Within living memory, the venerable bookstore was virtually the only retail outlet for books. No longer. According to the Book Industry Study Group (BISG), bookstores accounted for 45% of retail sales in the United States in 1998; the remaining 55% of the retail market is now divided among mass-market retailers, mail-order, book clubs, specialty stores, and online booksellers. Some of these outlets opened up new markets, others have stolen market share from bookstores; all are likely to stay around for the forseeable future.

Note: All figures below were reported by the Book Industry Study Group, and apply to the "adult" book category; the "juvenile" book market is roughly one-half the size of the former, and its percentage sales by outlet varies.

Bookstores

In recent years, aggressive expansion by large chains such as Barnes & Noble, Borders, and Crown has driven many independent bookstores out of business; at the same time, bookstores' market share has steadily declined. The bookstore, however, remains the most popular place to buy books, and will probably remain so for some years to come.

The basic retail model is a familiar one: manufacturers (publishers) provide their product (books) in bulk and at a discount to the outlet (the bookstore), which displays, promotes, and sells the product to consumers (readers).

There the similarities end. Insofar as a book is unlike any other "product"--each title is unique; its appeal is complex and unpredictable; it is not "consumed" in the manner of, say, soap--a bookstore is unlike any other retail business.

Returns

Perhaps the most important difference between bookstores and other retail businesses is that bookstores are allowed to return unsold inventory to the manufacturer (publisher) for credit. This system allows bookstores to offer their customers two crucial services that would otherwise be impossible: a vast selection, and the option to return books for cash or credit. Of course, unsold books take up valuable shelf space and incur shipping and handling costs; therefore bookstores do their utmost to forecast sales accurately.

Customer Service

Bookstore customers expect a high level of service--from knowledgeable and helpful staff, to a pleasant browsing environment, to (increasingly) in-house cafes. According to the BISG, 50% of bookstore purchases are not planned, which implies that the more congenial the environment and the better the service, the more books are sold. In return, bookstores can count on a number of loyal customers, who will often wait for a book to be ordered rather than purchase it at another bookstore or online.

Presently, competition for customers among bookstores is fierce, and the edge is going to those outlets that can locate in high traffic areas such as malls, offer the largest selection, and cater to the needs and whims of customers. Increasingly, this means chain stores. The implications of this trend and the fate of the independents is currently a subject of heated debate.

Book Clubs

According to John P. Dessaur, author of Book Publishing: The Basic Introduction, there are nearly 300 book clubs in the United States alone. They are a major player in book publishing: in 1998, book clubs accounted for 18% of book sales nationwide.

Book clubs offer their members a carefully tailored selection, significant discounts, and convenient delivery. There are general book clubs (e.g., Book of the Month club), more particular clubs (e.g., the History Book Club), and narrow-focus clubs (e.g., The Detective Book Club).

Most book clubs operate in the same way: the member is offered several free books in return for a commitment to purchase a certain number of books over a specified period of time. Periodically, a title is offered for purchase, and unless the member actively declines it, is sent to him or her, at which point it may be purchased or returned. After the member's commitment is fulfilled, more books are offered at lower prices.

Most book clubs prefer to act as auxiliary publisher rather than distributor. In other words, rather than sell books on commission, they typically buy a part of the publisher's initial print-run at or near cost, or even print copies themselves, sometimes with a modified cover. They then pay the publisher a royalty--usually no more than 10% of retail price. Book club deals are rarely very lucrative for publishers, who generally split that small royalty with the author, but are considered highly desirable because (1) they entail little or no work on the publisher's part, and (2) they add (sometimes enormously) to the exposure and prestige of the title.

Mass-Market Outlets

Included in this category are mass-merchandisers such as Kmart and Target, warehouse/price clubs such as Sam's, discount stores such as Dollar Stores, and food and drugstores. These outlets were responsible for 19.2% of retail sales in the U.S. in 1998. They tend to stock titles with popular appeal and offer large discounts. They also tend to demand large discounts from publishers.

Other Outlets

This category includes department stores, gift shops, newsstands, and specialty shops. Together they were responsible for 10% of retail book sales in the U.S. in 1998.

Book racks in drugstores, airports, etc. are serviced by "jobbers," also known as "rack jobbers" or "IDs" (independent distributors). Jobbers have exclusive control of what is put in these racks, and though newspaper and magazines take up the majority of rack space, books are an important item. They tend to be "mass-market-sized" (4.25" X 6.75") paperbacks with popular appeal.

Unlike bookstores or mass-market outlets, specialty shops (e.g., map stores, organic groceries, hobby shops) are centers for people with shared interests. As such, they offer a very attractive venue for niche publishers, who can assume that their books will be (1) of particular interest to customers, and (2) displayed more prominently than it would be a bookstore.

Online Booksellers

Online booksellers accounted for only 2% of retail sales in the U.S in 1998. The figure is misleading. Ecommerce is still in its infancy, and growing at a furious pace--sales increased by 349% between 1997 and 1998.

The phenomenal success of Amazon.com has led other large players, such as Barnes & Noble and Borders, to enter the fray. Competition has emerged from other directions as well. BookSite, for instance, has recently made it possible for any independent bookstore to create an online presence, complete with a huge online inventory. The American Booksellers Association has a similar project in the works called BookSense.com. There is little doubt that as ecommerce becomes more generally accepted and access to the World Wide Web grows, so will online bookselling.

For more on how and why online booksellers work, see "Online Booksellers."