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POD-Should you Take Returns?
What are the risks and benefits of taking returns?
Book Returns? Yes or No.
When you set up a book with IngramSpark, you are asked if you will accept returns. What does this mean and what should you answer?
To understand the issue, we should go back to the Great Depression of the 1930s in the United States. To help bookstores survive the desperate times, publishers offered to take returns on unsold books. This developed over time into a standard practice. Sometime, paperback books weren’t actually returned; instead, the bookstore stripped off the front covers which were returned to the publisher as proof the store had stocked the books for a while. But it was more expensive to actually ship the paperback books back to the publisher. But the practice has never gone away.
In some ways, it makes sense because if a 2020 title isn’t selling, wouldn’t you rather use that book shelf space for a 2023 book that might sell better? But you can also see how that mentality would start to favor new titles over the backlist. It developed into a system of NEW is good. Or, as Dean Wesley Smith has put it, under this type system, your books “spoil” quickly, just like produce. You must have fresh fruits and vegetables to stock the shelves.
Enter Print-on-Demand (POD) in the late 1990s and into the early 2000s. The old method of offset printing is now referred to as Print-First-Sell-Later. You print a large number of books at low cost per unit, then sell them. POD is a Sell-First-Print-Later approach. When you have an order in hand, then you print. The initial investment is only the illustrations, layout/design, copyediting, and marketing. It’s a very different business model!
But when the POD business model collides with the standard practices of bookstores, we run into the question of taking returns. Independent bookstores are also a small business and run on very tight margins. If they have to keep stock indefinitely, it means they can’t stock the newest titles and potentially lose sales. They passionately protect this right to return books that don’t sell. From their point-of-view, it makes sense. If you want to sell to physical bookstores, you must consider this issue carefully.
Independent bookstores have also worked hard in the last ten or fifteen years to manage their stock more wisely. With just-in-time ordering and shipping, they order smaller quantities, but reorder more often. This has cut the returns rate considerably. A 2016 report in Publisher’s Weekly said:
The trade paperback return rate from reporting publishers was the lowest, around 20%, while hardcover returns were 26% and the mass market return rate was 48%.
It’s estimated that front list titles will run 25% returns and backlist will have 15% returns. In a controversial move, Barnes & Noble recently cut back on stocking hardcover middle-grade novels because the return rate was running 80% or more. However, I’ve seen reports that independent bookstores strive for more like 8% returns. My experience has been 0% - 1% on some titles. In other words, YOUR returns rate can vary by title, genre, and format. The only way to know is to test it.
Let’s look at the issue in more depth.
Taking Returns - 3 Questions to Ask
The question of taking returns usually refers to orders from bookstores, so the first question to ask is this: Are bookstores your main market?
For many authors today, their main markets are online sales on Amazon or ebook platforms. Physical bookstores are a low priority market for them. Perhaps, as a children’s book author, your main market are school visits or other educational market opportunities.
Do you care about bookstore sales? I know there’s a certain nostalgia to thinking that your books are available in your local bookstore. And certainly, if you use Ingram Spark as your POD printer, it’s possible.
But is it your main market?
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A second question is how risk-averse are you? When you accept returns, you don’t know if a sale is complete for 180 days because the store can return the book(s) anytime up to 180 days. Let’s say you sold $1000 of books. Your account is credited and paid for the $1000. But at the end of 180 days, the bookstore returns $900 worth of books. At that point, the POD company will hand you a bill for that $900! You must return the money. You can choose to also have the books shipped to you at your expense, or destroyed. If you have the books shipped to you, you can resell them - if they are in good shape. Often, they are shop-worn with dings here and there making reselling hard.
A final question is what kind of financial shape are you in? Do you have a reserve of cash? If you are suddenly hit with a big return bill, can you absorb that loss and still function?
Taking returns is not a straightforward yes or no answer.
Take Returns? Pros
The biggest advantage to taking returns is you have access to the wider physical-bookstore market. Your book, at least the first six months of launching, can easily be stocked on bookstores across the US.
If you ask for returned copies to be sent back to you, the cost will include shipping so your costs for that title are high; however, you have the opportunity to resell it (assuming it’s in good shape).
Take Returns? Cons
A sale isn’t final for 180 days. You may be paid by the POD company in 60 or 90 days, but that money is still at risk until the returns period is over. Therefore, carefully read the policy for any POD company you deal with! Here’s information on Ingram’s return policies.
You can choose to have books physically shipped back to you or have them destroyed. You’ll take the loss directly on destroyed books. For books shipped back to you, you’ll have to find places to sell those copies; you may recoup some costs, but probably will make slim profits.
Taking Returns - Options
A final consideration is that most POD printers allow you to change the returns status whenever you want. One idea is to leave a book eligible for returns for the first six months after publication. Bookstores are more likely to stock a new book, so it makes sense. You’d get access to bookstores initially. If sales are strong, you can monitor the return rate and when sales start to drop and returns rise, then switch to a NO RETURNS status. In this case, you’d keep most backlist titles at NO RETURNS.
OR, some reports say that returns are lower on backlist titles. You may choose to accept returns on backlist, but not on front list.
OR, some reports say that hardcover middle grade novels are the hardest to sell in a bookstore. You might decide to put those titles at NO RETURNS, but for paperback nonfiction tiles, you would accept returns.
In other words, you can develop a policy of returns that works for you, your books, and your goals for placing books in certain places to encourage sales. And you can change it when your business changes, whenever you want.
Always, though, consider that third question: how healthy are your finances? In the early days of your career, when you only have a few books, you may not want to consider returns at all because you can’t afford a huge hit. As your backlist and your income grow, it may be worth the expanded market sometimes. For certain time periods. Or for certain books.
Do you take returns? When? What’s your strategy?