay for a book in that category. Overpricing a book can deter buyers.
• Talk to your distributor. If you work with a distributor such as Ingram or IPG, talk with your contact and see what they are hearing and seeing in relation to returns. They may be able to discuss sales reports, provide actionable tips, and help you determine your publishing strategy.
• Keep your eyes peeled for non-trade sales opportunities. While bookstores are ideal, stay open to other ways of selling books such as direct sales, conferences, special sales to organizations, etc. These types of sales are less likely, if at all, going to lead to returns.

For more information on how book returns work through IngramSpark, check out the article “Understanding Book Returns with IngramSpark” at ingramspark.com/blog/making-your-book-returnable.

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