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We've all heard of home distributors like Tupperware, Amway and Discovery Toys and the success they've all had in the secular marketplace. But is the "home distributor" strategy good for the Catholic book business? Not the way it's currently being implemented--with home distributors selling exactly the same thing as the publishers, bookstores, direct mail catalogers and traditional distributors. Let's step back and see the big picture, and look at things they way they really are.
When we talk "Catholic Books" we're not talking "milliion selling" John Grisham or Tom Clancy novels. If a Catholic title sells 10,000, it's a best-seller. It took Surprised by Truth close to a decade to reach a quarter million. Sad fact is, sales volumes of Catholic titles are typically low--in the secular market text book range. Unlike plastic food storage containers or toys with markups of a hundred percent or more, we're not talking about big margins to "divvy up "or work with. Bookstores must typically buy at a standard 40% off a publisher set retail list. With that 40% gross revenue, they have to cover shipping, storage, promotion and operational costs. To compound the situation, the same publishers that sell to bookstores also sell direct to consumers via their own respective websites, direct mail efforts and Amazon.com --often at a discount of 20% or more. (Something bookstores are hardpressed to compete with at the margins granted them.) Publishers also sell titles from other publishers to the same retail consumers. (So bookstores are often confused about what publishers actualy sell wholesale.) To make matters bad for traditional wholesale distributors, publishers sell direct to bookstores and also sell books for other publishers either as master distributors or mass retailers. If its parent organization needs quick revenue, a publisher will circumvent its distributors and do unnanounced promotions to bookstores.(Rule of thumb is: "if you need some quick revenue, do a sale to bookstores." ) Authors themselves have no reservations about circumventing distributors and selling direct to bookstores . They make it standard practice to sell against bookstores at conferences or with their own direct mail or telemarketing efforts. As you can see, there are no pure lines of distribution or marketing responsibility. The Catholic book business is already overcrowded with sellers all selling exactly the same thing.
Other than direct mail to the same Catholic publication subscription lists or ads in Catholic newspapers or magazines, little is done by the publishers of Catholic titles to use mass media to create primary demand, expand markets or carve out the mainstream. (Sorry the FSI ads in the Sunday newspaper and Ricardo Montabon informercials are for hign margin rosaries amd medals.) At a 40% gross margin, bookstores can't afford to market to the mainstream with much hope of profitability . Co-op advertising allowances are almost non-existant. The point-of-purchase they receive are heavily branded with publisher logos and entrities to buy from the publisher direct. (So why would any bookstore in its right mind advertise so its target customers could buy the item elswehere?) Bookstores and distributors get no break on publisher e-mail lists. ($100 for a one time use of 1000 publisher-owned customer addresses is typical. And you have to buy a minimum of 5000). Publisher-created print advertising is focused on Catholic publications that only reach a small segment of the potential 20 million Catholic buyers. (Though you can turn on any TV and see commercials for Mormon publications.) Though there are tens of millions of Catholics out there in mainstream America, mainstream market expansion is not a reality. The same small choir is sale-preached to by a myriad of sellers all selling the same thing. The last thing that's needed is another seller.
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Catholic home distributors are not selling alternative products like Amway househould cleaners and detergents, Discovery Toys or entirely different brands. They're selling exactly the same books that traditional distributors and bookstores do. |
Home distributors work in the secular marketplace because they are an effective way to sell new products or alternative products that feed off the primary demand generated by the traditionally-marketed brands. But even if home distributors like Providence House (now Catholic Company) claim they are an effective way to extend book sales to markets not covered by bookstores, they have no qualms about invading a local bookstore's market to do it. There is no territorial respect much less geographic definition. In the vast majority of cases this is Tide is your living room as well as supermarket. Secular chains like Kroger, Albertson's and Safeway would never put up with this kind of behavior from Proctor and Gamble or Lever Brothers. But the poor unfortunate "mom and pop" Catholic bookstores don't have the clout nor the association behind them to cry "foul." They bleed with their own brand of stigmata. They all should be canonized as "St. Rodney Dangerfields."
Catholic home distributor companies buy at less than traditional distributor rates (like 70% discount or more), then sell to "home distributors" that act like retailers that sell to consumers. Traditional distributors are lucky to get a 55-60% discount and then have to sell to bookstores at 40-50% off to compete with the publishers that retain them in the first place. ( Do the math, that's only a 10-20% gross cut.) "Home distributors" , on the other hand, sell at less than bookstore retail because they claim less overhead. In reality, both traditional bookstores and distributors get undercut, yet they incur more promotion and operating expenses. If a major secular manufacturer sold one of its branded products this way , major supermarket chains or distributors would cut off their business and tell their lawyers to check out the unfair trade practices with the FTC. Difference here is that they are no major Catholic bookstore chains or major Catholic distributors. (Sorry, Catholic divisions of Protestant or secular distributors don't count.) And Catholic bookstores have no association (much less one powerful enough) to step up and cry "foul" or protest with a boycott. Yet Catholic publishers could not exist without the thousands of independent bookstores that keep them in business--the same bookstores they sell against and undercut directly with discounts to consumers or indirectly by supporting home distributors.
Catholic publishers might very well say: "What do we have to lose if we give a another breed of company the opportunity to sell our books?" What they risk losing is the business of their core resellers, the Catholic bookstores. Just think what would happen if Catholic bookstore owners banded together into the kind of association that emulated the fast food franchisee type? With "all for one and one for all" as their campaign cry, they could command more than "lip service" from Catholic publishers, win real partnership respect, and gain access to a lot of other benefits in the process like group buying discounts, health insurance, and retirement plans. I know, I worked with franchise companies for over 10 years as a corporate marketing and advertising executive.
I cry every time I see mail returned from Catholic bookstores no longer in business. Every year the number of bankruptcy notices grow.
Rick Sikorski, Good Catholic Information
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