THE PROS AND CONS OF BOOk CONSIGNMENT AGREEMENTS: are they worth it for authors and bookstore owners?

One of the most common ways for independent authors/publishers to get their books into bookstores is through a consignment agreement. A consignment agreement allows a bookstore to sell books without having to pay for them upfront through a distribution agreement. In some instances, bookstores purchase books from a publisher at a wholesale price (often 50% of the retail price) and sell the books. With the consignment agreement, bookstore owners eliminate the risk of losing profit because certain books do not sell. Although most offers expect to sell thousands of books to bookstores the traditional way, this is a small compromise in exchange for shelf space in several stores.

HOW TO GET STARTED
First, it is important to know that bookstore owners and managers expect to be contacted by authors and publishers on a daily or weekly basis. The first thing you want to do is make sure you stand out, in a professional way. One of the stigmas behind independent authors and publishers is the lack of professionalism, with their books and the way they conduct business. Therefore, an important goal is to be just as professional as your competition, traditional publishers. The best way to make contact is to walk into the store and ask to speak with an owner or manager, and then introduce yourself as a local author or independent author (if in another city or state).

As mentioned earlier in this article, you want to carry yourself as a professional so it is important to have copies of your books, promotional material, and business cards with you. This is one of those times where your book (and you) will be judged by its cover. If your book cover(s) are not professional, you will not be taken seriously and may even be denied the opportunity to have your books sold in the store. The owner or manager will likely skim through your book and try to spot grammatical errors, so ensure your book is properly edited. If it passes this initial test, the next step is to discuss the particulars regarding the store carrying your books. Be sure to mention any awards, accolades, or major media appearances that might be associated with your books or your brand. Most local bookstores, especially the independents, are happy to support local authors. They may even have a special section dedicated to books by local authors. Some independent bookstores often cater to just independent authors, so it might be worthwhile conducting business with them.

Other ways of contacting bookstore owners can be via telephone, letters, and email. These are very acceptable forms of communication, especially if the author does not reside in the same area as the store. Once again, you should do some research to determine who the owner is and direct all communication to that person. Some stores have contact forms on their websites that may be filled out, which could be a good place to start. It is very important that authors/publishers focus on being professional when contacting stores. After you have spoken to the store’s representative, it is time to work out an agreement. Stores will often have their own consignment agreement, but you should have your own agreement prepared just in case.

DETAILS OF THE CONTRACT
One of the most important details of the contract is the percentage breakdown. This is the percentage of the sale the store will take before making royalty payments to the author/publisher. The percentage breakdowns are usually 50/50, 60/40 or 70/30. The standard breakdown for bookstore consignment is 60/40, which means the author gets 60% of the sale and the bookstore keeps 40%. Stores usually sell books from $9.99 to $14.99, so royalty payments may vary. Therefore, if your book retails for $14.99, you will receive a royalty payment of $8.99 and the bookstore will receive $6.00.

FEES
Another important detail that should be discussed with the bookstore owner is the existence of any fees associated with the consignment agreement. Fees can possibly be the determining factor whether you chose to do business with a store or not. There are three types of associated fees that should be discussed in every contract. There are no fees, a one-time fee, and a fee per book title. Obviously, an agreement with no fee is the most ideal because it assures an author the most profit at the end of the day (agreement). A store with no associated fee often shows their stability because as you may learn, the “startup” bookstores often have the highest fees. The one-time fee is pretty common and are often considered a “stocking” fee and is often used to ship books back at the end of the contract agreement or if the store suddenly shuts down. The last type of fee is the fee per title, which means if you have three titles and there is a $25 fee, you will end up paying $75 just to have your books placed on the shelf. Fees can range from $15 to $100, depending on the store owner and the royalty percentage. Be sure to choose wisely.

ROYALTIES
The next important details that are at the top of all authors/publishers list are the details about how and when royalty payments are made. This is totally up to the bookstore owner and is usually whatever is easiest for them to conduct business. The most common forms of payment are via checks or through PayPal. Payments are usually made monthly or quarterly. If your books do not sell during one month, you may or may not receive a statement telling you so. So it is very important that you keep track of the number of books you send to a store and the number of books that come back after the agreement is complete (which is normally 6 months). This eliminates the possibility of authors harassing every week about book sales.

QUANTITY
Once you have checked out the section regarding percentage breakdowns and royalty payments, it is time to look at title and book minimums and maximums. Bookstore owners (especially startup stores) want to have a large selection of books to draw in customers, so they often cannot afford to deal with independent authors that just release one book. It would be awkward to tell a returning customer that an author they grew to like only has one or two books to read. This may not be a big deal the first couple of times it happens but imagine having shelves that simply do not have series or much of a variety from the same author. To avoid this from occurring, many bookstore owners have a three or five title minimum. This means in order to participate in the consignment program an author/publisher must have at least three published books available for sale. There is usually a five-book requirement for each title that must be shipped to the stores. This prevents stores from having only one copy of a book or a hundred copies of a book sitting around. Once your books become popular and begin selling out, the store may request more copies. If you want to increase sales numbers, offer to host an event or book signing in the store. Store managers will appreciate the notice about potential demand for your books and may be interested in stocking up ahead of time.

INSURANCE
Your agreement should contain a clause that specifies what type of insurance benefits a store provides. Insurance should cover all incidents and accidents involving your books, such as theft, damage, etc. This also protects authors from dishonest bookstore owners that claim copies were “stolen” or “damaged,” and not pay you for those. Anything that happens in that store to your books is not, and should not, be your responsibility. There is also the possibility of customers repeatedly thumbing through a book and it becoming worn (not able to sell). One option for protecting books being sold on consignment is to put a sticker labeled “sample” on one book or specifically identifying this possibility to the store owner. This is the bookstore’s responsibility, but it does not hurt to take your own precautions. Having a book labeled “sample” is actually a pretty tempting way to get people to pick up the same book every time and thumb through your it.
 
PROS OF BOOK CONSIGNMENT FOR AUTHORS/PUBLISHERS
Book Promo – Book promo is every author's dream. Having your books in stores, especially stores that are not in your city, allows an author to gain the exposure they would not normally receive if they were not in specific stores.

Sales – Sales are important because it is a goal of every author to make money off their work. The more sales an author gets the more money that goes into their pockets.

New Readers – Being in bookstores allows an author’s books to reach new readers on a consistent basis.

Appearance Opportunity – Being in bookstores allows an author an opportunity to do an in-store appearance to perform a book signing or reading. This is a great way to interact will new and loyal readers and connect with other authors.

Best Seller Status – It may not be on the NY Times best sellers list, but being on a bookstore’s best sellers list is an accomplishment an author can be proud to represent. It also is worth mentioning when conducting business with other bookstores, to ensure them your books can sell.

Distribution Opportunity – With an increased number of sales, an author may be able to negotiate a distribution deal rather than the consignment agreement. A distribution deal will allow the author to sell a large bulk of books.

No upfront cost – A consignment agreement with no upfront fees is beneficial because an author will be able to receive full profit from book sales, rather than worrying if the cost of the fees will discourage them from dealing with a particular store.

Relationship building – One of the most beneficial tools in this business is developing relationships. Developing a positive relationship with the owner of a bookstore can help with promotion, arranging events and more.

New store openings – A successful bookstore may eventually expand to several different cities, which means your books will begin receiving recognition across different regions.

Store joint venture – Similar to bookstores expanding, store owners network and work on joint ventures that include small book expos and workshops. If you are one of the top selling authors in a store, the owner may recommend you to other store owners.

Bragging Rights – Whether it’s being a local best-selling author or packing venues at your local bookstore, these situations give you bragging rights. The more stores you get your books into, the more bragging rights you can potentially have.
 
PROS OF BOOK CONSIGNMENT FOR BOOKSTORES
Store Promo – Bookstores benefit from certain authors because the authors have their own following and they promote the fact their books are sold in specific stores. This allows the opportunity for the bookstore to gain new customers; they would not have normally reached.

Sales – Sales are important because it is a goal of every store owner to make money and expand their business. The more sales an owner makes, the more successful the store becomes, and the possibility of opening more stores becomes a reality.

Exclusive Books – One of the biggest gripes authors have is that large books stores, such as Barnes and Noble, do not carry their books. Consignment agreements give independent bookstores the opportunity to display books that are available at large retail locations. This will ensure that customers have to visit the small bookstores for specific books. There are several amazing independent/self-published authors that would surely provide a small bookstore with loyal customers.

New Readers – As mentioned above, independent authors can spread the word about small bookstores and provide them with new customers. Local events at those stores can do the same.

Distribution Opportunity – Another benefit of dealing with independent authors/publishers is their ability to bargain and negotiate deals. Once a consignment agreement with an author brings in profit and new readers, a bookstore owner may decide to purchase a bulk of the author’s books to bring in more profits for the store. The consignment agreement can act as a trial period to determine how successful certain books will be. If they are determined to be successful, they can be purchased at a wholesale rate.

Relationship Building – A good benefit with consignment agreements are the relationships that bookstore owners build with authors and readers. These relationships can evolve into genuine friendships and even business opportunities.

New Store Opening – A successful bookstore may eventually expand to several different cities, which means the more books a store sells, the greater chance of opening stores in different cities.

Store Joint Venture – Similar to bookstores expanding, store owners network and work on joint ventures that include small book expos and workshops.

Diverse Content – Another benefit to consignment agreements are the diverse authors a store will deal with, which in turn will lead to diverse books on display. A bookstore that displays diverse content will attract many types of readers and generate a ton of business.

Stocking Fee – Although authors/publishers may not like paying stocking fees, bookstores benefit from them because it generates a small amount of money in case certain books do not sell. These fees could also be used to handle the expenses of putting on a small book expo or workshop.
 
CONS OF BOOK CONSIGNMENT FOR AUTHORS/PUBLISHERS
No Promo – One of the worst things an author can find out is that a bookstore isn’t promoting their work. To determine if this is occurring, authors should attend stores they have consignment deals with and personally witness how books are being promoted. If you are a romance author, walk into the store and ask about the romance novels the store has in stock. If your book isn’t mentioned, you have to figure out why. Also, check the store's website to ensure your books are being properly displayed.

No sales – Simply placing your books in a bookstore does not guarantee sales. One of the realities of self-publishing is the fact that you are an unknown author and readers do not like taking chances when it comes to spending money on books. Readers are passionate about their stories. In some cases, authors go through the entire consignment process and do not sell any books.

Selfish Promo – Recently several independent authors/publishers have opened small bookstores. One of the things you have to ensure is that they do not just promote books that were written by them or other authors in their publishing circle. As a bookstore owner, they should promote all books equally.

Trickery – As with any business, there are individuals that do not believe in integrity. One thing to be mindful of is if you are receiving the correct amount of royalty payments for the books you submitted. It is important to keep track of the stores you have agreements with and the number of books that were sent to those specific stores.

Upfront costs – Some of the upfront costs in bookstores are so high, it is pointless to do a consignment agreement with the store unless your sole purpose is to gain exposure. One very important thing to do is calculate your expenses for the agreement and compare them to any potential income you may make. This would give you an exact idea of what your end profit will be.

Store closings – One of the harsh realities of business is the fact that most small businesses fail at some point. During these struggling times, a business can stick through them until they get better or they can close the business and get involved in another venture. One of the things authors/publishers need to take into consideration are the independent stores that are opened by authors who look at it as a “get rich quick” opportunity and immediately close the store when they realize how much work actually goes into the business.
 
CONS OF BOOK CONSIGNMENT FOR BOOKSTORES
No sales – Catering to independent authors/publishers is a gift and a curse. It’s a gift because bookstores have the opportunity to display unique content, but the curse is the lack of demand for the books. Bookstores have to market authors that are sometimes unknown and are asking readers to take a risk, which may not always work out.

Bad content – Content is very important and unless a bookstore owner has the time to read every single book entry, there will be some books that are poorly written and/or edited. Not only will readers be upset with the author, but also with the bookstore. This could result in the store getting a bad reputation and poor sales.

Store closings – As previously mentioned, bookstores take a risk when selling/marketing independent books. It is possible a bookstore owner will not make enough profit to sustain a successful career. Often, owners invest a lot of money into opening a bookstore and if they do not receive consistent income, it will be impossible to maintain the business.

REMEMBER AUTHORS/PUBLISHERS/BOOKSTORE OWNERS, CONSIGNMENT ONLY WORKS FOR YOU IF YOUR PRODUCTS SELL, SO DO EVERYTHING YOU CAN TO ENSURE THAT HAPPENS. GOOD LUCK.