Despite a recent record setting month that briefly buoyed this year’s anemic sales figures, it’s easy to forget that, of the estimated 150,000 titles published in 2002, virtually all books will share the same fate: as remainders. A remainder may not have the glamour of a freshly printed title, but this dynamic niche accounts for the traffic of millions of books and hundreds of millions of dollars in retail sales every year.
 
Publishers are understandably cagey about discussing overstock books, at least part of the issue is due to something totally out of their control: a long-ago sales agreement unique to the book industry. During the Depression, many booksellers were unable to afford to pay money up front for books that looked like dubious sales prospect. In order to save the industry from total collapse, publishers assumed some of the risk by allowing booksellers to return the books they couldn’t sell, a process resembling consignment.
 
After a period of time, usually 90 days, booksellers can return any unsold books for credit. While a percentage are repackaged and sent out to different retailers, others become “hurts,” a growing category of books that are not reprocessed into inventory, either because they are damaged or defective, or because it is not cost effective to send the title out to the bookstores again. These are gathered into an unsorted lot (anywhere from a single skid to a truckload) and sold to wholesalers who undertake the labor-intensive task of sorting and cataloging them and selling them at drastic reductions.
 
The larger category of discount books is remainders, titles that have gone out of print or are a year or more past publication date. Almost all of these have never left the publisher’s warehouse, and they will be sold to chains, independents, mail-order companies and the remaining spectrum of retailers. A number of changes in the book industry in the 1980s and 1990s have made the past decade a boon time for remainders: advances in printing and binding that make it easier to manufacture books, changes in tax laws that affect how publishers’ inventories are valued, and the rise of the mega-bookstore, which has displaced the more modestly stocked independents. Over the past few years, the glut of over publishing has slowed as publishers have adjusted to economic pressures and become smarter about the flow of supply and demand. Yet the remainder business continues to thrive, partly because the improved computerization of inventory has led to closer tracking and a gradual increase in returns.
 
Judging which books can be resold quickly and for a profit is a highly speculative art. Helaine Harris, vice president and co-owner of Daedalus, says the remainder business can be easy for a novice to misjudge.
 
“There’s been a real explosion in remainders in the past couple years,” she said. “You see a lot of companies come and go. It takes years to build relationships and understand this unusual market.”
 
While publishers make little profit on their discount titles and authors make even less, the steady spread of discount books is fueled by the retailers’ profit margin, which can be twice as high as the margin with new books. Both the independent booksellers and chain stores have discovered that a prominently displayed battery of discount books is a successful magnet for retail foot traffic. Once customers are seduced by a $5 discount, the reasoning goes, the shopping mood will carry them over to at least one other list-price companion from another part of the store.
 
The number of new titles published over the past decade has gone up 50 percent, while the number of books sold has actually gone down over the past few years. Add to that the public’s complaints about the high price of books, and you can see that for publishers releasing new works discount books can mean adverse competition for the book buyer’s already scarce dollar.
 
Source: “Making Books,” by Christopher Dreher, Book World, Aug. 10, 2003.