Manhattan Beach, CA - May 6, 2019. On May 1, 2019, Baker & Taylor announced it will close its retail wholesale business as of July 15, 2019. Leaving aside Bookazine, this leaves only one major wholesaler to sell books to retail bookstores across the US: Ingram Book Company. While Ingram Content Group, the overall entity that carries the Ingram Book Company brand, is a reputable family-owned business, the fact that they will stand as the only major wholesaler is still problematic.
As the representative of over 3,100 independent publishers, it is important for the Independent Book Publishers Association (IBPA) to consider what Baker & Taylor's exit from the retail wholesale space will mean to our members moving forward. Let's consider the following.
The difference between wholesalers and distributors
Understanding the difference between a wholesaler and a distributor is a necessary starting point.
In the simplest terms, a distributor holds stock/inventory only for those publishers it exclusively represents. For smaller publishers, the benefit of using a distributor is that the distributor functions like one big publisher. A distributor makes money when its publishers sell books, so it is careful to choose publishers for its portfolio based on the already proven commercial viability of their content, as well as their volume of titles and sales history.
A wholesaler, on the other hand, sells stock/inventory to retailers from all publishers. A wholesaler buys from individual publishers, as well as from distributors representing individual publishers—it is a neutral middleman that purchases inventory at standard discounts and resells that inventory to retailers. Wholesalers are helpful to retailers because they offer a one-stop-shop where bookstores can find stock and fulfill orders from all sorts of publishers. They are helpful to smaller publishers, because they don't require proven commercial viability, volume of titles, or sales history.
Obviously, there is no master plan that created the scenario in which our industry is left with a single wholesaler able to sell to retail bookstores. Instead, the current situation stems from economic trends related to two main factors: (1) consumers buying more and more of their content online, and (2) retail bookstores bypassing wholesalers in favor of buying direct from publishers and/or distributors (remembering that a distributor acts like one big publisher). Much of this change was driven by publishers' free-freight incentives for the purpose of encouraging direct sales and the fact that bookstores often get better discounts when they buy publisher direct. At the same time, technology has helped bookstores manage more suppliers, where in the past they may have only been able to easily handle one or two major accounts.
What this means for author publishers
If you only publish your own work, this shift in the marketplace should make little difference to you. Author published books are rarely shelved at bookstores and other brick-and-mortar locations. When bookstores do shelve author published titles, they typically end up there from one of three main channels: (1) via the author on consignment, (2) via Ingram Content Group via their IngramSpark platform or (in extremely rare cases) Amazon KDP's expanded distribution program, or (3) via a distributor that works with author publishers. Since Baker & Taylor rarely wholesaled author published books en masse directly to retail bookstores, their exit from this market is not a great loss for author publishers.
What this means for independent publishers
If you are an independent publisher currently selling to retail bookstores or hoping to sell to retail bookstores, the story is more nuanced.
Yes, as mentioned previously, selling publisher direct is an option. But even if technology has helped bookstores manage more suppliers, there is a limit to the number of accounts a bookstore can be expected to work with. This is where distributors have always come in, with their ability to group many small publishers together and seamlessly fulfill orders to bookstores from a single point of entry.
That said, many independent publishers don't meet distributors' criteria (commercial viability, volume of titles, sales history). Still others choose not to hitch themselves to a distributor because of the fees. For these publishers—those without a distributor—Baker & Taylor provided an important channel to retail bookstores. A world in which only Ingram Book Company services this channel is a world with less reach into this space. Also, only one player on the field means there are no checks or balances. Some believe this could lead to slower deliveries, higher prices, fewer promotions, and decreased customer service without the ability to leverage an alternative option. Should independent publishers expect increases in mandatory discounts, shipping fees, and/or penalty charges when working with Ingram Book Company? Only time will tell.
The industry's response
For its part, Ingram Content Group has released several notices reassuring their clients that "Ingram wholesale is positioned to fill the gap left behind by Baker & Taylor." In a May 2, 2019 email to Ingram Publisher Services (IPS) clients, Ingram Publisher Services' VP & General Manager Mark Ouimet wrote:
"Ingram wholesale is well positioned to fill the gap left behind by B&T, and particularly so for your books because of our unique distribution network. We will be able to fill any demand for your titles from retail customers (including consumer direct fulfillment customers) that is redirected to Ingram wholesale provided you are in stock in our DCs. As a reminder, we are also supplying Ingram wholesale orders to Amazon out of Jackson and all wholesale channels, including Amazon, out of Chambersburg and are shipping those books on a daily basis."
To its Lightning Source clients, Ingram VP of Content Acquisition Kelly Gallagher wrote on May 3, 2019:
"We are committed to serving our clients and customers with the highest level of service and stand ready to help address anyone else's needs as they arise. Lightning Source will continue to make your books available to the Follett and B&T library channels of distribution."
These assurances are good to have, but Ingram's willingness and ability to step up doesn't erase what the industry is losing in Baker & Taylor's exit from the retail wholesale market. In response, there is at least one book wholesaler servicing other parts of the market—American West Books (AWB)—that's considering what it would take to add retail bookstores to its wholesale mix. In a May 3, 2019 email to IBPA, AWB's CEO Christopher Robbins wrote:
"I've been speaking with a number of independents working to understand the need, frequency of orders, terms, etc. This would be a huge initiative, but I'm interested in exploring and seeing if we can create an independent alternative. I love the value of independent voices in the industry."
While things settle, we can expect to see current distributors and larger publishers create more direct accounts with retail bookstores* and for Bookazine, the only other wholesaler servicing the indie bookstore market, to consider how they might fill the gap left by Baker & Taylor's exit, as well.
IBPA, meanwhile, is connected to all the industry players referenced here and will continue to have conversations with them in order to understand new developments as they happen.** We will continue to keep you informed, and we're happy to gather and address our members' concerns. Members are invited to email IBPA CEO Angela Bole at firstname.lastname@example.org. As always, we're here to help.