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PUSHED TO THE MARGINS

With a few exceptions, most bookshops today stock all kinds of stationery, cards for all occasions, the usual knick-knacks, with coffee and soft music thrown in. The reason for these new attractions is simple: cash crunch. This is partly because much of the Indian book trade survives on credit. The steady decline in across-the-counter sales has led to a heavy reliance on institutional purchases — mainly university and college libraries — where payments are locked for a minimum of three months. There is very little cash in the till.

The paucity of retail outlets is responsible for the poor liquidity of the Indian book trade, but some part of the blame must also be put on the way the trade is conducted. Book traders in India still believe in two out-moded marketing concepts. One, that books sell because prices are low and discounts are offered to individual buyers. Two, that it is possible to turn in profits by selling other publishers’ books at a discount. The questions to ask here are — what are the margins in the retail trade' What happens to the trade if they aren’t sufficient' And, what are its consequences for the individual buyer'

On an average, a retail bookseller gets a discount of 35 per cent from the distributor/publisher. This could go up if 50 or more copies are ordered of a single title and if the payment is made in cash instead of the usual credit of 60 days. Outstation carriage costs come to 11 per cent of the invoice value, so in effect, a bookseller has an operating margin of 25 per cent or so.

But this is only on paper. If you deduct overhead costs — establishment, wages and so on — the margin comes to just over 10 per cent, provided the payment is received within 30 days. But this rarely happens; the average recovery time is 90 days or more. If you also take away the cost of money, the operating margin is down to a very slender 6 per cent. How then can a bookseller offer 10 per cent to a favoured customer'

There is just one way he can do so. By “mixing” the books with up to 70 per cent discount with those with an average of 35 per cent and then offering a 10 per cent on the package deal. But there is a catch. The high discount books are almost always remaindered stock, that is, titles that the publisher is selling off at a little over cost price because they aren’t moving fast enough. Sadly, because of the high cost of warehousing space, more and more books are being put on the remaindered list. For instance, the shelf life of a first novel is down to just 17 days in the United States of America, and this more or less sets the pace for the rest of the English-speaking world.

The result of this mixing of the remaindered stock with the new can be clearly seen in bookshops. A few new titles may be displayed on the windows, but the bulk of the space is hogged with remainders because that is the only way the bookseller can make a profit. If this trend continues, and there is every sign that it will, new titles will only be available if definite orders are placed for them with publishers. The bookseller, on his own, won’t bring them.

What booksellers must realize is that books sell in India only if they are functional and that more than prices and discounts, it is the relevance of the book to the potential buyer that matters. But this is easier said than done.

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