Book Distribution in the Philippines

Have you ever wondered how much authors earn in the Philippines, if any at all? How about book publishers? Well I have but I don't have all the answers. However, there's one field that might give us a hint at how much money is being circulated and that's distribution.

Distribution has always been a key process in our capitalist economy. It's the infamous middle-man, and what some might assume where all the money is. In traditional businesses, here's the typical breakdown of distribution:

40% suppliers
30% distributors
30% retailers

Seen from another perspective, suppliers, distributors, and bookstores can be seen in this manner:

suppliers = authors
distributors = publishers
retailers = bookstores

However, having said that, the percentages that work in business don't necessarily apply to the local book publishing industry.

I'll start off with the bookstores, or more specifically, the big bookstore chains (you know who you are). Independent bookstores might have different practices but here's the deal from what I've inquired.

First off, as a publisher, there are two ways to get my books on bookstore shelves. One is to sell the bookstore the books. As a publisher, this is good for me as it removes the inventory from my hands and bookstores take responsibility for unsold copies. In many ways, as a publisher, this is a goal to strive for. As a bookstore, I don't want this to happen as much as possible, because it entails risk on their part when it comes to unsold copies. That being the case, as a bookstore, why would I want to buy books? Usually because of bigger discounts. As a publisher, if a bookstore is willing to take the risk of stocking my inventory, I should sell the books at a much lower price. How much? Well, let me talk about the other way book publishers get their books on the shelves.

The second method is called consignment. I first heard the term while working at a specialty toy store back in the mid-90's and what it basically means is that I'm asking the store to sell my stock. It's different from simply selling the books to the bookstore because aside from all the hassles of consigning a book (which I'll discuss later), I have to get back any unsold copies of the books. This means that there is little financial risk on the part of the bookstore but a huge one on the publisher. What if the books don't sell? Then the publisher doesn't earn a thing from his endeavors. What if the books sell little? Then both the bookstore and the publisher earn little profit. What if the books sell really really well? The bookstore earns a lot and asks the publisher to consign them more copies of the book if the publisher is lucky. If not, the bookstore earns a lot and the publisher goes through some red tape to claim his money.

I mentioned that there's little risk on the side of the bookstore. What part is risky you ask. I mean if all the financial investment is on the part of the publisher and what the bookstore gets is merely the profits, what's the risk for them? Well, in a bookstore, shelf space is at a premium. Every book you put on the shelf is another book you don't put on the shelf. If the consignee's books sell well, that's well and good. But what if it doesn't? Another title might have generated more profits than what the consignee was offering. That's why there's risk on the bookstore's part as well. Is it as huge as the publisher's? Probably. But then again, the publisher isn't in charge of a large, bookstore retail chain.

Most local books (and not imported international books) make it to bookstore shelves because they're consigned. It makes perfect sense for the bookstore and the publisher takes a brunt of the risks (which is why publishers sometimes demand so much from authors--it's their money on the line). I was talking about publishers earning from their endeavor. So how much money do bookstores place on consigned books? 40% to 60%. 70% even if you lack negotiating skills. What that means is that if a local book costs P200 in big bookstore chain, anywhere from P80 to P140 goes to the bookstore. Of course you can shave off around 10% to 20% more if the publisher has good relations with the bookstore, has a good track record with them, are friends/relatives with the owner, bribed them with dinner, arranged a PR event for them, etc. There are various methods to get in the good graces of the big bookstore chains and if you're smart, you'll use them. But the fact of the matter is, 40% off the suggested retail price at best is still 40% off the retail price. As a publisher, you'll have to accept that around half of what consumers pay won't go to your pockets but to the bookstore.

Having established how much profit a bookstore acquires from consigned books, you can estimate how much discount a publisher will give the bookstore if the latter buys their books. That's anywhere from an additional 10% to 20%. So assuming you got a good deal with the bookstore and you're consigning books to them at 40%, if you want them to buy the books, you'll have to sell at around 60%.

But wait, as a publisher, there's several miscellaneous costs involved as well. First, before the bookstore stocks my books, I have to secure the book's ISBN (or ISSN in the case of magazines). Which isn't necessarily difficult but involves assigning one person to handle the paperwork. Second, I have to pitch (or convince them to stock them) my books to the bookstore. Third, when they've finally agreed, I have to transport the books to the bookstore. Of course transporting books is where it can get messy. There are usually two options. Normally, and the most convenient way, is that you transport the books to the main branch and they'll handle delivering it to all the other branches. The other option is if they ask you to deliver it to their various branches. Obviously, it doesn't take a math genius which process is more expensive on the part of the publisher. Of course you might not have a choice with the latter but that depends on what bookstores you're dealing with. I mean in the case of National Bookstore, there's no way you can transport your stocks to each and every branch. In the case of Fully Booked, it's more reasonable since they're not yet as widespread. Fourth is the process of following up on the individual (and I mean individual) bookstores, asking whether your books have sold or not. Not difficult by any means but it does take up a lot of time. The fifth step is collecting your payment, and quite frankly, some bookstores have so much red tape that it's difficult to collect. The sixth step in the case of unsold copies is the process of recalling your stocks. Again, see the third step for complications that might arise. As can be seen, the various steps requires at best additional manpower, or expensive fuel and transportation at the worst.

Aside from those expenses, as a publisher, you still have to pay your author. I once read in the now-defunct Pen & Ink that authors get as much as 10% royalty (whether that's gross or net I don't know but as an author, always go for gross!) for their books. Now by international standards, 10% is a huge percentage. However, it's a huge percentages because we simply don't sell a lot of copies. International authors might simply get 1% or 2% of sales, but then again, they have a print run of millions. I'd rather get 1% of a million sold books rather than 10% of one thousand sold books.

Then there's paying a flat fee to various editors, artists, graphic designers, and proof-readers. Oh, and let's not forget the actual printing cost of the book. When you look at all the expenses, one wonders how much a publisher does earn from publishing books.

Of course it's not all doom and gloom. Some books are indeed profitable ventures. I'm sure books by Nick Joaquin have undergone numerous print runs. The same goes for books by Luwalhati Bautista. The bad news is that my examples of "successful" books are usually required readings for schools. The good news is I have other examples, although they're not necessarily books but graphic novels. Arnold Arre's After Eden and Carlo Vergara's Zsa Zsa Zatturnah has gone through at least two print runs.

Then there's similarly the avenue of distributing through other means. I mean the scenario I described applies to big bookstore chains. Independent bookstores might give you cheaper rates, although it takes more work on your part to have your title peddled around the country. Some even look for alternative means of distribution. A few years ago, Summit Media, the company behind magazines like FHM and Kidzone, launched a series of young adult books. They didn't distribute it through bookstores channels but through their magazine vendor distribution because their rates were cheaper than that of the big bookstore chains.

Armed with all this knowledge, being a publisher ain't an easy job nor is it always a profitable one. As an author, you might want to approach a publisher so that you simply don't have to go through this tedious process or take the financial risk. If you plan to be a publisher, one must take all of this account when making your plan. As a consumer, you start appreciating how little profit publishers get when you buy books from the big bookstores. It's really no surprise why various publishing outfits give huge discounts at the Manila International Book Fair: they're already losing as much money if they were to sell it at local bookstores.