How does "sale or return" work?

January 30, 2010 8:30 AM

I'm starting a poetry publisher and I understand most books sold here in the UK are "sale or return". Can somebody explain exactly what this means, and perhaps illustrate a typical order process from start to finish (i.e. returns). In particular, do I have to agree to take returns at any point in the future, or is it only within a set time period?
posted by humblepigeon to Shopping (5 answers total)

US amateur publisher here, although we do work with UK distribution through LightningSource: For a long time, book distribution has been a consingnment thing. Bookstores buy books with the option of returning them for refund, but they don't even have to actually return them, though. Some (most) distributors allow the return of a torn-off cover or just a honor-system faxed-in list of unsold books as proof that a book has not been sold and is worthy of a refund. That means, as a publisher, you're paying bookstores for books that are being destroyed -- you're not even getting back a book that can be re-sold to a different bookstore or dumped as a remainder, so you lose the printing cost on any destroyed "returned" book. That has been our biggest problem with cashflow, because at low numbers destroyed books are a huge expense.

As for how long and what condition: that's in the contract or other arrangements with the bookseller. If you're using a distributor, the distributor will help you with those arrangements, or they'll tell you, "this is how we do it and that's that". Usually, bookstores have 90 days to return them, and beyond that point they have to keep the book. I've had a distributor accept returns up to around 120 days, which isn't a big problem, but it can account for strangeness in accounting -- "three months ago we only sold 100 copies of that book, how did we get 105 returns this month?" But that's something to talk to the distributor about, but understand that the wholesale price of the book comes out of your pocket if the book is returned.

That said, if you're not going through a distributor, you can arrange whatever terms you want directly with the retailer, even non-returnable terms. If it's a small independently-owned bookstore, and they're only buying three copies every few months, they might not have a problem with being non-returnable. If you want to get into the big chain bookstores, they are going to want a deep wholesale discount and a reasonable return policy, probably 90 days.
posted by AzraelBrown at 8:48 AM on January 30, 2010

Response by poster: Hi Azrael. Thanks for your help. Is the deep discount you talk of 50%? So if I set the retail price of a book at £6, they'll want it for £3 per copy? I was anticipating a 50% discount for ALL shops, but would some smaller outfits be happy with 30%, as is more common in other industries?
posted by humblepigeon at 9:28 AM on January 30, 2010

Actually, my experience is a 55% wholesale discount is more industry standard -- a £6 would wholesale for £2.70. I'd say, from what I remember when I was researching prices, 40% is about the smallest discount a bookseller will accept; if you figure 55% is what the distributor pays, they're marking up to sell to the bookstore, so the bookstore isn't necessarily getting 55% off -- but figure out your printing cost plus profit based on 55% discount, because that's the cheapest you'd be selling a book for. Again, you're able to negotiate whatever you like with the retailer if you're selling directly; you might even want to leave a price off the cover, which would then let the retailer buy the book at what price you're asking, and then re-price it however they want. It's not an ideal option, but possible. Here is a good article on pricing and returns. If you're looking for resources on getting into publishing, look at "self publishing" resources -- sure, you're not self-publishing, but the focus of that information is to help the small guy break into an established industry, so they have good suggestions on how the business works.

And, if you haven't got distribution and printing yet, I recommend LightningSource -- they handle printing, billing, distributing, and some of the other nuts-and-bolts issues of the book industry. They're not the cheapest option, but for a small publisher looking to save man-hours, they're a good deal.
posted by AzraelBrown at 10:25 AM on January 30, 2010

I have been out of the book trade for about a decade, and I only ever dealt with the USA (although my discussions with UK booksellers suggested that the market was pretty similar), so take this with that in mind, but:

The "usual discount" for books to booksellers was 40% off of the cover price. That is what I would count on. If I was buying directly from a publisher, it might get as high as 46% (maybe 50% with very large orders). That 40% made up my entire profit -- paid the rent, utilities, salaries, etc. I pretty much never carried anything with a discount of less than 40% -- it simply was not worth it's space on the shelf.

I understood that wholesalers got better deals, since they were placing much bigger orders -- 55% sounds about right, so they would buy at 55% off cover and sell for 40%.

Assuming this is about how it works in the UK -- out of every £10 of cover price sold through a wholesaler, the publisher will get £4.50, the distributor £1.50, and the bookseller £4.00. The publisher and the bookseller could work without a distributor, splitting the extra £1.50, but there are more costs for each of them (bookkeeping, shipping, marketing, and so on). A good wholesaler makes everyone's life easier, and it was well worth the money.

The only materials that were credited without a full return of the books were mass market paperbacks from major publishers (covers stripped and the books recycled) and the occasional damaged item where it would have cost more to return it than the item was worth. (We generally donated those to prison reading programs and similar services.) Things could be different in the UK.

When investigating wholesale deals, make sure you know how returns are going to work (how long can things be returned, whether they will be sent back to you at any point, who pays for damaged material), who pays for shipping on each leg of the process, how ending the relationship with the wholesaler would work, and how often you will get paid. This should help you price your books accordingly.
posted by GenjiandProust at 2:18 PM on January 30, 2010

UK bookseller here, you can also offer books as a "firm sale" - which a lot of small/self publishers do. This means that the retailer can't return them, but it also means that unless you can convince them it's a surefire winner they're less likely to stock the book unless it's a customer order.
posted by featherboa at 11:13 AM on January 31, 2010