Tuesday, June 1, 2010

Terms to Know: Billing vs. POS

Reminder: the deadline for guest post submissions is 11:59 pm on Wednesday, June 16th!

As I've mentioned before, one of the strange nuances of the book publishing industry is that virtually all stock is returnable; that is, almost all the books we ship to retailers can be returned for full credit if those retailers are unable to sell them. There are some exceptions: for example, most mass market paperbacks are "stripped," not returned, meaning the retailer only returns the torn-off covers to the publisher (hence the "if you bought this book without a cover" warning found on the first page of many paperbacks). There are also some markets, dubbed "special markets," for which stock is almost always non-returnable (e.g. museum gift shops, home shopping networks, home goods/cooking stores).

Because books can be (and so often are) returned, publishers need to make a distinction between sales to the retailer ("billing," or gross sales) and sales to the customer ("POS" [point of sale], "through the register," or net sales). The difference between these two numbers is the returns, and the ratio of net sales to gross sales is known as sell-through (expressed as a percentage).

For most brick-and-mortar affairs (especially the large chains), sell-through of roughly 80% is considered very good. Much less than that, and it's clear the account took more books than it can sell; much higher, and the account will probably consistently run out of stock, which means both the publisher and the retailer will lose sales while time is wasted in reordering, shipping, and restocking. (In case you're curious, on-line retailers like Amazon generally maintain a much higher sell-through rate, somewhere in the neighborhood of 90 – 95%. This is because 1.) they don't need to maintain those big piles of books at the front of the store, and 2.) Amazon doesn't offer the same instant gratification for physical books as a brick-and-mortar store, so their shipping delays allow them a sort of buffer zone when it comes to reordering and restocking.)

Ideally, each title will have good billing and sell-through, but occasionally you see titles with abnormally high return rates, distressingly high sell-through (sounds crazy, doesn't it?), low billing (or no billing, in the event of a skip), and so on. The sales game is a tricky one, and it's doubly true for book sales. Half the battle is getting the book into the store; the other half is getting customers to bring it to the register.

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  1. One of my publisher pays monthly which is nice (would be nicer if I could buy more than a happy meal with the checks most months), but they also tried to explain how they could dock my royalty check BEFORE I saw the royalties. They said they credited booksellers immediately, but I wouldn't see the royalties until they had money in hand, which could take 120 days.

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