During earlier times when I was working in bookstores, I have observed that some old publishers still earn good revenue even after seldom publishing any books for a long time. After careful analyzing, the publisher is specialized in world classical literature. Those books are long-term bestsellers; quite a few of them have steady sales return each year. In addition, the publisher has a long history of publishing with quite a number of bestsellers. Overall, the revenue is pretty good.

Relying on these long-term best sellers for daily operation cost and even making some profit is the dream of many publishers. However, not only me, many elder publishers have discovered that recently there're fewer and fewer long-term bestsellers on the market. Book market is filled with bestsellers with huge marketing campaign. Or else, they are books soon disappearing from the market not long after being published.

Because publishing covers a wide range of industries, it requires more accurate sales figures to say that long-term bestseller is really gone. For example, the market structure for academic field and mass public can be quite different. There are still a number of long-term bestselling textbooks on the market. As long as teachers use them for teaching or as testing materials, the market exists.

However, generally speaking, the main entities of long-term bestsellers in the retail channel, not for specific target customers, seem to be really decreasing.

After careful considerations, I discover that long-term bestsellers are not really disappearing. The form of long-term bestsellers has changed and their presences aren't that obvious owing to the rise of following phenomena.

The Explosion of New Books' Publishing Number

The direct impact to the market size of long-term bestsellers is the explosion of new book numbers. The book market has changed from a seller market to a buyer market and thus leads to the proliferation of various publishing themes.
40,000 books being published each year and the exceed market supply are the phenomena post year 2000. In early years of martial law and thought control, there're not many books published each year. From the viewpoint of overall publishing quantity, it's not until 1986 that Taiwan's market publishing more than 10,000 books (that is, 10255 books, and not including government and individual publications).

In 1982, there're Kingstone bookstores that represent new style of bookstores with spatial and bright interior design. Each store needs large amount of books to fill in the shelves. Is not until 1970 that the number of books published each year has risen from 2~3000 to 8000 each year (many of them are collections or encyclopedia). Publication before are government policy avocation materials or reissuing of books published before 1949.

That is to say, to sum up bravely, for a long time before the publication explosion the book market in Taiwan is a seller market. Whatever published to the market is eagerly absorbed by the large chained stores and channels to fill in the space. In addition, the end the martial law and the rise of the economy and living standard all make books stay longer in bookstores than they are now. Moreover, the special reading habits lead to a wide array of worldwide classic titles in Taiwan's early publication market.

Factors like publication themes (mainly classic), quantity (low number), bookstore scale (rapid expansion) and market needs altogether contribute to the flourishing of Taiwan's publishing market and thus create a niche for long-term bestsellers.

After 1994, the number of publishing titles is steadying increasing and reached 30,000 in 1998, 40,000 in 2002 and ever since never stop. However, the scale and number of bookstores are not following. On the contrary, owing to the overall industrial structure change (out shift of the manufacture industry to mainland China), the internal market needs have decreased/shrieked. In year 2002 along, there're over 200 bookstores closing business.

The explosion in publishing quantity that outnumbered shelf space will in the end lead to the decrease of display space in stores. It will be difficult to find all the books ever published by one publisher in any one store today. However, it's a common scene in the past.

Besides, publication themes also diversify, especially in informative or consuming titles like travel/gourmet guide, travel literature and photo collections of celebrities.

Moreover, B grade books, which was written by China's writers and published by Taiwanese publishers, are also increasing with the interaction between China and Taiwan. The quality of these books varies and therefore smaller the chance of becoming bestsellers (few publishers publish for some other reasons like publishing books to afford publishing more books).

That is to say, from the theme of publication, there're many published books who are not even qualified (or intend to be) as long-term bestsellers.

Plus, the publishing market in Taiwan is heading toward to heavy capital intensive market with more and more large publishers/ publishing groups. There're more and more publishers who are willing to spend on marketing campaign for certain bestsellers. Publishers and bookstores all rely on the income from new books to make profits (for bookstores, they also have to consider inventory cost). The importance of new books is higher than long-term bestsellers.

The growing number of new books and bestsellers but not the overall market will naturally lead to the decreased sales in traditional long-term bestsellers.

The Rise of Online Bookstores

Taiwan's first online book store, Books.com.tw was born almost at the same time with Amazon.com in 1995. However, it had a rough beginning encountering Asian financial crisis and Internet bubble in 1998 and almost sank with Nari Typhoon in 2000.

Fortunately, it had survived and stabilized it's footsteps through Sars and the gradual population increase of Internet usage each year. It's even capable of carving up the market share of physical bookstores (depending on its logistic system, especially the feature of receiving products in convenient stores). Today it has turn from drowning to become the major three book retail channels in Taiwan.

In my opinion, online stores didn't take away the market share of large chained stores but smaller stores in towns, small cities and remote areas. That is also the reason of the closing down of physical stores in non-urban areas in recent years. Online stores' competency like is price discounts (with 30% off for new books, much higher than offers from local stores), product drop off in convenient stores. With the highest density of convenient stores in Taiwan, no matter where you live, buying books is easy as long as there's convenient store nearby your house.

That is to say, the disappearing revenue from physical stores actually transfers to online stores. Are sales of long-term bestsellers also transferring to online stores? Market for long-term bestsellers might be shrinking but not disappearing.

Book Store Display and Product Mix Management

The rise of online shopping and the decrease of physical bookstores actually have great impact on the sales result of long-term bestsellers. The scale of physical bookstores isn't expanded with the growing number of new books. Therefore, the return rate grows higher and books are more difficult to find by their customers. Ordering books in physical stores can't compete with ordering on Internet on price, convenience and other factors. As a result, the sales of long-term bestsellers are gradually transferred to online bookstores (so-called long tail effect).

Online bookstores take one step further taking away revenue of long-term bestsellers. To compensate for the loss, physical bookstores places more inventories on promoting bestsellers (or marketing campaigns) and therefore sacrifice the maintenance of product mix. For customers, it's more and more difficult to find books they want. In the end, physical bookstores substantially increase the revenue share of new bestsellers.

However, in my opinion, the fundamental reason of long-term bestsellers' retreat from physical stores is the lack of professionals to maintain the long-term bestseller list in store. Except for flagships stores like Eslite Shinyi store or San Min Bookstore, most of the bookstore staff lacks the ability to manage the product mix in the store.

Those staff is already over occupied to cope with the influx of new books each day, to put them on/off shelves and to order/return more books. In addition, they have to handle casher, product inquiry, sorting/checking the store and all strange demand from customers. There're always promotion events and marketing activities taking away most of the working hour. Only very few hours are left for ordering books or managing product display. If the staff isn't familiar with the book market, he/she will have to decide on the sales record, fully follow the current market trend and will never have the opportunity to build its own store's bestseller list. In the past, each store's bestseller list was an important source of profit and accounted for 50% of the revenue (also known as the 80/50 rule, 80% old books accounted for 50% of the performance, 20% of the new book, accounted for 50% of the revenue. today it has become probably 80/20, 20% of the new book, accounted for 80% of the revenue).

Clear Market Positioning and Revised Product Mix

In the long run, large-scale chained stores will continue to exist. For smaller ones, their market space will shrink, except for independent bookstores like Small Ideas, Tonsan and Hungya who know their market position and whose owners are capable of choosing their own product mix. Medium-sized books will not survive if they can't make a breakthrough over their product mix.

In fact, it's not difficult to make a breakthrough. Bookstores will need to have the proper product mix and store atmosphere according to the districts' feature, target audience's preference and historic best-seller lists. Make customers enjoy the experience in stores better than on the Internet. Rebuild their habits of visiting stores to read and to shop. Then the store can win customers.

Recently, there are more and more discount activities from publishers and channels in Taiwan's publishing market. I discovered that, with proper arrangement, I can have 40% off discount for new books and 50% off or more for others. The presale discount has also raised from 21% off to 25~30% off.

It always occurred to me that either the profit/lost equation is different in the publishing industry or the publishers care only about revenue but not margin. Changing profit/lost equation results in higher and higher tag prices. Prices have been trading up. Tag prices have been raised by 10~20%. Raising tag prices and offering more discounts is just playing with words but not offering customers extra bonus.

Although the market situation in Taiwan is a severe price war (looking at the 1 NTD/90% off sales events on TV news everyday), still marketing is not only discount promotion. Otherwise, customers will ask for more and more discounts. Margin is more important than revenue. If managers can't remember the rule and indulge in price
wars, they will earn revenue but not profit and jeopardize their own business.

Offering discounts is All Right

Book is a vary special product. One person will buy only one copy. Even if one bought many copies to give away to their colleagues, friends and family, in the end, each person will have only one copy. That is to say, if you sacrifice margin for revenue, you will never earn the profit back. Of course there are worries that without discounts, there will be no sales. After all, the whole market is in a price war and customers are willing to delay their purchase for more discounts.

Recalculating the Publishing Cost

Leaving the structural/environment cause of price war aside, discount promotion is still applicable. As mentioned before, the publishing cost has to be recalculated. The traditional profit/lost equation has to include discounts offered.
For example, when calculating royalty fee for authors, should we calculate it with tag price or selling price?

Publishers should find the sales percentage in each discount interval. For example, 5% of the total sale falls in tag price, 15% with 10% discount, 35% with 20% discount and 15% with 30% discount. Then the cost and profit of each interval should be calculated to estimate the real cost.

Usually we refer return rate to the returning rate of books in newly published period and assume the sales low after the newly published period (besides classic titles).

High discount won't necessarily lead to high sales. Publishers should find the optimal discount rate (to maximize revenue and profit simultaneously). If one book can be sold with 40% off, then don't go to 50%. Then you can meet the market need for discount and lower the damage of profit loss.

Be Careful with Quantity Orders

Be careful with quantity orders. Don't sell the book with very high discount just because of the large quantity. Even if customers offer low prices and you are willing to do so. You should at least be aware of their purchasing period, purchasing rule, budget resource and reason of purchasing. Quantity orders are great opportunities to earn
more profit. If you know the need of the customer to certain books is "irreplaceable", then you don't have to accept the discount request from your customer. If not, then evaluating how much you want the order and offer an equivalent price.

Don't be Stingy with Discounts when Facing Sales Threshold

However, there's one condition that publishers should sacrifice margin and offer discounts.

When you have a book you assume to be popular and indeed get good sales result, every week there're are good news from the sales report. However, the sales volume reached a certain quantity and didn't move at all. There are enough books in the store, the books just don't move anymore. At this point, you should go far discount promotion. The discount should be high enough to attract customers.

I suppose the whole processing of selling books is like throwing stones in still water and making ripples. In the beginning, the ripple can be small but obvious and quick. Then the ripple will become larger and slower. Not knowing when, the ripple will disappear and the water is still again. The ripple effect is a word-of-mouth effect. In the
beginning, the impact might be small but quick since heavy users spread the new quickly. However, information from heave readers will take longer to reach common reader. To reach those readers who seldom read this kind of books, the spreading will be even longer and require some buzz-marketing techniques.

Now, offering discount promotion is just like throwing stones into the water again to create more ripples (in fact, all marketing activities are like throwing stones to make ripples). This is especially useful when facing a threshold. Certain types of books will have a selling threshold of 5,000,000 copies. After reaching 5,000,000 copies, the sales figure will either stop or reach 10,000,000 copies. However, your sales figure stop at 4,600,000. You don't know whether the sales figure can reach 10,000,000 or not. Before reaching 5,000,000, the ripple effect had already vanished.

You never know whether the book has reached its limit or has more potential. However, what publishers can do is to take the risk and help the book overcome the threshold. Then we can leave it to the market to decide. However, if it were topic books and have short life span, you shouldn't hesitate on discounts. You have to sell all the stocks within its life span at all cost. Topic books (i.e photo collections of celebrities, books about recent discussed issues) will become useless papers outside their life span. Publisher can keep as much as 20 copies for future research needs or fan collection.

Do We Need Discount for Classic Books?

Although the market is constricted for classic books in recent years, there are still classic titles. The number is just less than previous years. If a classic book can be sold for a certain quantity each year, does the publish need to do discount promotion?

I think there're two judging criteria. The first one: does the sales volume already pass the threshold? Secondly, does the sales volume equal with the figure last year? If the book has not yet reached its threshold and its sales figure is less than last year, then publishers should consider offering discount promotions to stimulate the purchase
and let the book overcome the threshold or surpass last year's figure.

However, publishers should be careful when offering discounts. There should be limited amounts of discounted copies (to reach the same sales volume as last year). Otherwise, discounts will attract exceed purchase and publishers will lose their potential customers who will purchase at regular price in the future.

I suggest that there's no need to offer discount promotions for classic books under the request from resellers unless the sales situation is worsen. That will only damage the profit of publishers. If publisher want to offer a favor for resellers, be sure to offer it
with limited discounted copies.

Selling All Books with All Means

We should abandon the traditional belief that books becomes stocks after the newly-published period. When one book is published, the publisher should try all different ways to sell all the books.

Some books can't be sold even with high discounts.

When encounter situations like this, and with large stocks, I suggest publishers should use these books as bonus gifts. Biding them with new books or giving for free to royalty customers and in cross-industrial promotion activities.

If the quantity isn't large, I suggest publishers should give away the books to it's original target customers, schools and institutions, school libraries in remote areas, or NGOs. Some publishers are emotional with books. In my opinion, books are media for thoughts but not equal to thoughts. The ultimate goal for publishers to publish books is making profits to sustain the company. Sale is the major goal of publishing.

Books are made for sale. For those can't be sold, publishers should use them for brand building or better public relationship. They should not sell books in very low prices or keep them in storage. Putting useless stocks as assets is to deceive oneself as well as others. Giving these books away will at least saving the storage cost and earning better brand image. It's better than doing nothing. The duty of publishing books is to sell all the books. Complaining market situation or quality of the book won't be helpful, even if the complain be valid.

Try changing your thought to "selling all the books". I believe that will generate endless marketing ideas. Discount promotion is just one of them (as long as you don't use it as the only promotion strategy, you can do anything that can maximize profit & revenue and earn money for the company).