Australian Book Prices: The Difference is 16 percent
Last week the PriceWaterhouseCoopers (PwC) report for the Book Industry Strategy Group (BISG) was released. The report was a market analysis of the book industry in Australia. After not having any Australian Bureau of Statistics for our industry for a number of years it is good to see some statistical analysis of what is going on in our industry, although the figures in the PwC report were just estimates. Still it does put into focus what has recently only been anecdotal evidence.
One of the recommendations in the report was that bookshops, independents in particular, need to become cultural destinations and diversify their product range to remain relevant and competitive. Bookshops, independents specifically, are already cultural centres and have been for a long time. Many bookshops already sell a diverse range of products including music, DVDs, giftware, stationery, coffee, food and wine but a bookshop’s primary business must remain books, especially in tough times. To remain relevant to book lovers they must be able to offer a full range of books in a full range of formats and be able to supply them in the time frame the consumer expects. It will not matter how much affection people have for their bookshop if they can’t get the book they want when they want it, at a competitive price.
The part of the report that I found most interesting were the reasons for Australian book prices being more expensive. GST was mentioned as was postage inequity. Exchange rates were also referred to with an US/Aus exchange rate of 80 cents being stated as the break even point. However the figure that caught my attention was that supply chain inefficiencies in Australia can add up to 16% to the price of books here. Now I have had a couple of rants about book prices (What Price a Book in Australia and Book Pricing Repeating the Same Mistakes only on a bigger scale) and put forward my thoughts on what a book should be worth and funnily enough the difference has been about 15% ($32.95 should be $27.95).
In all the debate about the price of books it has been difficult to compare like-on-like because of factors like tax, postage and fixed costs like wages and rent that differ from country to country and currency to currency. But this report makes it clear that there is up to 16% difference in the price of books in Australia caused by the way we all run our businesses. And I want to be clear here. Supply chain inefficiencies do not just mean publishers supplying bookshops. It means the total supply chain from customer to bookshop to distributor to printer to publisher to author and everything in between. It is the way bookshops order books, the way publishers supply those orders, they way bookshops receive those orders, returns, printing, remainders, stock turnovers, EVERYTHING. There is not a problem with one sector of the book industry it is the whole industry that has a problem and the whole industry has to fix it together.
The supply chain is the most critical aspect of our industry at the moment both in terms of print books and eBooks. Our industry is leaking more than 50% of online book sales for physical books overseas and with 70% of eReaders being Kindles this is happening on a much bigger scale with eBooks. (Local publishers may still be getting the sales when eBooks are sold via Amazon but it is at the expense of their local retail partners). Hopefully the final BISG report can address some of these issues and we can see improvement in inventory and distribution practices from both booksellers and publishers.