To: Rob S. who wrote (29032 ) 12/5/1998 5:14:00 PM From: FR1 Read Replies (2) | Respond to
The problem with the above is that this IS THE NORM for the book business - all competitors take advantage of the same supply dynamics. This model for supplying inventory up front and charging for it latter evolved because small book stores could not manage otherwise. not the norm and what you are saying is not correct.It works like this: Distributors: Pulishers have a discount they negotiate with distributors . In some cases, especially with speciality small press distributors (like Bookpeople, Publishers Group West, etc.), the publisher accepts a consignment deal of 55%. The distributors then have a sales force and go out and sell the books to bookstores at a lower discount. The distributors also sell to chains bookstores, like Barnes and Noble. Bookstores: Almost all publishers have a discount schedule for bookstores (unless the publisher has a exclusive arrangement with a distributor who handles all orders). The discount schedule ranges from 20% off retail up to around 46% off retail for a big chain like Barnes and Noble. Almost all sales are net30 unless it is a single copy order which is usually cash (called a STOP order).Amazon: What is unusual about the Amazon arrangement is that the distributor has been completely eliminated from the equation. In other words, Amazon is buying books at 55% consignment while the average bookstore is getting 40% to 46% off retail net 30 (and the book is not sold when ordered). Add to this the fact that Amazon does not need a super expensive store with location, location, location and you have a major advantage. is big news, gives Amazon a large profit advantage which will change the industry a lot. Amazon.com buys 60% of their books from Ingram which is now owned by Barnes & Noble.
