It’s Not You, It’s Me: Is it time to divorce the returns system?

Self-employed in publishing

Publishing is an unusual industry in many ways, yet perhaps the most bizarre of its kinks is the returns system. Under this system, provided certain criteria are met, booksellers of all kinds are able to return unsold books back to their original publisher. The publisher then has to refund their value and either house the overstock or pulp it.

But has the system become more damaging than it is profitable? And where, when no other industry conducts this practice, did it originate?

Keeping booksellers afloat

The origins of the returns system are publishing legend. While many claim its originator was Simon & Schuster, there doesn’t seem to be any available hard evidence to back that up. What does seem clear is that returns contracts first became popular during the Great Depression, when books were selling badly. It helped give publishers a competitive edge, by allowing bookstores to take chances on large print runs when it wasn’t clear whether or not the book would sell.

By the end of the Great Depression, it had become common practice, and today it is an embedded part of the industry. Were returns to disappear overnight, it would cause chaos. However, there are arguably more problems associated with returns than benefits, especially for publishers.

Pros and cons: time for a divorce?

For publishers, the returns system is a real bane: it is hard to report profit with certainty when half your sales could be returned at any moment; housing or pulping returned stock is an enormously expensive practice; and author payments are often withheld until cold hard sales figures are reported from the shops. The problems are manifold and complex. It isn’t just a financial problem either, because every time we print 5000 books when we could have printed 500, the planet takes a hit. For a lot of publishers, abandonment of the returns system is long overdue.

However, many booksellers claim that without the returns system, they would go under, even though this is manifestly not the case that retailers in other industries suffer this problem. While publishers can regularly expect to receive a average of 40% returns on a print run, unsold stock in other industries normally accounts for as little as 10%, as in the fashion industry.

Though there are many alternatives to the returns system currently being posited, the biggest issue seems not to be with its very existence, but that the rate of returns is so consistently high.

Fewer returns, less loss

High return rates can only occur for a couple of reasons: either the publisher has overprinted and/or the bookseller has over-ordered. In both cases, there is an indication that one or both parties’ sales predictions have failed to live up to expectations. Some would argue that publishing has a much harder market to predict than other industries, nevertheless we cannot deny that the industry’s rate of returns implies a concerning disconnect between us and the market.

If the returns system was taken away, it is likely that the biggest change would simply be smaller orders from booksellers and smaller print runs from publishers. Once the end of the chain has to foot the bill for unsold stock, rather than being able to pass it back up the line, the level of unsold stock is likely to go down, as in other industries.

Yet, such a state of affairs is completely achievable under the current system of returns, but it requires booksellers and publishers alike to be more reserved in their orders and print runs. We don’t necessarily need to change the system, only our attitudes toward it.
