Mark Terry

Wednesday, April 04, 2007

Bestsellers Losing Money

April 4, 2007
From today's Shelf Awareness:

Robert Gray: Harry Potter & the Deathly Loss Leader

Yes, kids, it's scary. It's mysterious. It's not for the faint of heart. It can be a dramatic sales builder and a profit killer, but it is also one of the inescapable facts of retail life.

It is that fiercest of villains, the Loss Leader.

And the fate of Harry Potter and the Deathly Hallows, with a 12 million copy first printing and pre-order discounting in extremis, seems to be to reign forever as loss leader king of the publishing underworld.

In February, Marc Perton noted in a Consumer Reports piece that he'd already fended off early sorties by Loss Leader, cleverly disguised as Barnes & Noble (40% off on a pre-order of Harry Potter #7) and Amazon (46% off). That was just a warning shot over the bow.

I received an e-mail recently from a very good bookseller expressing frustration with the extreme discounting techniques currently being deployed for Harry Potter and the Deathly Hallows by online and chain bookstores, big box discount stores and warehouse clubs, grocery chains, convenience stores, gas stations--the list, as they say, goes on.

The bookseller reasonably asked how many--or how few--of those millions of copies being printed would be "sold at a fair price by hard-working independent booksellers, who will work extra hard producing Harry Potter parties in the hopes of selling some books."

It's a good question, and one too easily answered. Most of those millions of copies will be sold as loss leaders, and few will be sold at full retail by independent bookstores.

It is also a classic biblio-philosophical conundrum: If 12 million copies of Harry Potter and the Deathly Hallows sell in the magic forest, do they make any sound in terms of profitability?

The answer is complicated.

And how much will it matter to the nine-year-old who has already pre-ordered a copy from somewhere and is eagerly counting the endless days until July 21?

Unfair question.

Still, indie booksellers live in this world and must find ways to deal with Harry Potter and the Deathly Loss Leader. Whether they sacrifice margin for sales or sell at full retail and sacrifice total units, HP7 will still play a critical role in their summer business plans.

So how are independent bookstores preparing both to welcome Harry and to do noble battle with the evil Loss Leader?

A quick broomstick flight among bookstore websites provides some intriguing early clues. Hang on to your hats, kids; this will be a fast and bumpy hyperlinked ride.

By definition, loss leader implies sacrificial price breaks, but some indies are offering pre-order reserves for no discount whatsoever, including the Reading Grounds, Diane's Books, Books on First, Book House of Stuyvesant Plaza and Bunch of Grapes Bookstore.

Other booksellers have chosen to sell the novel at substantial discounts. Among those already offering reduced prices for pre-orders are Saturn Booksellers, Toadstool Bookshops, the Book Vault. R.J. Julia Booksellers, Millrace Bookshop at the Gristmill and Bookland & Café, which adds a 25% off coupon for a second book "so you can find something to read while you wait for July to come!" Yankee Bookshop an features an interesting mathematical alternative.

Tattered Cover Book Store has opted for a modest discount and a number of promotional activities and events for the community. Events have traditionally been a way for independent bookstores to counter the discounting wave, and both King's English Bookstore and the Bookloft are showcasing their celebrations online. Queen Anne Books is posting occasional 'missives" to keep loyal and impatient Harry Potter readers primed.

Combining events and discounting is a popular strategy. Titcomb's Bookshop, Quail Ridge Books and Left Bank Books offer variations on the theme.

Perhaps the most intriguing strategy I've found online has been the one taken by indie booksellers who've chosen to employ good wizardry by turning a loss leader into a charitable donation. This option has been employed by Odyssey Bookshop, Orinda Books and Capitola Book Café, which gives its customers a choice between a 30% full discount, or 20% off the book and a 10% donation to the local literacy program. The website's challenge: "What would Harry do?"

Our final stop on the broomstick tour will be Learned Owl Bookshop, which offers not only an irresistible Harry Potter and the Deathly Hallows release date countdown clock, but a creative, charitable answer to the loss leader blues.

Harry Potter and the Deathly Loss Leader is coming to retailers near you. What's your plan?--Robert Gray (column archives available at Fresh Eyes Now)


Food for thought, ey?
Best,
Mark Terry

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