Search Results for: label/open to buy dollars

Q: How Well Do Publishers and Booksellers Work Together?

A: Publishers and retailers work together well in some areas – but there is a huge disconnect based on competing self-interests that make it difficult to help each other succeed.

What makes for a successful retailer? More revenue than expenses, of course, but not just a simple profit and loss reckoning, but profitability within a biz model that includes a positive monthly cash flow. Healthy cash flow is achieved through healthy inventory turns. What are turns? For a bookstore that mean ordering copies of a title on payment terms (often 60- and more often 90-days to pay) and then hopefully selling those copies and getting money for them at the cash register before writing a check to the publisher.

How likely is that to happen if you are stocking 200 thousand inventory items in a big box national chain? Not likely. But hot selling titles will hopefully push overall performance numbers up. But what happens if there’s no new Harry Potter or vampire title to average in with the laggers (and even help them move more briskly because of increased consumer traffic) on the aggregate? What if you are a retailer and your inventory piles up to the point that you don’t have the funds to buy new books (referred to as ‘open to buy dollars’)? Simple. You return slow-moving titles, of course.

Store buyers place their orders with publishers (and/or distributors) based on projections of how many copies of a book his or her stores will sell in the first four to six weeks. How does the buyer come up with those projections? He listens to the publisher’s sales rep give the key selling points, comparable titles, and publicity plans. He then combines the sales rep’s projections with what his reports on the comps and his own gut tells him, and then places his order a couple weeks or months later. With the large chains the buyer will get a personal report card based on how well his titles met those projections. He has the further accountability of a finite dollar number in his corporate check book. Once that number nears zero without being replenished, his ‘open to buy dollars’ are done. So not only will he return books if they are not coming close to meeting forecasts, but he may be forced to return some borderline performing titles in order to have more dollars available to purchase a hot-selling title. To the publisher this feels like the retailer is paying his bills with returns.

The preceding paragraph sums up what is in a book retailer’s best interests – and what their challenges are. What about the publisher?

A publisher feels like she will do well on a single title when she adds up pre-press expenses (cover and interior design and editing), manufacturing expenses, direct marketing expense, overhead, a return reserve (usually an aggregate percentage applied to each title that assumes not every copy printed will actually sell and will have to be disposed of as an overstock or remainer), and royalty expenses (including advance against royalties), and then subtracts that number from sales projections – usually three-month, six-month, and 12-month projections. How does she come up with those projections? She reviews the performance of comparable titles and considers the author’s ability to help promote sales of the title to come up with her own number. She then shares her thinking with sales and marketing teams who will listen and agree or disagree in some measure and come up with their own projections. Different companies settle those differences in different ways. The publisher will do well on a single title in reality when the retail buyer brings in the number of titles projected (sell-in) and consumers buy enough copies of that title off the shelf (sell-through) to generate reorders. The publisher will get her report card on the basis of meeting or exceeding the original projections. She will do particularly well when overall sales pay off any advance against royalties and re-orders are frequent enough to keep inventory levels down (books sitting in a warehouse are like bananas – they can go bad overnite!).

The common success denominator for retailers and publishers is managing inventory levels. The retailer tries not to over order in the first place and is quick to return laggers. Both dynamics hurt the publisher who saves money on higher press runs and gets killed by returns. When publisher and retailer both get too conservative in order to combat this, another negative occurs. Stock outs. What happens when a customer comes to the store and the book he is looking for isn’t there? He forgets about it – or if he is persistent, he orders it online and waits for it. That kills brick and mortar retailers. Another less obvious impact of conservative buying patterns is the lack of merchandising. There was a day when you would walk into a bookstore and there would be numerous titles stacked high to capture attention and send the message that this was a book that just had to be purchased. With a few notable exceptions, like the afore-mentioned Harry Potter example, title emphasis is more subtle – and much easier to miss (or ignore).

Two relatively recent technological developments that are helping publishers more than brick and mortar retailers are print-on-demand and the e-book. Print-on-demand vendors provide a pretty high quality book (and the print quality is getting better all the time) – though without bells and whistles like foil and embossing – overnight and at a reasonable price. Not as good a price as printing 100 thousand books on an offset press, but a good enough price that beats the heck out of an excess inventory fall bonfire! An e-book is never out of print. Add those two dynamics together and any book is technically available within 24-hours to a retailer or individual consumer without the risk of large print runs.

But back to the publisher-retailer relationship. Even print-on-demand can’t totally mitigate the damage to performance numbers that occurs because the two parties have conflicting interests when it comes to inventory management.
Is there a solution? If you follow the financial reports of major publishers and retailers, neither side of the equation is doing well enough to give much in the give and take of business.

The solution for the author who wonders why his or her book isn’t selling like it should is to look in the mirror and ask him or herself what he or she can do to build demand. The book publishing and selling environment isn’t currently emulating the Fields of Dreams. Just because you wrote it doesn’t mean it will sell.

Should I Buy a Handgun or Not?

Should I buy a handgun? Philosophically, I believe in our Second Amendment right to bear arms. Personally, however, I am not sure I am comfortable with a handgun in the house. I don’t think the two perspectives are mutually exclusive though! For me, as the author of murder mysteries, it is both a serious and tongue-in-cheek question.

I don’t have any great confidence that a handgun will save the lives of my family and me. But I suspect that I will make a purchase, take a class, go to the range once or twice a year, and lock whatever handgun I purchase up!

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The $700 Billion Bailout: Overheard Conversations

Who created a situation that required a $700 billion bailout? Hint: The same group that promised to fix it.

Prelude

Government: Everyone in America should have the right to pursue the American dream, which everyone knows is owning a house. But not everyone can afford it. The dream or the house. Therefore we will legislate that lenders must give loans to anyone who meets certain minimal criteria – and lower the criteria.

Part 1 At the Broker

Customer: I’d like to borrow money for a house but I’ve not saved any money.

Broker: No problem. Since the price of houses will always go up, we don’t require a down payment any more.

Customer: Cool. Oh, and one other thing. My employer is a jerk sometimes and might not fill out the earnings verification form.

Broker: No problem. We have a new financial instrument called the “Liar’s Loan” – we let you verify your own wealth, employment, and income.

Customer: Really? Cool! You’re not worried even a little I won’t pay you back?

Broker: Nah. It’s not my money. A bank will provide the actual funds. I get my commission whether you pay it back or not.

Customer: Cool!

Part 2 At the Bank

Banker 1: We’ve got to get rid of some of these loans. They smell bad. And they’re attracting flies.

Banker 2: But how do we get rid of them?

Banker 1: We’ll sell them.

Banker 2: Who would be dumb enough to buy these stinky things? Especially with all the flies on them.

Banker 1: Nobody will buy them one at a time, but there are people who will buy a whole bunch of them.

Part 3 At the Wall Street Investment Bank

Real Estate Fund Manager: Man, we’ve got to get some fresh money into these mortgage funds. They stink! And they’re attracting flies.

Assistant Real Estate Fund Manger: Have you seen default levels? Who would be dumb enough to buy these stinky things?

Part 4 At the Institutional Investment Firm

School Board Pension Guy: You sure this is a good investment opportunity? I hear there are problems in the mortgage industry.

Advisor: No problemo.  These things are as safe as anything in America. The Investment Banks wouldn’t buy a bunch of stinky individual mortgages and put them in one basket and say they are good would they? Besides, they’ve divided the security into three traunches: good, okay, and bad. Since we’re dealing with your pension funds, we’ll only buy the good ones. They are AAA rated securities. I’d like to get a higher rate of return but that is available only on the bad securities – and you know how the Investment Banks are; they save the good bad stuff for themselves. If you’re still worried just be aware that the Investment Banker even bought bond insurance on your good ones.

School Board Pension Guy: Cool.

Part 5 Back at the Wall Street Investment Bank

Assistant Real Estate Fund Manager: Boss, I know those new securities you came up with are strong sellers but I have one question. Don’t we have to show the mortgages on our books?

Real Estate Fund Manager: (Rolls eyes and gives a little laugh.) Nope. The Government allows us to set up something called an SPV – a special purpose vehicle. We did ours in the Cayman Islands. The SPV carries the stinky loans on their books, not ours. We are AAA rated for those wanting a safe investment. Heck, even our so so securities in the second traunch are rated BBB for those with a little more risk tolerance. The question is irrelevant anyway.  Housing prices always go up.

Assistant Real Estate Fund Manger: Boss, you’re a genius.

Real Estate Fund Manager: I know.

Interlude

Government: We are going to hold companies accountable through Sarbanes Oxley and make them declare Market Value on their books every day. Plus we’ll punish rogue CEOs who inflate values. Now everyone knows we mean business. We demand transparency from our investment companies, too. That’s why we have the SEC. The only problem is, too much transparency gets a little confusing. And Americans don’t like confusing.

Part 6 A Meeting of the Minds

School Board Pension Guy: Hey, where are our payments?!

All Others: Sorry, the jerks who borrowed money on the houses can’t make payments.

School Board Pension Guy: But you said that housing prices always go up and they could refinance their mortgages with low interest ARMs if they got in trouble.

All Others: Sorry. We’re as upset as you are. But there’s nothing we could have done to see this coming. Housing prices always go up you know.

School Board Pension Guy: But I only bought the good securities. The AAA ones. That means I get paid back first. That’s what you said.

All Others: Sorry. There are more problems with the loans than we thought. Sarbanes Oxley isn’t helping either. No one is getting paid back squat right now.

School Board Pension Guy: But you bought bond insurance in case this happened!All Others: (Laughter.) Do you really think an insurance carrier has set aside that much money? Sorry.

School Board Pension Guy: Is all you can say, “Sorry.” You’ll pay for this you know.

All Others: Listen, no time to finish the conversation right now. We have a high-powered meeting to attend at a resort in the Cayman Islands.

School Board Pension Guy: You haven’t heard the end of this. Like I said, you’ll pay for this!

All Others: You really think so?

Postlude

Government: People are so gullible and get themselves in such messes. I guess it’s up to me to save them from themselves again. My work is never done. But I’m up to it. I’m about giving them the American dream after all!

Christmas Reminds Us that Generosity Brings Joy to Life

The joy of brightening other lives, bearing others’ burdens, easing others’ loads and supplanting empty hearts and lives with generous gifts becomes for us the magic of Christmas.

W. C. Jones

Jim and Della discover the joy of giving.

Jim and Della give their most prized possession to the other.

Jim and Della Young. A young couple just starting out in the world together and living in hard scrabble tenement in New York City that cost $8 per week. Furnished. Sure, they were poor, but they were in love so all was well—until the Christmas season rolled around.

Through shrewd bargaining with grocers and other shopkeepers, Della had managed to save money to buy a Christmas gift for Jim. Her problem was that you couldn’t buy much with $1.87. She was beside herself with tears. Jim had fared little better. But when he arrived home from work on Christmas Eve, he carefully carried a treasure he knew Della would adore, all wrapped in tissue and paper and tied with a string. But the only thing on Della’s mind was a gift she had for Jim. She could barely contain her excitement in anticipation of seeing the expression of joy on his face when he opened what she had found for him. Della’s pride was her hair: “rippling and shining like a cascade of brown waters. It reached below her knee and made itself almost a garment for her.” Jim’s pride was a gold watch that had been owned by his father and grandfather.

Jim’s gift to her was a set of combs, “side and back, that Della had worshipped long in a Broadway window. Beautiful combs, pure tortoise shell, with jeweled rims.” Della’s gift to Jim was a “platinum fob chain simple and chaste in design, properly proclaiming its value by substance alone and not by meretricious ornamentation—as all good things should do. It was even worthy of The Watch.”

All was wonderful except the small detail that Jim had sold his watch to buy Della’s combs—and Della had sold her hair to a wigmaker in order to buy his chain.

But in his classic short story, The Gift of the Magi, William Sydney Porter, better known to the world as O. Henry, wrote:

The magi, as you know, were wise men—wonderfully wise men—who brought gifts to the Babe in the manger. They invented the art of giving Christmas presents. Being wise, their gifts were no doubt wise ones, possibly bearing the privilege of exchange in case of duplication. And here I have lamely related to you the uneventful chronicle of two foolish children in a flat who most unwisely sacrificed for each other the greatest treasures of their house. But in a last word to the wise of these days let it be said that of all who give gifts these two were the wisest. O all who give and receive gifts, such as they are wisest. Everywhere they are wisest. They are the magi.

The Christmas season is fun and exciting as we open presents—but it is even more joyful for the opportunity to share from our abundance with others. Generosity brings joy.

 

the simple blessings of christmas by mark gilroy.

Excerpted from The Simple Blessings of Christmas by Mark Gilroy.

The simple blessings of Christmas are all around us – but in the hustle and bustle of the season we too easily miss them! That’s the premise behind a new gift book, The Simple Blessings of Christmas, I wrote for my friends from Inspired Faith (part of Mac Anderson’s Simple Truths gift company). As Christmas day approaches I am going to continue to excerpt a few of the 30 short chapters. You can also click here to view the inspirational “movie” that goes along with the book. Hope you enjoy! If you do, I would truly appreciate you sharing with your friends and family. Thanks.