David Hetherington is the Vice President – Global Business Development at Books International, a leading provider of US and International book manufacturing, print and digital distribution services for the book publishing industry.
Welcome David and thanks for joining us! To start, what is Books International and what services do you provide?
Books International is a family-owned, specialist firm. We have been in book fulfilment and manufacturing businesses for almost 40 years and deliver a range of operational services to book publishers. Book fulfilment is our foundational business: we provide pick, pack and ship services for publishers who do not have their own fulfilment operations.
The services we provide can range from “full service”, which includes order to cash through to pick, pack, and ship, or pick, pack, and ship only. For order to cash services, we take the order on the publisher’s behalf and in effect act as their agent and manage the post-sale relationship with the customer.
We also have a digital book manufacturing business which was added to the company’s service portfolio about 10 years ago.
What size and type of publishers use your services, and are you mainly US based?
For distribution, we have 30 publishers that we support presently and through those publishers we ship approximately 6,000 orders each day. Over the course of the year, the value of the invoices that we ship for publishers is in the multiple millions of dollars. For our digital and print services, we have 400 customers that range from small publishers to some of the great names in academic publishing such as Oxford University Press and Taylor & Francis.
We are a global business and are seeing an increase in interest from global publishers but there is also no shortage of interest from US-based organisations. We have a substantial business in the UK and own United Independent Distributors (https://www.uid-group.com/) which includes Marston, Orca, Turpin and EuroSpan.
What we have seen is that publishers want to focus on creating great content and leave the less glamorous pieces of the business to specialist firms like Books International and our sister company, United Independent Distributors.
Are there any other markets you are hoping to break into?
We are trying to expand our footprint on both sides of the Atlantic by taking the existing relationships we have with US customers and importing those to the UK. We also want to take the substantial relationships that exist within the United Independent Distributors group and extend them into the US.
You have always steered towards the business development side of publishing, why is that and have you ever wanted to dip your toes into other areas of the industry?
I have always enjoyed the excitement of the hunt for new business. We are a significant player but not a giant so when we have a victory it's especially satisfying. We have some formidable competitors in both the US and UK, and I have a great respect for them but when we win in a competition there is nothing like that excitement of the victory!
I have worked with some great editorial talent over the course of my career but unfortunately, I do not see myself as fitting the editorial profile.
That said, I am an avid reader, particularly of military history and a great admirer of Churchill. I consider myself to be a reasonably capable “Armchair General”.
As one of the industry experts on book distribution, can you tell us what you think the future of fulfilment is?
The future of fulfilment has never been more important than it is going to be in the years ahead. Frankly, it is an extension of the work that companies like Supadu do. Bricks & mortar retail is (unfortunately) facing significant challenges and unlikely to rebound. Covid-19 has created 10 years of growth in the eCommerce space in 10 months and that is not going to change – only accelerate.
Any publisher that does not work to build a business-to-consumer fulfilment mechanism is putting their business at significant risk. I am of the view that because of the operational complexities of the business to consumer relationships, it will be better for publishers to hand those complexities over to specialist firms like Books International and focus their attention on developing a solid, long-standing direct relationship with their readers.
What advice would you give publishers to help them start building a business-to-consumer relationship?
Understand the importance of your website.
Publishers need to direct consumers to their website and not to rely solely on bookstores or the usual e-commerce route to generate a sale. Publishers should work to recapture a share of the revenue that they are now passing to larger channel partners and instead build their own relationship with the consumer.
There are some very interesting and innovative ways that publishers can develop the necessary infrastructure to support their B2C efforts and I would welcome the chance to discuss this in a future column.
At some point in time, a publisher may consider selling the company and the business is likely to be more valuable when there is a credible relationship with their readers. If your company has built significant direct to consumer relationships, the company is much more valuable to a prospective buyer.
At the moment, there is a national and international shipping crisis, and an extreme demand for delivery services in support of business-to-consumer sales. As an example of where business-to-consumer space is heading, Walmart has earmarked $16 billion for capital investment in their fiscal 2022 budget and a large portion of that is to continue to build their business to consumer relationships and eCommerce capabilities.
As well as shipping challenges, what are other challenges that publishers are facing at the moment because of Covid-19?
Access to the services. If I am a publisher and I am starting to build my direct-to-consumer business, I may not have the same scale that a company like Books International has. We have long established relationships with the shipping companies and our relationship is likely to provide a better range of service and lower costs than the publisher’s standalone business.
What opportunities have opened for publishers?
There is an opportunity for publishers to re-examine how they have done business for years.
I have been in the book business longer than I care to admit (!) but up until now change in this business has been very slow. The pandemic has accelerated the pace of change and forced organizations to take a much needed look at how they do business.
The important thing is not to assume that the pandemic or the changes it has introduced are over, because they are certainly not. There will surely be another crisis that will come up. There are security issues with hacking, concerns about ransomware and a whole host of issues that publishers should consider.
The supply chain has been the least glamorous part of the publishing industry, but it is essential that it is squarely in the centre of a publisher's radar going forward.
You have mentioned before that the production side of publishing is often separate from the rest of publishing. Is that a good thing or would you like to see that changed?
There is a growing appreciation of the importance of production organisations but alongside that we need to change the image of production. When I was growing up in the business there was an expression called “nickel snatching” where people would spend dollars trying to save nickels. We need to take the supply chain in its entirety and look at the total cost of ownership and the essential role that a publisher’s supply chain plays in the success of the business.
Do you have advice for publishers trying to deal with suppliers?
It should be a co-operative relationship and you cannot and will not be successful by beating the supply chain partners to the ground. Everyone needs to make a reasonable profit and to reinvest in their business. Again, in many sectors of the supply chain it is a seller’s market and publishers must acknowledge the fact that everyone in the supply chain must be successful.
The number of book manufacturers who have gone out of business in the past 5 years in the US and UK is significant and now there is a capacity issue. Digital book manufacturing is not an inexpensive proposition. You cannot invest in the technology required to support publishers if the manufacturer is not earning a reasonable return on investment.
Is digital the way forward? Are physical books here to stay?
There is no doubt in my mind that physical books are here to stay. The pandemic certainly boosted the value of digital, particularly in the public and academic library market. Digital delivery is certainly here to stay but it is highly unlikely that the digital book will ever be the only format.
What part will Artificial Intelligence play in publishing? How much should we automate publishing processes?
There is a place for AI, but we still need people at the centre of the business. If I were a publisher, I would certainly look at AI but make sure I do not have rose-tinted glasses on.
Finally, how can publishers become more sustainable and what are the advantages of Print on Demand?
If you visit any distribution centre, they have “The Wall of Shame” where unsold books go to die. Publishers are coming to grips with the fact that they have an immense amount of capital tied up in unsold inventory. One of the brilliant things about direct-to-consumer business is that you do not have anywhere near the returns that you would typically face with sales to a Brick & Mortar organisation. That is a key reason for publishers to look at digital manufacturing and Print on Demand – direct to consumer has immense potential to be a sell first – print later business with all the remarkable benefits for sustainability!
However, the publisher should conduct an evaluation from the perspective of the total cost of ownership. If you consider it from the unit manufacturing costs, digital manufacturing is often a less attractive proposition but if you consider digital manufacturing from the total cost of ownership then it is a very compelling argument.
I am really excited about the attention that sustainability is getting in the industry. The United Nations has a programme as part of their Sustainable Development Goals specifically for the publishing industry (https://www.un.org/sustainabledevelopment/sdg-publishers-compact/).
There is a list of the publishers who participate in the SDG program, and it is very likely that some consumers will be making commercial decisions based on the company’s sustainability.
Thank you, David, for your wisdom. If you have any questions, please do not hesitate to get in touch with us at Supadu or with David Hetherington email@example.com.