Dealing With a Demand-Based Marketplace

Getting the “Demand Thing” Down
Nothing creeps into book publishing conversations more often than “demand.” While it has many connotations, most discussions gravitate toward becoming more demand based. This issue of Insights examines some of the key issues and strategies of demand-based book fulfillment.

What’s Driving Demand-based Fulfillment?
The need for publishers to become more demand based comes from several directions—both internal and external:

• Consumers. Empowered book consumers want their reading material when, where and in the format they prefer. As a result, you may now need to provide a combination of solutions ranging from e-books to print-on-demand to faster shipping methods.
• Distribution Partners. Rapid replenishment remains the operative phrase as big-box retailers and distribution networks strive to minimize inventory while quickly fulfilling orders. The burden to make it happen is on you.
• Publishers. No one can afford to print and then pray for demand. Nor can you live with outdated return policies. Better forecasting and more sophisticated, demand-based fulfillment methods are essential.

As a result of new economic pressures and changing business models, publishers are hard at work identifying how demand issues impact their individual organizations and how to best respond.

A Demand-Based Strategy for Every Publisher
What you first need to keep in mind is that the importance of demand strategies is only going to increase. Identifying and adopting an appropriate response for your market is essential.

Secondly, there is a demand-based solution available for every publisher, no matter how large or small, no matter what your target market. Here are some ideas to consider in making your publishing model more demand driven:

• Improve forecasting. No one needed to tell you that, but there are more tools and systems emerging to help you. For example, Quebec French-language publishers now have available Gaspard. This system presents useful data directly from all of the point-of-purchase as opposed to unique distributor information. Its mission is to reduce overstocking and returns. Information includes:
  
  
  • Compilation of best-seller lists
  • Comprehensive reports on books sold
  • Returns forecasts
  • Market share determinations
  • Progression or regression of sales per category data

• Likewise, many U.S publisher use Publisher Alley, an online tool that provides in-depth analysis of book sales through Baker & Taylor, YBP Library Services and Majors Books Company. Each title features detailed bibliographic data including review and award citations, as well as daily sales, demand and inventory updates.

• Incorporate digital printing. The rapid development of a wide range of digital printing solutions helped advance discussions around demand forecasting. The progressions in speed, quality, finishing and integrated web storefronts are enabling cost reductions by reducing inventory requirements without sacrificing responsiveness. Using digital printing technologies can make a number of areas more demand based. You can economically print:
  
  
  • Short runs of new titles while measuring demand
  • Backorder replenishments that help avoid costly multiple shipments
  • Advance copies
  • Short-run specialized titles

• Outsource fulfillment. An outside fulfillment specialist may offer:
  
  
  • Greater economies of scale that result in more bargaining power and
    better service, particularly in areas like logistics
  • Superior ability to improve and automate important functions such as
    bid analysis, contract awarding and freight audit and payment
  • Greater quality and efficiency of services that help increase performance
    levels to the expectations of a rapidly changing marketplace

New Models Bring Other New Challenges
Demand-based publishing is also causing publishers to rethink other parts of their model, like pricing. For example, some publishers are considering revising their pricing strategies when it comes to new releases of e-books. There are concerns that a new e-book published at $9.99 cannibalizes sales from the hardcover audience that will pay $25.

According to “Demand Pricing for Ebooks,” an article by Evan On, that issue is stimulating discussions about new e-book pricing models that would take into account peak demand pricing. The rationale goes like this:

• Publishers create a hardcover version first to recoup maximum return on their sizable upfront investment
• They then maximize units shipped to drive down unit production costs at the highest retail price point
• Finally they hold release of the less expensive, lower-margin e-book to preserve peak demand financial returns

On the other hand, some argue that withholding the release disenfranchises e-book readers and reduces the value of new-release marketing for that book-buying segment. They also argue that the practice would only further encourage an already thriving underground e-book piracy business.

Demand-based pricing might ultimately provide the solution by having e-books begin at a higher price and then move to a backlist price similar to the existing model for hardcover and paperback books. Expect to hear more debate on the subject.

The real point is that demand-based initiatives are constantly changing—some might say disrupting—the industry as well as publishers’ individual approaches to business. While your response needs to fit your specific needs, expect “demand” to be an increasingly important business concept.

Looking for a Partner Who Understands Demand Issues?
Transcontinental can help you execute a demand-based fulfillment strategy that fits your individual needs. For more information, contact us.

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