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Thursday, February 10, 2011

The High Costs of Distribution

Occasionally, someone will ask me why I only sell on my web-site. The answer is that distribution is expensive. In particular, my first book, An Engineer's Guide to Silicon Valley Startups is pitched at a niche audience, and one that's likely to be internet savvy. Giving 50% of my revenue to Amazon is unlikely to draw me any additional sales or reach additional audiences.

My second book, Independent Cycle Touring, however, is aimed at cyclists, potentially a much less internet savvy audience. This is a book that really could be distributed to bike shops and book stores, so I approached a local bike shop with a sample to see if he would be interested in carrying it. The owner thought that he could sell a handful of this book every year. Then he asked for a whole sale discount, 40% off the cover price. That effectively lops a whopping 60% off my profit margins! Then he gave me the name of a distributor who could distribute my book to all bike shops in Northern California. Guess what, he wanted 60% off the cover price, reducing my profit to $1/book. At that price, it's not even worth writing the book unless I could sell thousands of copies a year. I suppose I could raise the cover price, but that would only reduce sales further. And note that these are sales to bike shops, which don't return books (unlikely the retail book trade). Those really aren't worth thinking about.

So for the foreseeable future, I'm going to keep selling the book off my web-site, and at local events like the upcoming Sports Basement talk.

Incidentally, I recently sold two copies of Engineer's Guide to the Midwest Library Service, meaning that some library, somewhere, received a request to stock my book. If you want to read my book but can't afford it, try asking your local library to acquire it. I am perfectly happy to handle library sales, and the guys over at MLS even send me a check up front rather than making me navigate the Purchase Order process. Now that's author friendly.

3 comments:

Unknown said...

Sometimes it's not about the profit margin, but the viral effect. For example, if you give things for free then word of mouth --> viral --> popularity.

If the idea of minimal profit or loss scares you, maybe you can do a couple of A/B tests. A) sell books online as is B) sell books for $1/profit, or even $0/profit in one area and see if becomes viral, in that area.

If that model works, then the experiment is a success and you can stop selling the books to bike shops -- hopefully that'll mean more number of conversions online!

GeekMBA360 said...

Great blog.

Regarding selling your books, why not set up an affiliate program via service such as e-junkie.com and having other bloggers to help promote your book? I've had some success with e-junkie to promote my own e-book.

Bill
http://www.geekmba360.com/category/start-up-success

Piaw Na said...

I have considered e-junkie. I have other changes coming, however, so stay tuned.