Ch 4: Bad News for Booksellers

Baker & Taylor exiting the retail book distro biz spells trouble for publishing

Baker & Taylor, one of the two major book wholesalers in the US, just announced that they are exiting the retail wholesale business. I believe this is bad news for booksellers, readers, and writers.

First off: what is a wholesaler? The short answer is that it bridges the gap between publishers and bookstores (among other purveyors of books.) It creates scale and simplicity for publishers and for bookstores, so a publisher doesn’t have to sell and ship to and bill thousands of stores for their products, and a store doesn’t have to work with and send money to and keep track of accounts for hundreds or thousands of publishers. It also smoothly and quickly manages the logistics of getting print books from point A (aka a publisher or warehouse) to point B (a store or library). Booksellers such as Greenlight Books in Brooklyn or Barnes & Noble in Manhattan or even Amazon can order copies of a book from Baker & Taylor.

B&T describes itself this way:

“Baker & Taylor is a leading distributor of books, video and music products to libraries, institutions and retailers…We ship more than 1 million unique products (SKUs) annually. We also maintain one of the largest in-stock inventories of books, videos and music in the U.S. - about 385,000 titles in inventory and more than 1.5 million titles available for order.”

In late 2018, Ingram (the other major wholesaler) discussed buying Baker & Taylor’s retail wholesale division, though that seems to have fallen through. At that time, Oren Teicher, the CEO of the American Booksellers Association, expressed serious concerns about this prospect, saying that he believed that competition in the space was “a very significant factor in the success and growth of the independent channel.” There has been real concern from booksellers and others about this new announcement that Baker & Taylor will not be continuing its trade retail business.

As Paul Swydan, a bookseller, mentions, this will lead instantly to increased costs for some booksellers, who typically have a razor thin profit margin - as low as 1%, according to some booksellers I’ve spoken to. Over time, the lack of competition in the space will possibly lead to increased costs and less great service across the board. If it takes longer for a bookstore to get copies of books, they could lose sales, harming their bottom line and their relationships with customers, who will be more likely to order books from Amazon rather than checking out their local indie or Barnes & Noble.

Some publishers might find themselves with less or more expensive access to the market. Additionally, as folks familiar with the comics world know, this creates a situation where the remaining wholesaler’s policies become law.

The remaining distributor can end up exerting influence over what books become successful, and which ones make it to market at all.

This is not me being alarmist, this is what happened in the comics distribution space in the 1990s. Diamond Distribution bought up or forced out all their competition until they were the only game in town for distributing comics to comic book shops. Diamond has been accused of poor service, unfairly increasing their minimum orders (harming small publishers and newer creators), and even controlling the content that is sold to stores (and therefore to readers) by changing their policies or dropping a title, series, or publisher if they wish.

As long as there are numerous competitors in a space, one might see opportunity where the other doesn’t, and they keep each others’ prices and policies reasonable. But without that competition, there’s nothing to stop the remaining one from increasing their prices dramatically overnight, or offering significantly worse terms or poor service to business partners, who are left without a choice if they push back or refuse to work with them.