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Harry Potter & the Deathly Loss Leader

Shelf Awareness -- April 4, 2007

Yes, kids, it's scary. It's mysterious. It's not for the faint of heart. It can be a dramatic sales builder and a profit killer, but it is also one of the inescapable facts of retail life.

It is that fiercest of villains, the Loss Leader.

And the fate of Harry Potter and the Deathly Hallows, with a 12 million copy first printing and pre-order discounting in extremis, seems to be to reign forever as loss leader king of the publishing underworld.

In February, Marc Perton noted in a Consumer Reports piece that he'd already fended off early sorties by Loss Leader, cleverly disguised as Barnes & Noble (40% off on a pre-order of Harry Potter #7) and Amazon (46% off). That was just a warning shot over the bow.

I received an e-mail recently from a very good bookseller expressing frustration with the extreme discounting techniques currently being deployed for Harry Potter and the Deathly Hallows by online and chain bookstores, big box discount stores and warehouse clubs, grocery chains, convenience stores, gas stations--the list, as they say, goes on.

The bookseller reasonably asked how many--or how few--of those millions of copies being printed would be "sold at a fair price by hard-working independent booksellers, who will work extra hard producing Harry Potter parties in the hopes of selling some books."

It's a good question, and one too easily answered. Most of those millions of copies will be sold as loss leaders, and few will be sold at full retail by independent bookstores.

It is also a classic biblio-philosophical conundrum: If 12 million copies of Harry Potter and the Deathly Hallows sell in the magic forest, do they make any sound in terms of profitability?

The answer is complicated.

And how much will it matter to the nine-year-old who has already pre-ordered a copy from somewhere and is eagerly counting the endless days until July 21?

Unfair question.

Still, indie booksellers live in this world and must find ways to deal with Harry Potter and the Deathly Loss Leader. Whether they sacrifice margin for sales or sell at full retail and sacrifice total units, HP7 will still play a critical role in their summer business plans.

So how are independent bookstores preparing both to welcome Harry and to do noble battle with the evil Loss Leader? 

A quick broomstick flight among bookstore websites provides some intriguing early clues. Hang on to your hats, kids; this will be a fast and bumpy hyperlinked ride.

By definition, loss leader implies sacrificial price breaks, but some indies are offering pre-order reserves for no discount whatsoever, including the Reading Grounds, Diane's Books, Books on First, Book House of Stuyvesant Plaza and Bunch of Grapes Bookstore.

Other booksellers have chosen to sell the novel at substantial discounts. Among those already offering reduced prices for pre-orders are Saturn Booksellers, Toadstool Bookshops, the Book VaultR.J. Julia Booksellers, Millrace Bookshop at the Gristmill and Bookland & Café, which adds a 25% off coupon for a second book "so you can find something to read while you wait for July to come!" Yankee Bookshop an features an interesting mathematical alternative.

Tattered Cover Book Store has opted for a modest discount and a number of promotional activities and events for the community. Events have traditionally been a way for independent bookstores to counter the discounting wave, and both King's English Bookstore and the Bookloft are showcasing their celebrations online. Queen Anne Books is posting occasional 'missives" to keep loyal and impatient Harry Potter readers primed.

Combining events and discounting is a popular strategy. Titcomb's Bookshop, Quail Ridge Books and Left Bank Books offer variations on the theme.

Perhaps the most intriguing strategy I've found online has been the one taken by indie booksellers who've chosen to employ good wizardry by turning a loss leader into a charitable donation. This option has been employed by Odyssey Bookshop, Orinda Books and Capitola Book Café, which gives its customers a choice between a 30% full discount, or 20% off the book and a 10% donation to the local literacy program. The website's challenge: "What would Harry do?" 

Our final stop on the broomstick tour will be Learned Owl Bookshop, which offers not only an irresistible Harry Potter and the Deathly Hallows release date countdown clock, but a creative, charitable answer to the loss leader blues.

Harry Potter and the Deathly Loss Leader is coming to retailers near you. What's your plan?


Time Traveler Uncovers Book Club Threat

Shelf Awareness -- March 30, 2007

The bookstore Web siteseeing tour bus occasionally swerves down unexpected byways. This happened on a recent trip to the digital archives of the New York Times.

What I found in the past was an odd reason for momentary hope, a reminder that to some extent this has been an industry in which the sky is perpetually falling.

A little time travel can do wonders for your perspective.

Eighty years ago, a new menace appeared in the world of books. The February 10, 1927 edition of the Times reported that the Literary Guild planned to offer subscribers home delivery of a dozen books per year for $18. It was encountering industry resistance and "charged that the opposition arose because the guild was able to offer books at a lower price than book stores sell them for. . . .  The guild hopes not to antagonize the publisher and the bookseller, but to increase the business of both by winning for them a new and larger public."

Could this also be the 80th anniversary of that ever-elusive yet never-ending quest for a "new and larger" reading public?

On February 11, Ellis W. Meyers, executive secretary of the American Booksellers Association, spoke to the Times about industry concerns regarding the Literary Guild's unfair advantage in its focus on bestsellers: "According to Mr. Meyers, the booksellers' association informed the guild that the dealers were compelled to supply the public with 10,000 new volumes a year and to keep on hand 250,000 standard and classic works. . . . 'Publishers,' said Mr. Meyers, 'get out between 200 and 300 books a year, including some for which there is little demand. The expense of publishing the latter is borne by the best sellers. Take away the best sellers, as the guild would do, and the publishers would be left with the unproductive end of the business on their hands.'"

The March 4, 1927 edition of the Times reported that tensions were mounting to the point where some booksellers had announced they would not place publisher orders for the Literary Guild's first selection, Anthony Comstock, Roundsman of the Lord by Heywood Broun and Margaret Leech.

Two years later, at the 1929 ABA convention in Boston, the book club issue was still a prime concern. On May 15, the Times carried an article in which E.P. Dutton & Co. president John Macrae "urged members of the American Booksellers Association, in convention here, to demand that publishers give them a discount equal to that allowed the book clubs. He told the booksellers that they had the 'economic power' to make their demand effective. The proposal was suggested as a remedy for a reported depression in the retail book trade."

Dr. Robert E. Rogers, a literature professor at MIT, also spoke at the convention. According to the Times, he warned that book clubs "were threatening the last stronghold of individuality by establishing 'a censorship of snobbishness' . . . These are not the best books. . . . But the thing will grow. The American public is so used to standardization that there is no end to its possibilities."

Rogers offered a rural analogy to help save book dealers: "'Hoe your own row,' he said. 'Build up your own business. If people want book clubs, they will prosper. If they don't they will peter out. There is nothing you can do about them. My advice is to let them alone and put more creative ideas, vision and acumen into developing your own industry.'"

Some day, Professor Rogers warned, "'the logical end would be reached with the formation of the 'non-literary guild for the worst book of the month--and then perhaps the American people will wake up.'"

The Times also reported that a "spirited discussion and a premature ballot at today's session . . . revealed the existence of two strong factions, one favoring open warfare against the monthly book clubs and the other counseling peace and possible union among all the branches of the book business."

ABA president Arthur Brentano Jr. said that the association would offer several resolutions, including one formally putting the ABA "on record" as being "opposed to book clubs as unfair competitors" and urging "publishers to join with small-town booksellers in an advertising campaign to meet the competition of the book clubs."

In response, Literary Guild president Harold Guinzburg said "he believed that the book club method of merchandising had taken some trade from the bookstores, but added, 'how many new readers they have created it is impossible to say.'"

This year Literary Guild celebrates its 80th anniversary. Are you still worried?


RainyDayBooks.com's Community Online and Off

Shelf Awareness -- March 21, 2007

What's the secret to bookselling success? 

In this third and final stop on the Rainy Day Books siteseeing tour, Vivien Jennings offers the following response to that question: 

Community, community, community.  

"Every day, I feel I have made a difference both to individuals and to the community," she says. "I know that most people are living at a pretty fast pace. If they make time for reading, we want to make sure that they are pleased with the experience. I can truthfully say that wherever my partner Roger and I are, people come up to us and say, 'Thank you so much for what you do for the community.' " 

Community isn't built in a day. The bookstore's strong regional ties are the result of longtime nurturing and an ongoing focus upon diverse communication strategies.  According to Vivien, the decision was made years ago to resist being defined by location, to get out into the community on a regular basis and build "a solid foundation that has supported us through all the tremors that have shaken this business. Almost every day of the year, we are visible throughout the city working with organizations, schools and universities, and other businesses, maintaining a presence for Rainy Day Books." 

How do you build such a community? Vivien has a few answers for that one, too.

Consider e-mail addresses for frontline booksellers: "With the e-mail bookselling capability, customers can communicate with their favorite bookseller at their convenience and have the personal attention and more in-depth conversation they prefer. Staff members can also pace their replies according to the pace of the day. Several of our staff have developed great relationships with customers by e-mail. We tease one male staff member who gets lots of e-mails from moms after the kids go to bed, and he will answer them the next day, and then fill a bag with their selections, which they can just run in and pick up."  

Consider Community Partners: "We started years ago inviting other businesses and non-profit organizations to partner with us on our author events, and it has always been more about awareness than money. What we ask of our partners is that they put their best foot forward in participation, and that they support the event in any way they can. We network our partners with each other as well. With the non-profits, there is no 'turf.' We are always looking for partners with the same spirit of community that we have, which is always about 'a better life in a better world.' " 

Consider Admission Packages: "Our author events schedule is quite diverse, and because we have Admission Packages for the events, it provides a steady stream of customers from all over the city into the store, some of whom are always new. We have had an overall approval and support for the Admission Package concept. Early on, two different stories ran in the media here about our shift. We explained that for the publishers, the tours are very much business, and that our concern was that if we didn’t build confidence that we could produce sales and financial benefit from the author appearances, that the wonderful array of experiences we were providing might start to diminish. It’s all a matter of communication with your customers. We told them we needed their support in sales if they wanted us to continue to provide the community with such unique and wonderful experiences." 

That sense of community is also key for the next generation. Geoffrey Jennings describes the bookstore's success as a communal effort that begins with his mother, "who redefines the concept of 'Type A' personality," and Roger Doeren, "who researched and designed the systems we use throughout the store." It continues to evolve thanks to "a core staff of dedicated readers, and a large core customer base that values our presence in the community. Networking is more than just a Web site; it’s the connections to people who might not be in our immediate geography, but have a place for us in their hearts." 

Consider, from Geoffrey's perspective, the bookstore's future: "As the second generation of Rainy Day Books, I look at our overall strategy and see us successfully adapting to the needs of our customer base. We offer our knowledge, customer service, personality, and service to our community. We think that has value, and so do our customers. Every independent bookseller has a different story to tell. My hope is that our story continues to be entertaining. So far, so good!"


RainyDayBooks.com, Genesis and Evolution

Shelf Awareness -- March 14, 2007

Where do bookstore Web sites come from and where are they going? In last week's column, we explored a Rainy Day Books online innovation regarding staff e-mail addresses. This time we'll trace the roots of the Fairway, Kan., store's Web site, take a closer look at current online strategy and peek into the future.   

In the beginning, however, there was Rainy Day Books.com: the domain name.

According to Roger Doeren, "Geoffrey Jennings, Vivien's son, was the genius behind the genesis of the Rainy Day Books Web site. He was our original webmaster and his insight was responsible for initially registering the domain name back in 1994. He anticipated the demand to do business on the Internet and he got the jump on other booksellers in the marketplace by creating, building and maintaining RainyDayBooks.com early on."  

At BookExpo America 1996, Vivien and Roger met Dick Harte of BookSite and learned they could enhance their online presence with shopping cart and title search options. "Dick and I hit it off well," Roger says. "We stayed as loyal members of BookSite.com for eight years until we outgrew its capabilities. We parted on friendly terms."

In 2004, again at BookExpo, they took the next step when Len Vlahos, director of BookSense.com, offered a trial subscription to the service. "I leapt at the opportunity," Roger says, "and after fully testing and evaluating BookSense.com for two weeks, I opted to accept a full subscription." He was soon invited to join the BookSense.com Users Council, and hasn't stopped testing and evaluating since then.

The learning curve is sharp and never-ending, but Roger describes the Rainy Day Books Web site as a creative expression of the bookstore's spirit: "Building and maintaining RainyDayBooks.com is similar to a Lego building block process. Given the same building blocks, other people will build something else. RainyDayBooks.com is frequently empirically evaluated and the feedback is utilized to calibrate and target changes and improvements for the best. Change for the sake of change is stabbing in the dark; hit and miss, mostly miss. I like to turn on the lights and see what is in the dark as I build and maintain my surroundings." Although that word change has become a siren song for most of us online, Roger tries to balance awareness and adaptability with foresight.

For example, he has an online wish list for BookSense.com: "I communicate directly with Len Vlahos about needed improvements that all subscribers will enjoy. I would like to increase the HTML character limit per text field from 4,000 characters to about 10,000 characters. I would like to add a gift registry. I would like simpler and more direct click-through purchasing power. I would like to add more Bookstream Bookwrap author videos."

Currently on Roger's drawing board are several new features: "I have recently completed a hyperlink from RainyDayBooks.com Author Events Photo Albums to SONY ImageStation. Many attendees to our author events know that I take a lot of photos and have often asked to see my photos. Now they will have that opportunity, as I upload more of my photo albums over time."

He is also working on a plan to offer live streaming audio and video of author events. Given Rainy Day Books's ambitious events schedule, this could be both a coup and a logistical nightmare. Roger, however, sees it as an incentive, "the next best thing to being there, live and in person. It will drive more attendance to our events and online author-autographed book orders. Live radio, television and webcasts drive attendance to other entertainment events."

Even as we communicated for this series, Roger was conducting an experiment. He embedded a Windows Media hyperlink throughout the Web site wherever an upcoming Robert Crais event was listed.

Roger believes that what he calls the "one-two combination" of the bookstore's Web site and weekly e-mail newsletters delivers an effective punch. The site attracts approximately 60% local, 25% regional, 10% national and 5% international hits; online book sales are "constantly increasing. The cost of time and money to build and maintain RainyDayBooks.com delivers a great Return on Investment (ROI). It is our 24-hour-per-day, 365-days-per-year extension of our full service, friendly and knowledgeable community bookstore."

Next week, we'll conclude the Fairway, Kan., leg of our bookstore Web siteseeing tour with some thoughts from Vivien Jennings, who promises to weigh in "on the right brain side, as Roger (who actually is a genius on both sides) has addressed the technology."


RainyDayBooks.com--No Place Like Home (Page)

Shelf Awareness -- March 8, 2007

I just couldn't resist a Wizard of Oz headline, since our bookstore Web siteseeing bus will be parked for a couple of columns at RainyDayBooks.com, the online version of the Fairway, Kan., bookshop run by Vivien Jennings and Roger Doeren.

Next week, we'll explore the genesis and evolution of RainyDayBooks.com, but I want to begin this tour by highlighting an option that first attracted my attention to the site. A link on the home page--Staff Contact Information--takes you to a list of booksellers. Click on a name (Suan Wilson or Steve Shapiro, for example), and you can access that individual's e-mail address.

Bookseller/patron interactivity--what a concept.

Although we know that great handselling begins with conversation, the potential for such interaction is lacking (or at least not apparent) at many bookstore Web sites. Staff Picks are often highlighted, but if customers hope to engage in online book discussions with booksellers of likeminded reading tastes, they have to take their chances with the generic info@, orders@ or books@ alternatives more commonly available.  

Maybe somebody will answer.

The RainyDayBooks.com approach blends technological sophistication with human interaction. Roger describes this as a way "to empower our customers with information, knowledge and the wisdom to make informed choices and decisions about books and their community. Our Web strategy utilizes Internet technology as a bridge to connect our customers to our e-marketing and e-commerce."

He describes himself as "webmaster, technology geek, information nerd, etc. My middle initial is D for Donald, but it might as well be D for 'Data'; that's what Vivien lovingly calls me when I am working in what she calls 'computerland.' " Roger adds that the bookshop's site is "freshened up" nearly every day: "I even update our Web site sometimes when needed from my Web-enabled cell phone."

Beneath the RainyDayBooks.com technology, however, beats a bookseller's heart. Consider those staff e-mail addresses.
According to Roger, "Our staff and our loyal customers are the best. They look out for each other. They treat each other with appreciation and with respect. Many loyal customers visit RainyDayBooks.com and call us up or e-mail us while they are making their selections. We welcome live interaction with customers. Providing direct contact information is appreciated and utilized. It can turn a shopping experience into a book buying experience."

If that's the case, why do so few bookstores offer this level of interaction? "I can only speak for myself. For us, handselling and building lifetime relationships is what we do best, whether it is in our bookstore or through our Web site. Providing our loyal customers with direct access to our knowledgeable staff through our Web site makes perfect sense."

Vulnerability is a challenge. "RainyDayBooks.com and our @RainyDayBooks.com e-mail addresses have been out there on the Internet since 1994," Roger says. "That's a long time for spammers to put us on the hit lists, and we are on plenty of them."
Two key strategies help counteract the threat. A first line of defense is the use of, for example, "roger at RainyDayBooks.com" instead of the more vulnerable roger@rainydaybooks.com hyperlink.

The second is Spam Arrest, a tool which, according to Roger, "filters out about 99% spam from each of our e-mail account inboxes; that is thousands of spam e-mails per day, per e-mail account. Hundreds of these spam phishing e-mails are fraudulently representing companies. We are lucky that so far RainyDayBooks.com is in the clear."

He believes that booksellers "need to make ourselves available to do competitive business on the Internet, but with calculated risks and safeguards. Over the years, I have expressed serious concern for safety and security on the Internet. Exploitation with phishing and pharming are rampant and people are being harmed in lost valuable time, productivity, privacy and money. I am vigilant in taking steps to protect our customers and our company. I constantly and thoroughly research technologies that will improve our business contact, communications and operations. Spam Arrest is a solution to an increasing problem with the Internet, and it works."

These safeguards also allow Rainy Day Books to offer direct, online conversations between staff and patrons.

I've wandered through more bookstore Web sites than any rational human being probably should to find a shop that provides online access to its frontline handsellers. I've heard plenty of reasons for not offering such contact, but at RainyDayBooks.com, unfeasibility has been trumped by the potential for at once virtual and real conversation.

Next time, we'll examine the genesis of the Rainy Day Books Web site and its ongoing evolution.