Running to stand still • 12 July 2008 • The SnowBlog

Running to stand still

          
Em thoughtfully ponders the subject of returns

Over the last couple of weeks I've done a lot of Snowangels work - the branch of the business that offers cover design, consultancy, that sort of thing. It's both enjoyable for me, and a good way to boost the Snowcoffers, although it does mean that I have to work quite hard. However, I've just checked our weekly sales, which get updated on a Saturday. We've had returns that come to pretty much the same value as the consultancy work, give or take a tenner or two. 

It's rather - sobering? upsetting? frustrating? - to know that instead of working 13 hour days for two weeks managing both Snowbooks and Snowangels, I could have sat staring at the wall and had the same net financial result. What's to be done? Returns are idiotic, and it's taking all my reserves not to pepper that description with expletives. I've said it before, but here's the effect of returns:

1) We have to print books in order to send them to stores - let's say 0.80 per copy
2) We have to pay the distributor to send them to stores - let's say 0.63 a copy
3) When a book is returned to the distributor they charge us either 6% of gross revenue to process it back into stock, or 2% to pulp it. We pulp all mono paperbacks that are returned to us. Dwell on that for a moment. 
4) It's at this point that we realise the cost of print / the stock value, which sits on the balance sheet - because there's no chance of being able to sell that copy again.
5) We may also have paid royalties on goods sold that then get returned. The amount owing to the author on their ledger is reduced, but since most fiction's sales are front loaded, it's unlikely that the book will earn its way back for us to recover this loss. 
6) Returns wreak havoc with our cash flow. Imagine budgeting activities based on how much money is on your sales ledger. Then arbitrarily reduce that number with no warning. It's nigh on impossible to forecast cash flow. 
7) Our distributor doesn't collect all the money owing to all their publishers every week, because of invoice queries, late payers and so on. They divvy up the difference between what they're owed and what they receive between publishers based on their returns profile. So at any time we have 5000-25000 'reserved' against our account (depending on our returns rate and on how much money has not been collected) which is made up of money that's actually nothing to do with Snowbooks, but is owing to various different publishers.

Not to mention the shocking waste of diesel, paper, effort, store labour - god, it's completely retarded, and so, SO frustrating when the simple, tried and tested stock management methods I learned ten years ago would eliminate returns overnight. We had a chance to dramatically reduce returns with the Industry Returns Inititative - but all that did was automate the returns process, rather than get to the root of the problem.

On the other hand, if we published books that sold a million copies with no effort, I wouldn't have this problem. So I need to acknowledge that we need to publish books that sell - both into retailers and out to readers. That's what it's all about, after all. I think we do an ok job of this most of the time - we're still here, after all - but there's always room for improvement.   

That doesn't mean that returns, at the current rate that we all experience, are acceptable. My feelings are that the publishing industry can be charmingly backward all it likes. But when its idiotic idiosyncracies make it so hard for me to run our business, and result in so much needless waste, it really does infuriate me. 
Emma