To return or not to return? This is an age-old question in the book business. I’ve always thought that doing returns was good for me and the bottom line, but I wanted to test that, so I set about doing some math to answer this question. Returning books is more complex than getting a credit back at the same discount you purchased the books.
My store is not big enough to have a dedicated shipping and receiving person (oh, wouldn’t that be heaven), so returns tend to get processed by two of us, in spurts. Often these spurts are during slow times, but with a small staff, having one person doing returns means there’s one fewer person on the floor selling books. There is a process to returns: you’ve got to pull books, organize the books, enter the books to be returned in the computer system, pack up the books and then ship the books. This is not a simple process. Often books need to be checked in a books-in-print database to make sure they can still be returned.
And it’s shockingly easy to make mistakes. Publishers change all the time. When I last made Hyperion returns they could go in the box for Hachette — now, no. I got many books from my last Hachette returned because I forgot that Hyperion is now with Harper. And really, there’s nothing that sinks my heart faster than getting a box of "unacceptable returns" back from a publisher. It means I’ve paid for shipping twice: once to them and once for them to send the offending books back. There is nothing more irritating than getting a return back; it’s like an ex-boyfriend who just won’t stop calling. If you’re rushing to get the boxes ready for UPS or Fed Ex, it’s very easy to accidentally put the wrong label on a box, which means two boxes are going to come back to you.
Human error aside, shipping costs and staff time need to be factored in. A 37-pound box shipped from Vermont to Random House in Indiana costs between $16.22 via United States Post Office media mail, or $17.35 via UPS Ground. Now the the small savings by going to the post office needs to be balanced against the ease of having the package picked up by UPS. I generally don’t have enough returns to qualify for the bulk savings that are available through the UPS or Fed Ex. My shipping costs for my average box work out to be about 5%. So my 46% discount from the publishers tends to be more like 41% before I factor in staff time. Let’s use the same box we shipped to Random House and figure out what staff time costs with a $10 an hour staffer. If it takes her one hour per box, that’s an additional 2.5% out of that box going back to the publishers. Now my return is more like 38.5%. So I’m actually losing money, and a fair amount of it.
Returns are good for several reasons. A credit balance at the publisher can help pay your bill when cash flow is tight. And returns can free up shelf space for books that are actually going to sell. However, after really crunching the numbers, I think having a sale might be a better way to go. Mark the offending books at 30% off and you’re still making 16%, which seems a lot better than losing money in this economy. And: sale books are non-returnable.
I’m curious what other booksellers do about returns. If you’ve got some great ideas/strategies, please share.
Josie, Marisa and I are sitting here doing returns so this article caught my eye. First thing is, I use Fed Ex through the ABA program and I just did a 50lb box from here (Doylestown, Pa. outside of Philly) to Indianapolis for $13.85 with $300.00 for insurance. You really do save with that program! Also we had our return boxes out for customers at 40% off for 2 weeks before we closed the boxes. We definitely sold some, but I’m thrilled to have taken 5 boxes yesterday (2 large author events) and 4 more today. We do this twice a year late July and January. After awhile the “sale” books are more annoying than the returns. They also are a wake up call for Fall orders. We will be moving into a slightly smaller space so it makes you look closer at what I want be carrying (still carry too much as a former teacher!) and how many.
I don’t see it as an either or but rather as a two step process. First to the sale table and then, if its still there, to the returns box.
That’s what I do, Kenny. If I decide it’s time to get rid of a title, I’ll try marking it down. Once I’ve marked it down to cost and it still hasn’t moved, then I add it to the return pile. And, of course, if you’re returning to a distributor rather than a publisher, you’ll get even less for your return. I am grateful for the option of returns and getting at least some credit, though. Makes trying new book titles much less risky than trying new sideline items, most of which (in my experience) are not returnable. The hardest part for me, which I wrote about on our store’s blog recently, is forcing myself to ‘give up’ on a title I really love but that just won’t sell. It can be hard to say goodbye to a good book. But sometimes you have to, um, “badge up” and do it. ;o)
We’re new at this, so it’s reassuring to read what other folks do. We had a week-long sale at 25% off, offered the remaining books to a couple of local non-profit literacy groups at 30% off, and now will send the rest back to the publishers.
We agree that the sale table is a benefit for us and for customers. It advertises for us that bargains can be found here. Good message for an independent to blare. Most all of the picturebooks & nonfiction in picturebook format sell at 30% off. I have a harder time with hardback fiction. Generally those get returned after a year of no sales, or the paperback comes out.
If you follow the “markdown for a while, then return” procedure, be sure to make that initial markdown big enough so that it’s a concerted effort to actually sell the book. If you find yourself returning the majority of books you’ve marked down, then your markdown percentage is too low. It costs money every time you have to touch a book so why not (excuse the expression) go for broke and mark it down to sell. Think about what you’d buy it for if you saw it on a sale table. My rule: mark it down to the square root of the list price and round it up to the nearest price point. Drastic – yes. Do the books sell – heck yeah. Also, arrange the sale table by price points and use signage to lure eyeballs. A “Under $5” sign commands attention. This issue reminds me of a great reply to the question, “Do you sell remainders?” “Remainders? Heck we have enough remainders in our own stock!”
Putting the books on sale rather than returning them is not a smart business decision. If you are selling the book at cost, you are making no profit. At the same time the $10 sale on which you might make a gross profit of $4.50 is instead spent on books with no profit margin. The only ones you are helping are the publishers which is very nice but not such a good business decision. If you want to offer sale books than by remainders where you can offer a value to your customers and still make a profit.
Nice piece, but the math doesn’t seem quite right (unless you have a super-sweet deal with the big pubs!) You may have *received* a 46% discount at the time of purchase, but every pub & distributor I know processes returns at 50%. That means that in addition to the labor cost of pulling, scanning and packing, plus the shipping cost, in the *best* possible scenario you’re still losing nearly 9% of your original wholesale cost for every book you return. When you send back a $24.95 book you bought at 46% disc (cost $13.47) you’ll get 50% ($12.48) not 54% back. Anything you can do to mark down items in the store, providing you can need 45-49% of the *cover* price, will put you financially ahead vs. returning the book for credit!
I get back the same discount I purchased the book at with all the publishers I do returns with. If I buy books at 46%, that how my returns are credited. With the distributors, you’re totally right, I only get 50%. I agree with your ultimate argument: sales are more cost effective than returns.
Isn’t the USPS Media Mail cheaper than the normal bilk USPS cost?
Much good feedback here. I’ve been testing various approaches for about 4 years. I agree with Ellen that the Fedex ABA PartnerShip rates are best. I also don’t order anything from a distributor that I think I might have to return – only sure bets, special orders or an occasional title I can’t get anywhere else. I keep track of invoicing information so that when I return books to a major publisher they will give me full credit at the original discount. (With smaller publishers you have to be more flexible and take more risk, because they can’t offer the same breaks.) I used to try putting things on sale, but decided not to do that any more. There are two thrift stores on my block and if people want cheap books they have pretty good selections there. And I don’t want my store to be identified as a place to hunt for bargains, mainly because I don’t want to devalue the books I choose to promote, but also because I believe discounting drags down the whole market (mass market books aren’t in my universe, so none of this necessarily applies to that type of inventory). It does take more staff time and effort to manage orders and returns so that you can avoid having to give away your stock at below cost, but to me it’s worth it.
We try REALLY unusual displays alongside discount prices to move the books. For an example, we put chocolate cookbooks, with Like Water for Chocolate alongside Chocolate bars together with brown t-shirts and M&M Math. Then we put a small bowl of “free” Hershey kisses and the indie summer kids picks list brochures – with great corny signage like “special summer treats for you”. Whatever prices we had to discount for the books we made up in the sidelines. It does work for us to “repackage” the deal. Then we return the dogs that still won’t sell. I always say, “get the barking dogs outta this store … they’re causing a morale problem in the pack” 😉 Can’t forget abut the value of happy booksellers in the store. They can sell land in the everglades.
Miah, I agree totally about stocking books that your staff like and can sell. But I’m curious — Do you sell any copies of Like Water for Chocolate from that display? Or just the sidelines? I’ve tried similar things and found that even if they’re discounted, the books are left behind while a few chocolate bars will sell and the free stuff disappears immediately.
Hi, non-bookseller here, asking a probably-ignorant question. What about donating books to libraries or other non-profit orgs? Can you get a tax deduction equivalent to the value of the cover price? Thanks for sharing this back-office dilemma. Very interesting to those of us in other parts of the business!
yeh right.. great post, Thank You
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