Borders Group, Inc.
Borders Group, Inc.
Logistic Management
OUTLINE
The book industry
Borders Group, Inc.
Phantom Stockout
Borders.com & Future Step
Q&A
The Book industry
In book industry, the product variety was enormous with more than 50,000 titles, the variety of formats in which books were available had also increased.
(Audio, leather, hardcover, paperback, and e-book)
The sales market of book industry in U.S.A
1.68 billion in 1960s
The industry had grown quite steadily from 1960.
The sale market were roughly 23 billion in 1997 and had grown at 6.9% annually since 1994.
The book industry (con.)
A simple view of publishing supply chain shows
Exhibit1.
Table below presents the cost break-down of a typical book from publisher’s point of view.
Cost
% of Retail Price
Manufacturing (material, printing, binding)
10
Marketing
7.5
Distribution
8
Author royalties
10
Overhead
8
Retail or wholesale discount
40-50
Return
0-50
(depending on volume)
(increased to 15% after first copies)
(could vary by category, title and retailer)
The book industry in Transition
The book publishing industry faced transformation entering the mid-1990s.
There are two practice made the book business challenging. Return policies—publisher took back nearly 40% of all the hardcover book printed in 1996.
Authors’ advances — increase the amounts of money advances, and revenue often did not cover excessive advance and the publishing house ended up losing money.
The book industry in Transition (con.)
The book retailing had change significantly.
Independent store
Mall-based chain store
Superstore
%
80
72
70
60
53
50
43
40
33
37
30
15
20
10
0
25
19
4
1960
1970
1980
1990
Independent
72
53
33
19
Mall-based chain store
4
15
37
43
Superstore
0
Logistic Management
OUTLINE
The book industry
Borders Group, Inc.
Phantom Stockout
Borders.com & Future Step
Q&A
The Book industry
In book industry, the product variety was enormous with more than 50,000 titles, the variety of formats in which books were available had also increased.
(Audio, leather, hardcover, paperback, and e-book)
The sales market of book industry in U.S.A
1.68 billion in 1960s
The industry had grown quite steadily from 1960.
The sale market were roughly 23 billion in 1997 and had grown at 6.9% annually since 1994.
The book industry (con.)
A simple view of publishing supply chain shows
Exhibit1.
Table below presents the cost break-down of a typical book from publisher’s point of view.
Cost
% of Retail Price
Manufacturing (material, printing, binding)
10
Marketing
7.5
Distribution
8
Author royalties
10
Overhead
8
Retail or wholesale discount
40-50
Return
0-50
(depending on volume)
(increased to 15% after first copies)
(could vary by category, title and retailer)
The book industry in Transition
The book publishing industry faced transformation entering the mid-1990s.
There are two practice made the book business challenging. Return policies—publisher took back nearly 40% of all the hardcover book printed in 1996.
Authors’ advances — increase the amounts of money advances, and revenue often did not cover excessive advance and the publishing house ended up losing money.
The book industry in Transition (con.)
The book retailing had change significantly.
Independent store
Mall-based chain store
Superstore
%
80
72
70
60
53
50
43
40
33
37
30
15
20
10
0
25
19
4
1960
1970
1980
1990
Independent
72
53
33
19
Mall-based chain store
4
15
37
43
Superstore
0