Just One National Book Wholesaler Remains in the United States

With Baker & Taylor ceasing service to the retail market, independent bookstores may be left to work it out with the last remaining player: Ingram

On the first of the month, Baker & Taylor announced it would stop serving as a wholesale book distributor to retailers. Instead, it will focus on its support of the library market. The announcement didn’t come as a total surprise; there had been rumors circulating for a while that B&T was attempting to sell that portion of its business—possibly to Ingram. In a communication obtained by Michael Cader of Publishers Lunch (subscription required), B&T told its accounts that the strategic change was necessary due to increased operating costs exacerbated by customers’ expectations for same- or next-day delivery.

So what does it all mean? To start, it leaves the US book publishing industry with one national wholesaler: Ingram. If retailers (namely, bookstores) want to order many different books at one time, they will often place that order with a wholesaler. It’s more efficient than going to a dozen or more different publishers with individual orders—and sometimes it’s necessary when the store isn’t placing an order large enough to go directly to the publisher.

When we asked longtime publishing industry vet Mike Shatzkin about these logistics, he said, “When you get past Penguin Random House and HarperCollins, for most [bookstores] it is a toss-up whether it is worth going direct versus having everything consolidated from a single vendor, which is far easier to administer.” Based on news reports, Twitter reactions, and background conversations we’ve had with those in the industry, we found that B&T has been preferred by some stores for better service in some US geographic areas, as well as a lower minimum order for the best discount.

Affected booksellers seem mainly upset that cost-effective, rapid supply will be hurt. On Twitter, Hannah Oliver Depp, owner of Loyalty Bookstore in Washington, DC, called the change “a f*cking tragedy” (asterisk ours) due to the loss of competitive pricing and swift customer service. Subtext Books in St. Paul, Minnesota, wrote on Twitter: “Limiting wholesale distribution to one company is bad for the ecosystem of literacy, and bad economics. Immediately, this means that our mid-week special orders will likely not show up on Friday, but on Monday instead.” Longer shipping or wait times can lead to bookstores losing business to Amazon (which is moving to one-day free shipping for Prime members).

The industry is already mobilizing to help independent bookstores weather the change. So far, here are the initiatives we’ve seen—some of them aided and supported by the American Booksellers Association:

• Ingram has created a point of contact for ABA members who previously had their business concentrated with B&T. Ingram says it is looking at increasing bookstore credit lines and amending their programs to be more friendly and helpful to small bookstores. (You can see an itemized list of what Ingram is promising in Shelf Awareness.)
• Some publishers have expressed openness to establishing more flexible, direct accounts with independent booksellers. Penguin Random House is pushing its Indies Express program with lower unit minimums and other special offers; Hachette Book Group offers Indie Direct with friendly terms as well.
• Bookazine is a smaller US wholesaler who may now expand, given the gap in the market.

It’s heartening to see the industry rally around independent bookstores and try to maintain business as usual. However, a lack of competition in the market typically leads to increased costs and diminished service—something bookstores fear is an inevitability with the loss of B&T. Margot Atwell of Kickstarter wrote in her newsletter, “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.”

Bottom line: Shatzkin told us, “It would seem likely that, over time, this will cost stores some margin. The wholesalers have to set their discounts to compete with the stores going direct to publishers, of course, so there is some limitation to how much any of them can shave the margin because B&T is out of the picture.” Publishing consultant Thad McIlroy told us, “I think that having two choices was in many ways about convenience—such as a rush order where the title is out of stock at Ingram but available at Baker & Taylor or vice versa.” He added, “I look at Ingram and think it’s a great company with great people. But you look at their moves over the last 10 years, give or take, and they are moving into monopoly or near-monopoly positions in multiple parts of the publishing market. I’ve not done a detailed analysis, but their acquisition of Perseus Distribution, of CourseSmart, of Book Network International in the UK, and on from there collectively raise a concern. Again, if I wanted to see our industry run by a single player I couldn’t think of a better player than Ingram. But I don’t want our industry run by a single player, not in distribution, not in nuttin’.”