Tips and Tricks for Lowering Your Cost of Goods

Tips and Tricks for Lowering Your Cost of Goods

At the 2019 FallCon, one of the most popular education sessions featured “Tips and Tricks for Lowering Your Cost of Goods.” Below is the handout distributed to attendees.

Panelists: Kristen Beverly, kbeverly@halfpricebooks.com; Jeanne Costello, jeanne@mariasbookshop.com; Arsen Kashkashian, arsenk@boulderbookstore.com; Moderator: Christopher Green, inventory@bookwormofedwards.com

Book Inventory

Major Publishers:
  • Restocking directly from publishers regularly is the most cost-effective way to take advantage of the extra margins they offer:
    • Rapid Replenishment: Many publishers compete for direct orders by offering rapid replenishment programs during the holidays, and more and more are offering it all year long. With lower minimums and express shipping, there is little reason not to participate in direct restocking.
    • Free Freight: Keep track of your minimums for free shipping! If you end up paying shipping, you won’t see the gains.
    • Returns: Publishers don’t have return penalties, so return directly when eligible. Our returns manager uses these guidelines:
      • Paying to ship a few books isn’t worth it (rule of thumb, less than $150), BUT
      • It’s worse to tie up $ indefinitely in inventory that isn’t selling. Hold onto it until you get enough to return it or put it on the sale cart (last resort).
    • Stock Promotions:
      • These are getting better and better. If you systematically apply ongoing promotions to all of your restocking orders, it will show up on your bottom line. Keeping track of the promotions and promotion codes is an ongoing job, but work the effort. I do 2 things:
        • For my routine restocking publishers, I print the terms and promo codes and tape them to the bottom of my computer screen until they are expired.
        • Holiday/IndiesFirst Stock specials. Click here to see the BTW (Bookselling This Week) article with all the Fall specials
        • This is a great way to bring in holiday titles at great prices. I put these into a spread sheet in order of expiration so I go through and use them as needed before they expire.
    • Marketing Coop:
      • Many publishers have streamlined coop dollars with a percentage rebate based on direct and indirect total annual purchases. Find out how to become eligible for these coop dollars. AND, don’t forget to submit indirect coop reports from Ingram. These are usually due 1st quarter.
      • And, of course, continue to claim display and event coop dollars on a case-by-case basis.
Smaller publishers/University presses:
  • Learn and understand your terms clearly.
    • Avoid shipping where possible.
    • You can often get better terms placing orders through a sales rep. Negotiate as they often have the ability to apply ‘expired’ specials.
    • If returns are unlikely, consider switching to Nonreturnable for higher discounts.
Wholesaler:
  • Free Shipping! Know your minimums for free shipping. My account is set up to hold my orders until the minimum has been reached. Also, combine with Publisher where appropriate to reach shipping minimums. Only on rare occasions will I order from warehouses that charge my account shipping.
  • Wholesale partner agreements:
    • Are you eligible for wholesale partnerships with deeper discounts? Talk to our Ingram rep (we have Jim Carretta here at the trade show, jim.carretta@ingramcontent.com) about how you might become eligible for deeper discounts.
    • Look into the Ingram Booklove growth incentive. It may or may not be worth pursuing if you are able to source more inventory direct from publishers.
  • Eliminate return penalties. Again, negotiate with Ingram on how to eliminate or reduce return penalties. We get a percentage of returns penalty free. Also remember, most publishers don’t have return penalties.
  • We get an extra point for prompt pay.
Sideline Inventory:
  • Always negotiate for Free Shipping.
  • Always negotiate for Free Displays
  • Markup! We generally mark-up 2.2. Some markets go higher, 2.6%. Find the sweep spot for your market and the product. If it isn’t selling through, the additional mark-up isn’t helping your cost of goods. Better to mark it down than to sit on inventory that isn’t selling.
  • NOTICE especially this season that many vendors are increasing their costs ahead of the tariffs. Make sure you adjust your pricing to reflect those cost increases.
  • Ask your sales reps to apply stock promotions every time you order. They often can if you press them to use them more frequently. Always negotiate.
Used Inventory
  • Used bookstores do not have to be dark, dusty and disorganized! And neither does your used inventory.
  • What you offer a customer bringing in their books should take into account both the price that you can put that particular book out for and the demand that you expect for it. How long do you think it will sit on your shelf before someone buys it?
  • Remember, you do not have to make offers on everything that customers bring you.
  • Always tell the customer that it’s just an offer and they are welcome to refuse it.
  • Buying from the public can sometimes be a customer service nightmare, so be prepared with reasons why you can’t pay more than what you are offering, i.e. “Why you are you paying me a dollar for this when you have 5 copies on the shelf for $10?” “Unfortunately we already have 5 copies on the shelf that aren’t selling…” Come up with scenarios and the response that you would give to the customer ahead of time.
  • Consider giving an offer for all the books they bring in and not an itemized offer.
Remainders
  • How to buy remainders –
    • Search for items that you know sell well in your store – previous book(s) in series, popular authors, etc.
    • Use remainders for filler when you have a section that needs it.
    • Decide what you would sell it for in your store and then calculate backwards how much you can pay. Use a cheat sheet!.
    • Sometimes the books are marked or stickered. Look on the samples if you have them and just make sure to take that into account and price accordingly.
    • Don’t be afraid to negotiate! Start out a bit low (but not too low) or ask them where they need to be and meet in the middle.
    • Go after the books that you really want and then leave the ones that are just okay if you can’t get to a good price point. Don’t be afraid to try new things for your store!
    • For quantities, decide what works best for your store by genre and display space v. shelf copies. Make yourself a cheat sheet to carry with you at shows and have in the office.
      • Fiction – display 5 copies, shelf 2 copies
      • Poetry – display 3 copies, shelf 1 copy
      • History – display 5 copies, shelf 1 copy
  • Where to buy remainders –
    • Remainder shows – BEA, CIROBE
      • Vendors will have tables filled with books and dust jackets. Pull items you might be interested in and make a stack. If you see other stacks, please always ask the person manning the booth if you can look through the stack before taking anything.
      • After deciding what you want to order, go through and negotiate with the vendor. Always be sure to write down quantities and final agreed upon price for your records.
      • Get to know your sales rep!
    • Excel Spreadsheets
      • Many vendors have their list of available books in Excel spreadsheets with ISBNs, retail prices, titles, etc. Having this gives you the opportunity to look up sales information (if you have that available). Have your frontlist buyer go through and look for titles and authors they recognize and would otherwise buy new for the store.
    • Websites
      • Several remainder companies like Book Depot and Book Country have great accessible websites. Feel free to shop their website and then email your sales rep to negotiate if necessary.