01 Jun Alternative Business Models 3: Direct Sales

“Amazon is not the last word in bookselling”

By Marleen Seegers – first posted in june 2013.

We recently focused on E-riginals in translation and the profit-sharing model, two increasingly popular business models in the rapidly changing book market.

This article is dedicated to a third model, which takes on one of the cornerstones of current-day publishing by selling books directly to consumers instead of making them available via bookstores or online retailers (read: Amazon).

One of our clients, New-York publisher OR Books has applied this business model since its launch in 2009. Founded by veteran indie publishers John Oakes (Avalon, Nation Books, PEN America) and Colin Robinson (Scribner, Verso, The New Press), OR Books clearly profiles itself as a different publisher:

OR Books is a new type of publishing company. It embraces progressive change in politics, culture and the way we do business. […] Our approach jettisons the inefficiencies of conventional publishing to better serve readers, writers and the environment.

Their structure is extremely simple: their titles are available exclusively through their website, which sports an elegant design and user-friendly interface. Customers can choose between buying the e-book, print edition, and a bundle option of these two at a considerable discount. They have a “virtual inventory,” which means they only produce print editions through print-on-demand when they receive an order from a customer. As with the publication of e-riginals (in translation), this avoids high up-front print-runs which are costly to stock and copies that risk staying unsold or returned.

Rather than playing the victim of the ruthless Amazon empire, by selling directly to its customers OR Books cuts the giant retailer out of the equation altogether (something which we’ve recently seen other publishers do as well). According to John Oakes, this is the best way publishers can engage themselves in the fight. In a Publishers Weekly essay, he argues that “wrestling with Amazon over how to sell [is] a match that publishers are likely to lose—consumers like getting books for less money—but this is not a battle publishers have to fight, unless they refuse to evolve.”

However progressive OR Books’ bookselling system may seem, it basically reaches back to a time when publishers were also printers and bookstores, before supply-chain intermediaries changed the business for good. It certainly is cost-reducing, since they don’t spend money on sales representatives, sales conferences, shipping possibly unsold books around the country, etc. This latter element also points to the environmental-friendly side of the model since it avoids fuel waste. Also, no returns means no waste and no unsold books to be recycled.

While bypassing Amazon, they still maintain the possibility to get their books into physical stores. Indeed, the direct selling model won’t keep OR Books from collaborating with traditional book stores, as John Oakes indicates in the afore-mentioned PW essay:

Counterintuitively, our growing experience with direct sales has led us to re-examine our bookstore connections. By creating a buzz around a book online and fostering online communities of readers around each book, we create a small but reliable in-store demand as well. And we’ve found that increasingly stores are open to buying on a prepaid, nonreturnable basis; we give them a flat 50% discount, not dithering over a percentage point here or there. Stores order a smaller amount than they would under the old “order now, pay later” system, but they sell what they take in stock, and reorder. […] This model seems workable, and we look to see more publishers, consumers, and stores joining us. Amazon is not the last word in bookselling.

Moreover, they license US/UK trade rights in their books, something they recently did for Yoko Ono’s forthcoming title Acorn with Algonquin/Workman Publishing.

Since their books aren’t (very) present in book stores, will never be suggested by Amazon’s algorithms, etc., how does OR Books attract consumers to their website to buy their books? By reinvesting the saved money in marketing their titles. A good example is one of their earlier titles, Going Rouge—a parody of Sarah Palin’s Going Rogue published on the same day—which before its publication had already been covered among others on NPR, and by the LA Times and Entertainment Weekly. Julian Assange’s Cypherpunks has had an impressive media coverage and so has debut novel The Dream of Doctor Bantham by the much lesser-known Jeanne Thornton, as you can see on the OR Books website here and here.

One last difference between OR Books and “traditional” publishers: their e-books are DRM-free. But that leads us to another topic, a controversial one that deserves to be discussed in a separate article (coming soon)!