Angus and Robertson, Borders and online shopping

Angus & Robertson and Borders bookshops are going through difficult times. I don’t understand the legal terminology describing their financial situation, but I do understand that their future may not be too bright. Many employees seem certain to lose their jobs and some stores are likely to close.

One of the reasons given for their precarious position is the increase of on-line book buying. People now prefer to shop on-line rather than in person in a shop.
I have to confess that I have become one of those people. But ironically it was Angus & Robertson that got me into the habit.

I’d been looking for details about a book and one of the references supplied by google was for A&R. After I found the details I wanted, it seemed much easier to click the “buy” icon than it would have been to take the details to my local bookshop and order it from them.

Then A&R started to offer free postage and almost monthly discounts to make on-line shopping even more appealing. Another attractive feature was the possibility of buying hardcovers instead of paperbacks. With the discount the cost wasn’t much more than the paperback price and I’ve always prefered the (apparent) permanency of the hard cover. I also found that I now had access to books I’d never see in a local bookshop.

My A&R deliveries all seemed to come from an overseas source, so available books were not limited to locally released editions. Books not released in Australia became accessible, in particular hardcover editions of books that were only released locally as paperbacks. My on-line book buying increased. I could even look for books I’d not known about. I could select a topic and see what books were available about that topic.

I was becoming a regular A&R online customer.

And then I discovered The Book Depository – an online book seller based in Britain. I’d seen the name mentioned a while ago in someone’s blog, but for many months I didn’t give them a thought – but when I decided to visit their website I was amazed by what they offered. They supply books at around half of the local price. Of course the highly favourable current exchange rates have been a big help. But considering A&R were sourcing their books overseas anyway, the exchange rate could not be the reason for the difference in price. Not only were the books so cheap, they have no-cost delivery to many countries including Australia. Since discovering The Book Depository most of my book purchases have been through them. I’ve even been able to pre-order unreleased books to ensure I receive a copy as soon after release as possible (one I ordered a couple of months ago arrived today).

But back to the situation with A&R and Borders – can they really blame online shopping? As I mentioned, my online shopping started with A&R and I only changed my supplier when I found a much cheaper alternative. Are there other reasons for their difficulties? I think there are, and I can suggest one.
I have seen both Borders and Angus & Robertson stores selling books at prices above the RRP. One book I had wanted to buy was being sold by both of them (in their Canberra stores) at $5.00 more than the RRP, and well above the price being charged by other shops who were offering discounts.
I really can’t see why large chains such as Borders/A&R should do that. In the mid 90s I worked for a publisher. Wholesale prices for their books were based on the RRP with booksellers being given a negotiated discount off the RRP. These discounts started at 35%. The book seller would therefore make up to 35% of the RRP profit on each sale.*
However, the larger chains like A&R, Borders, Dymocks, BigW, K Mart, Target etc. received more generous discounts. That is why places like Big W can sell their books with a 35% discount and still make money from the sales.

So here is the question. Why should A&R/Borders prices need to exceed the RRP? And why should they be surprised if their sales were affected and their profitability compromised?

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* My employer also sold books mainly on a Sale or Return basis – the book seller could stock books for a short period and if they didn’t sell they could be returned to the publisher for a refund. Therefore they did not need to gamble on stocking books that wouldn’t sell.