Under the Radar: There's more to supply chain management than influencing reprint decisions and allocating existing inventory
Book publishing lives in a new world of data. In most English-speaking territories, BookScan delivers a market-wide summary, title-by-title, of what passes through the cash registers, but their reporting is of point-of-sale data, not of the inventory that enabled it. In the US, BookScan is the distributor for sales-and-inventory feeds offered by the two largest chains: Barnes & Noble and Borders. What we see is that more publishers take the store-specific feeds than subscribe to the overall BookScan service.
BookScan and these digital data feeds have accelerated the spread of a new function called “supply chain management” at many of the largest publishers, including Random House, HarperCollins, Simon & Schuster, and Scholastic in the US. This activity, which is sometimes housed in its own department, gathers information on inventory and sell-through from various retailers and wholesalers. Supply chain management exists primarily to inform reprint decisions by the publisher and to assist in allocating existing inventory to where it is most likely to sell.
But making the best use of the available data requires going beyond the objective of right-sizing reprintings and allocating scarce stock. It can also be used to identify under-distributed books that are “flying under the radar”. Teasing out that information has been a new challenge for publishers large and small. Publishers’ customers are almost universally able to provide regular data feeds and are, with few exceptions, willing to do it. And publishers are increasingly finding that proper management of the data they are receiving can surface opportunities to increase sales of books that were languishing because they weren’t available in quantities sufficient to meet discernible demand.
Our company manages the PoS-and-inventory data for a dozen publishers – a variety that includes the very largest, some university presses, multi-publisher trade distributors, and some niche publishers – for Barnes & Noble and Borders in the US, and for Waterstone’s in the UK. We maintain a data warehouse of these feeds and produce regular reports. Optimizing the information from this data requires a three-part process:
- We archive the weekly feeds our publishers get, so that we are not restricted to looking at one week of information at a time. In fact, we use a minimum of two weeks of data for all of our reports and 52 weeks of data for many of them.
- We calculate meaningful metrics from the data, so that we are measuring “sell-through” as a function of inventory, not simply seeing a raw number. Very rarely is the top-selling book the one most in need of additional inventory.
- We edit the results, so that our clients view the data in a way that is meaningful and actionable.
What our publisher and distributor clients are seeing, week-after-week, and in all three of these large retail accounts, is that the books losing sales to out-of-stocks are almost never the books stocked in the largest quantities. This is not to discredit any of the buying operations at these accounts, but it is stark evidence of how complex the book inventory problem is for a retailer managing hundreds of thousands of titles in hundreds of stores.
Overstocks go back to publishers as returns; those are the mistakes everybody is aware of and tries to avoid. But understocks are just as costly to the industry. Buyers at big chains are so deluged with new titles to consider, and major books and promotions to manage, that it is simply impossible for them to review the performance of titles they bought for 10 or 20 stores, or for a quarter of the chain to find those that are performing at a level that suggests they should get more distribution. Almost by definition, individual store managers can’t help here – many of them would never have seen those titles in the first place.
Proper analysis of an account’s sales-and-inventory data, using the metric that drives store profit – stock turn – as the key index, enables publishers to find the books flying under the radar. Buyers are persuaded by evidence rooted in this kind of analysis. Reps who use stock turn or sell-through percentage as a trigger to alert a buyer – rather than a publicity break or review, or simply a push from somebody higher up in the publishing house who wishes the book were doing better than it is – quickly find they get better results and enhance their own credibility.
Of course, publishers casting a discerning eye on their inventory’s performance don’t only find opportunity; they also find the titles on which their hopes and expectations have not been matched by consumer acceptance. But, using the right tools, they find the failing books before the returns come in. Seeing potential returns before they happen can certainly save an unneeded reprint; it can also provoke a price reduction, or some other pro-active step to avoid or mitigate the return. We encourage our clients to look at sell-through percentages every week for the Top 25 titles in inventory at an account, to take timely note of successes and failures. Very few titles are overbought by an account without the encouragement of a publisher to do so.
This technique – archive, calculate, edit – provides leverage that increases in value with the size of a publisher’s list, and with the number of outlets a retailer is managing. It is pretty much assured that a publisher with a list in excess of 1,000 titles in any retailer with more than 100 stores will quickly find a database such as we’re suggesting an essential tool to manage the account. The good news is that the techniques are being increasingly refined and can be used by any publisher in the world who can get a data feed from a cooperating retailer. No universal data service needs to be in place to get substantial benefits from PoS data.