I read an interesting business profile in our local paper of the Cosmos Creations company and John Strasheim, the CEO. Strasheim had sold his Bowtech archery company and with a partner purchased Cosmos. Their corn [grits] products are absolutely delicious: caramel, salted caramel, cinnamon crunch, and sea salt and butter. If you haven’t tried them, I would heartily recommend them!
What interested me was that he had learned how the distribution systems worked for sporting goods and how to market his products. But when he took over this food company, he had to learn how food distribution worked, who the “gatekeepers” are, and how to market a product that you want your customers to buy repeatedly.
The business issue this raises relative to publishing is that our lines of distribution and the “gatekeepers” are very different from other businesses. And authors and scholars generally have no idea how this system works. For one, a great deal of distribution of books depends upon Ingram Content Group, Amazon, Yankee Book Peddler, and Blackwells. These book wholesalers have business relationships with bookstores, libraries, and other retailers (including department stores such as Target and discount stores such as Costco). Therefore, publishers have to have relationships with as many wholesalers as possible in order to get books into as many venues as possible. But wholesalers control who they will or will not have relationships, and what the shape and terms of that relationship will be. They dictate the discount rates, the terms of return, what they will pay for shipping, and the frequency of payment. In other words, they control what they will pay for books as well as what they will sell them for to the retailers or libraries.
In 1998, when I first started in publishing, Ingram was expanding by buying up other distributors, and they were expanding their construction of warehouses around the country. Their bankers told them that they had too much inventory on hand to make the construction loans. Consequently, Ingram returned millions of dollars worth of books to publishers all at one time, and they damaged the finances of publishers all over the country (and probably the world).
Another major line of distribution is college/university bookstores. In my experience, most college professors think that their own institution’s bookstore is owned by their institution. But in the U.S., almost all college and university bookstores are owned and operated by three companies. They simply lease space from the institutions with agreements to order textbooks and carry merchandise with the school’s logo (e.g., coffe mugs and jewelry). This is why the bookstores are so keen to “buy back” used textbooks: they can shift them around to any of their other stores around the country. So publishers must also keep contact with these key gatekeepers of the book system.
The upshot of all this is that most of the ways the publishing business works in terms of distribution is invisible to authors, professors, and other purchasers of books.