“Restructure your business – and not your debt!” Summary from ReBoot workshops Bookselling and Suppliers
October 9, 2020 by ruediger

Summary from reBoot workshops Suppliers and Bookselling

Navigating through pandemic publishing land often requires confronting tricky conflicts of interest, as we learned throughout the four workshops in the ReBoot Preparations Tracks.

When the lockdown started in Poland, for instance, the leading book chain Empik started to give away learning materials for free. “We opposed that”, said Sonia Draga, founder of the eponymous trade publisher Grupa Wydawnicza Sonia Draga, and the new president of the Polish Chamber of Books. But in the end, she added, we could indeed win over new customers whom we had not reached before.

Reaching new customers for books through digital – in online sales, digital communities and marketing campaigns – and the resulting push for digital innovation turned out to be a strategic key topic across most workshop debates, with similar conclusions from New York to Athens, from Warsaw to Rio de Janeiro, and from big retail chains like Germany’s Thalia to small independent publishers and booksellers all around.

Understanding the dynamics that result from the turmoil in markets over the past half year clearly requires to analyze often contradictory details, explained Paulo Oliveira of Portugal’s “Bertrand” book chain (the world’s oldest bookstore, founded in 1732):

Portugal saw a 70-day long lockdown, and a breakdown of tourism, which led to bookshops loosing between 80 and 90% of sales. Even after reopening, due to distancing requirements, volume sales were still down -25.5% in volume and -28.3% in revenue. But significant additional turnover from ecommerce, and cutting expenses during the lockdown, resulted in an EBITDA “which was very good”, Oliveira concluded.

Germany’s Thalia chain had put a strategic focus on introducing an “omni-channel” approach well before the Covid-19 crisis had begun, recalled Birgit Hagmann, the company’s head of digital. Within days, teams put all their efforts behind online, creating a new landing page at once, re-focusing on new thematic categories like children’s books and ‘be at home’ books, from cooking to entertainment. And most notably, Thalia created a Buy Local portal that was open for any other bookseller, to join the marketing platform as a partner. In the end, 4,000 stores of all kinds had connected, even direct competitors.

“We could offer good customer service”, Hagmann explained, “and when you can offer first class customer service, all the way to delivery – from bicycle riders to click & collect – your customers will reward this with their loyalty.”

New customer preferences included a sudden shift from new titles to backlist, commented Brian O’Leary (Book Industry Study Group, BISG, New York), pointing to a statement from Markus Dohle, CEO of Penuin Random House, who revealed that 8 of his house’s 10 top bestselling titles in 2020 were backlist! Unsurprisingly, a majority in the ReBoot workshop confirmed similar patterns from their markets.

A common baseline was echoed with more practical details and case studies by Nitasha Devasar (head of Taylor & Francis, India), Fernando Pascual (from the indie bookshop “El Sótano”, Mexico), Hernán Rosso (Big Sur Distributor in Argentina and Chile) or Mauro Tosca (Messagerie and Gruppo editoriale Mauri Spagnol, Italy) and many others.

The new ‘best practices’ generated an unexpected virtuous circle, starting at first with improvisation, which leads to learning and to innovation. Its steps include collaboration > omni-channel > gaining entirely new customers by giving away some content > adding new businesses after the lockdown > understanding the drivers of change by analyzing closely experiences and data > develop novel approaches that often result in new collaborations and new hybrid strategies like omni-channel and related combinations of physical and digital business practices.

Managing such a virtuous circle however, and bringing it to fruition, is all but a given. It requires

  • State of the art technical tools and processes, to generate and maintain a workflow that can handle such complex processes;
  • Smart teams who are prepared to try out (and learn) new business practices; and
  • A vision that understands to seamlessly combine physical and digital, omni-channel, direct-to consumer and user communities.

“Technology needs to be resilient and adaptable”, was a key recommendation from KNK’s Jason Spanos (KNK is a sponsor of ReBoot). The phrase willfully echoed a compliment given by book people often to their professional community, to highlight how strongly they resisted the drama of the past half year.

Resilient technology means that it must easily adjust to new requirements, new challenges, new everyday practices. How would you otherwise change your ecommerce overnight, transform your portfolio of products, and allow at once new forms of fulfillment! “At KNK, we started with ERP”, Spanos added, “but in the meantime, many other things have come up in the customers’ journey, pushing borders.” He reminded us that 20 years ago, when digital started to come into play, it was seen as a “cost factor”, while today it has “become part of a company’s culture”.

The point was shared by Nathan Hull of the Norwegian Beat Technology start-up, which – in the words of Hull allows the publisher to finally engage efficiently in a D2C (direct-to-consumer) strategy and own the customer relationship”, regardless if a book is digital or physical, sold one unit at a time or via subscription services. (Beat.no is a sponsor of ReBoot).

In his White Paper for ReBoot, Hull argues: “Part of this control comes in the form of access to usage data, the gold dust formed from the platforms’ users’ usage habits. Currently, and for the most part, retailers only report two main factors back to publisher: units sold and revenue. Yet, they’re sat on and exploiting a goldmine of information for themselves, all farmed from the sales of publishers’ titles. For subscription services this goldmine is even deeper.“

In two subsequent case studies, the value of automated processes and a platform and professional community approach have been exemplified in much detail.

Hans-Joachim Jauch, founder of Calvendo, a publisher of personalized picture books and calendars, explained how he is handling 400,000 individual products from order by a customer to curation of the submitted content to production and distribution with a staff of just six employees an.

Jon Malinovski, founder of the rights trading platform PubMatch, shared observations how canceled international book fairs resulted in a surge of buyers of rights in his online community – who in the past would have relied on face-to-face meetings in a physical rights center. “Bologna was the first book fair to come”, Malinovski recalled, “and we had just 3 weeks to set up 500 publishers and agents and upload 20,000 titles.

At this point, midway between lockdowns in spring and growing nervousness about the unclear outlook for the forthcoming end-of-the-year sales, many in the international book industry are reasonably concerned. What can a responsible management do to prepare?

Restructure your business”, was the stringent advice of Peter Jark, a lawyer with BBL-Law, specializing in insolvencies, adding drily “and not your debt.” Jark is convinced that first and foremost, the pandemic fallout put every single company into a “change situation”, which will require “to spend money on operational restructuring”, and that change will define its new self.

The complete recordings of the ReBoot workshops, together with additional documentation will be made available online to registered attendants of ReBoot: Books, Business and Reading through www.rebootbooks.org

 

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