Last Mile Issues

Today, a rather interesting commentary on the distribution system in India, was made in an article on The BookSeller:

Examining the Indian market, Pan Macmillan Asia m.d. Daniel Watts, who is based in New Delhi, said the main challenge for publishers selling in India was payment collection, with distributors under pressure from retailers to provide better service, availability and prices, and retailers wanting to deal directly with publishers.

He said: “The market has also opened up and the retailers have multiple choices from where they can source their books. This has facilitated a credit culture. The retailers will take 150-210 days credit. They’ll withhold payment for impending returns which are usually made within three months. They’ll withhold payment as it suits them because there is always another source ready to supply books. The backlog in payments goes all the way up the chain. Most publishers operating in India are not able to collect inside 210 days and they face the same challenges with regards withheld payments for pending returns.”

He said there were ongoing talks between the major publishers operating in India, including HarperCollins and Pan Macmillan, over whether to work together through a central warehouse to supply retailers directly, a move which may be a possibility within the next “two to three years”.

He estimated that the online bookselling market, led by Flipkart.com, currently has a 15% share of the market, with physical book chain Crossword c.o.o. Kinjal Shah telling him that his board of directors no longer have the confidence to open new stores.

That the distribution system in India needs a revamp is a no-brainer. Publishers across the spectrum will tell you that the distribution system is an evil they have learnt to live with. Payments are slow, discounts are high and books are almost always taken on an SoR (“sell or return”) basis. All that might have been bearable if books travelled the last mile and reached the eager reader. Poor road infrastructure and distributor apathy ensures that that does not happen.

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What is interesting is the comment made by Kinjal Shah on the reluctance by his company to open more stores. If other bookstore chains, like the one he oversees, also feel that way, that leaves the field wide open for online stores to take their place. The increasing internet penetration in the country will only help their case, already buoyed by features such as Cash on Delivery (COD). That cannot be good news. Most online bookstores also carry other products and, more often than not, use books as loss leaders. That means many books are often sold at extreme discounts, a practice that does not bode well for publishers.

The archaic distribution system that exists in India has prompted many publishers to engage in retail, Penguin included. Other models are also being attempted, like the book club model by LeftWord Books. These are desperate attempts, and the degree to which they succeed will ultimately decide whether bookselling in India goes the Amazon way.

For publishing to truly thrive in India, efficient and viable bookstores are a must. Online platforms simply do not have the reach that physical stores can potentially have. Even these stores will not fulfil their potential if the distribution system does not ensure that the reader’s wants are met. That means distributors have to understand reader tastes and preferences and study the market for certain types of books. Books in the languages (other than in English and Hindi) must be available not only in the states that these languages are spoken but also elsewhere, where a diaspora speaking that language exists. Unfortunately, such a scientific approach to book-selling isn’t taken and books are moved to markets going by just instinct.

The my-way-or-the-highway approach that retailers seem to have taken will not help the industry. If publishers will ultimately suffer because of these practices, they will be loathe to bet on books that serve a niche market and whose demand might materialize over a period of time. Only “blockbusters” will be published, dumbed-down fiction that appeals to all. The more intelligent reader, not to be impressed by such titles, will seek a good read elsewhere. All to the detriment of that cocky retailer.

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