Previous posts on this topic dealt with U.S. book distribution in its earliest iteration when books were shipped to America from Europe, then carried by itinerant foot- or horse-peddlers. Later the invention of steam-powered travel allowed faster shipment across the nation to all quadrants. This article deals with the modern era, ending a few years before now. Our current age of book distribution will be in the post to follow.
The Middlemen vs. The Publishers
In the modern era, middlemen are essentially national distributors like Baker & Taylor or Ingram, the country’s largest and most predominant examples. Both these firms stock thousands and thousands among the titles of books in print, from every major publisher, and from many minor, university, and independent publishers as well.
These middlemen are not the only firms plying titles to booksellers. Publishers are still in the market of selling titles to bookstores, but of course sell only their own titles, and do so by employing regional sales representatives. More and more, the size of this force of representatives is being collapsed and shrunk in favor of electronic communication and digital catalogs.
Why would booksellers buy from individual publishers when they might meet all their ordering needs through one or both of the national distributors? This question returns us to the idea that those involved in the book industry (perhaps up until the current era) have viewed themselves as a different kind of businessperson, and this may even be true. Players on both ends of the spectrum see themselves as agents in a commercial trade to be sure, but also as persons concerned with books, with reading, and with creating or fostering literary culture. That the publishers were able to and thought it a priority to send out agents to individual retailers allowed booksellers to establish a rapport with their publishers’ representatives. Many booksellers might order titles solely on the recommendation of such a representative, given a positive relationship and good history with them.
The national distributors, the middlemen, provided no such service (until recently). For their part, booksellers, on the whole, were more apt to view these middlemen as interlopers in the book trade, more concerned with turning a profit than with the content of the books themselves. After all, the publishers were the ones taking the financial losses for publishing titles of cultural or academic importance, but which would never be bestsellers. The distributors were able to counter the goodwill retailers might have felt towards publishers, or their agents, by shipping from regional distribution centers, rather than a single, national headquarters. Ordering from a middleman meant being able to place an order for almost all the titles one might need, since distributors stocked items from all the major publisher’s lists. This cut down on shipping charges. In order to provide premium services to retailers (large inventory, quick shipping that is generally free), the distributors cannot give the same discount as the publishers, one reason why retailers might still prefer to order directly from the source.
By the 1970’s, wholesalers had established themselves as major players in the distribution game and managed to stay ensconced as such through the 1990’s, benefiting particularly from the rise of the superstores, which would order mass quantities of stock. Wholesalers were additionally aided by the entry of Amazon and other online booksellers into the industry and its supply chain.
Amazon began by processing its book orders through Ingram. (In 2001, Ingram was still Amazon’s single largest vendor.) This meant that once Amazon received an order for a book, Amazon would place an order from Ingram to have books shipped to their warehouse. (In the beginning, there was only one, and in Seattle, creating almost a reverse problem from that encountered by other wholesalers with only eastern warehouses). Only then could Amazon turn the order around from its warehouse and ship it to the customer, all of which meant that Amazon was shipping everything twice. For Amazon, whose quintessential business mantra was to provide ideal customer service, the lag in shipping time for customers ordering through Amazon needed an overhaul.
The Genius of Amazon
Amazon’s business decision at this juncture cemented its short-term earnings future. Amazon determined that to provide the best possible service to its customers, it needed to acquire more warehouse space and additional warehouses. This meant a large output of funds was tied up in property at a time when the company had yet to show a profit, and would not, for some years to come. But Amazon CEO Jeff Bezos believed he was onto something. Bezos’ ultimate goal was not online bookselling; his intention was to create an online marketplace where customers could find and buy anything, literally, that they desired. It was this endgame that drove Bezos (even though his company had yet to show a profit on paper) to acquire other businesses and absorb them into Amazon, even if they maintained a separate internet presence (Zappos.com, Diapers.com, IMDB.com, Woot.com, Audible.com, etc). Not only that, but Bezos eventually created a space on Amazon where customers could purchase items from other individuals selling online, using Amazon only as the channel by which buyer and seller could discover each other. Bezos was trying to engender brand loyalty to Amazon among his first-time buyers, and his strategy worked.
With the construction of both larger warehouses and more regional ones, Amazon was inserting itself squarely into the distribution chain. What Bezos realized was that for Amazon to supply its customers most efficiently, it had to bypass the middleman entirely and become its own distribution network. As Michael Clarke, an Executive Vice President with Silverchair Information Systems, has stated, the “logistics of distribution are the iceberg below the waterline of online bookselling.” Clarke noted why Amazon has been so successful in contrast to a company like Sears, which had brand loyalty, offered the same range of products in their catalog as Amazon now does, and maintained warehouses across the country for the purposes of distribution. He contends that the essential difference was that Amazon entered the market in the internet age, never having existed in another iteration, so that Amazon’s catalog, as the number and variety of its products increased, made its way directed onto its website, while Sears maintained its print catalog rather than transferring the entirety of its goods and services onto the internet. “Sears thought it was in the catalog business and, more recently, in the retail store business. It was not. It was, and remains, in the retail sales and distribution business. The mechanisms of sales and distribution may change over time, and keeping ahead of those trends is the key to remaining successful.” (Clarke)
Change the Only Constant
This is of course, the point that has been true of book distribution throughout history, and has been echoed by other scholars, publishers, and industry insiders. In fact, history has more likely shown that the mechanisms will and perhaps even must change over time. Amazon worked diligently to firmly establish itself as the industry leader of book distribution in the established model. In the next (and last) post on the topic, we’ll look at the most recent moves Amazon has made, in addition to much consolidation and consternation on the brick and mortar side of book publishing and bookselling.
Bianco, Anthony. “Virtual Bookstores Start to Get Real.”
Brandt, Richard L. One Click: Jeff Bezos and the Rise of Amazon.com.
Clarke, Michael. “When Your Core Competency is No Longer Core to the Business You’re In.”
Miller, Laura. Reluctant Capitalists: Bookselling and the Culture of Consumption.
Veverka, Mark. “A Big E-tailer as E-publisher.”
Given that Amazon was able to achieve their level of success exclusively as an e-retailer, with physical warehouses but no physical retail presence, what might they do next?