How to Choose a Distributor
guidelines offer pointers and thoughts on how to make the right decision
for your list, looking at the services and qualities of a Distributor to
take into consideration and possible pitfalls to avoid. What questions
should you ask?
How soon do you get paid? Will you get paid on time? When are deductions made for charges? As long as you are paid on 90% and the charges not put in before, that is acceptable. Consider the risk of non-payment. If booksellers go bankrupt etc you are not likely to be paid so ensure that credit control and market intelligence are good by the Distributor. When are the reps paid by the Distributor (if separate) and are they paid promptly (this keeps the reps content and they will do a good job). If the Distributor only pays you as and when the bookseller pays them this is not a good deal.
Is it reasonably straightforward and easy to understand?
There are various charging methods but the most common is by invoice value, between 12-15% of invoice value. Is this charged on all sales? (i.e. including returns) or is it on net sales only. Are credits charged for on top? Vat will probably be charged for services. What else is charged for e.g. distribution of free items, repricing?
Is the charging mechanism so complex that you will never really know if it is correct? The level of complexity should be appropriate to your level of operation.
Distributors who want your business will compete if they think you would be a good match to the rest of their client base. If they go too low they may be desperate for the business or conversely very efficient.
The old-fashioned fixed rate charge e.g. when 50% of cover price is returned to publisher avoids VAT and gives you a definite return on each book sold. If you do not want to use wholesalers and give high discounts (anything over 35%), and avoid VAT charges the fixed rate has benefits. But the downside is that it does tie your hands and the Distributor's.
Try to meet the staff of the Distributor. How well do they handle difficult situations on the phone? How good is their front-line staff? Is there one publisher who seems to get priority treatment, i.e. will you always feel second best? How many new clients have they taken on during the last few months? Is there a danger of publisher overload? Some Distributors have a history of their service being affected by taking on too much volume too quickly.
Does the Distributor offer regular and useful feedback on sales achieved, returns and stock levels, customer profile, debtors? Is it in electronic or paper form? Will it meet your requirements? Are reports available on demand or only at set intervals? Can you enquire on-line?
How good is their IT system? Look at its flexibility and reporting ability. Watch out for movement to new systems! Some Distributors' service levels have dropped when updating or changing hardware or software. Are they linked up to teleordering or PubEasy to ensure prompt transmission and receipt of orders and reports?
MARKETING & REPRESENTATION
Does the Distributor have an effective marketing structure offering advanced information sheets, press releases, targeted mailings, catalogues, publicity bulletins and other promotional material? Will they notify titles to Whitaker and BookData? Do they have a website? Is Representation offered at the key Book Fairs and other publishing events?
Representation charges seem always to be on the high side, i.e. between 10 and 15% of invoice value. This should always be of net sales (i.e. never pay reps for returns!). Sales may be area-based so watch out for paying large sums to sell to library suppliers. Demand a lot of the rep service because you are paying a lot for it.
Make sure your Distributor is not so tied in with the repping (ownership or a very cosy deal), that you get biased and unhelpful advice. Reps and Distributors may be closer to each other than might appear the case. Getting as many solutions at one stop is appealing but may not be the best and most economic solution. Be wary of deals that have to be tied together, e.g. Distribution and repping.
Can direct sales be handled effectively from individual members of the public and institutions? Via phone, mail fax or Internet? Are there credit card facilities?
WAREHOUSING AND DISTRIBUTION ONLY
You may decide that you only want warehousing and distribution services but if it leaves you creating invoices and collecting the cash it has to be worthwhile. It may seem tempting to hold on to cash collection but an honest and efficient distributor is better placed to argue with large chains and achieve prompt payment.
STORAGE Look carefully at the charges for storage. How many years stock will be held before fees are introduced? Is there a charge for returned stock to be restacked? Is the stock handling and husbandry reliable and efficient?
Insurance may be offered to publishers in a number of ways often dependent on the size of the list. For small publishers with a limited number of titles it may be part of the overall package. It is usually the case that no insurer will pay out for more than one reprint cost. The standard insurance covers fire and flood. Goods are only covered once they arrive at the warehouse, thus transit time is not covered. Once the goods are in stock they are covered until they are despatched and delivered to the customer. Stock loss in the warehouse is not covered separately, generally there is an allowed loss rate and if any loss amounts to more than this the Distributor will probably negotiate with the publisher.
With bigger publishers insurance is discussed as a separate issue. Some may have their own cover already so the Distributor does not charge them nor is it included in the contract. Some opt to take the risk not to be covered at all.
Another option may be to split the cost of insurance.
Insurance is not cheap and it is a key area to cover in the negotiation.
Check out a Distributor with the publishers they work for, you select the companies to call. Talk to experienced booksellers. Their opinion of the service is important. Look for a Distributor who wants to keep the people they sell and supply to happy as well as publishers. Are deliveries rapid enough, are there seasonal trends (i.e. slow at Christmas), and are the parcels accurate and well packed to avoid transit damage? The bookseller has to have confidence in the supplier.
These are the key points to consider in the selection of an effective Distributor for your product and will arm you with the ideas and thoughts (and hopefully the difficult questions!), necessary when discussing your requirements with potential Distributors. The leading companies are listed here on BookWeb. Good Luck!
With thanks to Bill Norris of Central Books for his help in putting together these notes. firstname.lastname@example.org. www.centralbooks.com
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