1.0 Introduction

• 1.1 Distribution Basics

Distribution is a part of the book business that is not easily visible to many of those involved in the book trade, and certainly not to the average book reader in Canada. However, effective management of the supply chain—the process of getting books to where they need to be, when they need to be there, and as efficiently as possible—is a critical function in publishing. Further, it is a process that increasingly touches virtually all other aspects of the Canadian book trade, from editorial acquisitions to marketing to consumer behaviour.

From the publisher's perspective, the importance of distribution is two-fold:

1. Sales and distribution functions account for a significant share of costs—as much as 30% of net sales (or more) for many publishers.
2. The degree to which a publisher has effective sales and distribution systems greatly determines its market access and sales performance. This is especially true in a book market, such as Canada's, where (a) trade accounts and consumers have an abundance of books to choose from, (b) customers of all types expect to be able to get the books they want right away, and (c) buying decisions are heavily influenced by the books that are immediately available and well promoted within the sales channel.

All these points considered, decisions around distribution are arguably among the most important strategic choices a publisher can make.

This study aims to contribute to our understanding of the book trade by presenting a comprehensive overview of book distribution in Canada's English-language market, and by exploring current issues and market trends related to the book supply chain. All major categories of book publishing, including educational texts, are considered but the focus throughout is largely on trade publishing—that is, books that are published for a general audience and sold mainly through bookstores.

The study was commissioned by the Department of Canadian Heritage (PCH) and conducted from December 2007 through March 2008. It began with an extensive research phase that identified and examined existing data and analysis pertaining to book distribution in Canada's English-language market. This initial research phase was complemented with a country-wide interview series with book professionals, and by further original research that explored major aspects of cost-scale relationships in book distribution.

We should note at the outset that there is not a great deal of publicly available data on book distribution in Canada's English-language market. This paper draws on data from Statistics Canada and other published studies for its statistical foundations, and expands on this with observations and insights gathered through industry interviews as well as additional proprietary data contributed by individual firms or organizations.

The research for this paper was further informed and supported by a previous study conducted for PCH throughout the spring and summer of 2007: The Book Retail Sector in Canada. This earlier study was published on the Canadian Heritage website in January 2008¹, and readers are encouraged to review it as a complementary resource.

Similarly, a complementary study on book distribution in Quebec was also carried out during the first half of 2008. The completed study, "La diffusion et la distribution du livre de langue française au Canada", is available in both official languages on the PCH website: http://www.pch.gc.ca.

Our findings with respect to book distribution in Canada's English-language market are summarized in this paper and organized in the following chapters:

• Trading Partners: An overview of principal roles and types of trading partners in the book supply chain.
• Terms of Trade: An overview of key components of cost in book distribution and current terms of trade among publishers, distributors, retailers, and institutional accounts.
• Issues in Book Distribution: A summary of current and emerging market dynamics having a material effect on the book marketplace and/or trading practice in the supply chain.
• Market Access for Canadian-Authored Titles: An analysis of how book distribution in Canada's English-language market affects the availability of Canadian-authored titles for Canadian readers.
• Digital Distribution: An overview of emerging models and platforms of digital distribution, and their relationship to the supply chain for print books.

 1.1       Distribution Basics

The term "distribution" is generally used to refer to a wide range of activities within the book supply chain. These encompass functions such as sales and marketing, warehousing and inventory management, order processing and administration, logistics and fulfillment, collections, data management, and customer service.

Book distribution is therefore concerned with the functions required to manage book inventories along with all of the transactions involved in trading these inventories between publishers and customer accounts throughout the supply chain. This is best understood as a collaborative process and one that involves the active management of multiple business-to-business trading relationships.  

Book distribution in Canada is heavily influenced by an important structural aspect of the domestic marketplace: Canada is a relatively small market, with a modest population spread over a large geographic area. Economies of scale are particularly difficult to achieve in such a market, and as will see in subsequent chapters in this paper, this has broad implications for the structure and operation of the book supply chain.

For the moment, we will simply note that the book trade in Canada's English-language market—particularly with respect to publishing houses, distributors, customer base, and warehouse capacity—is heavily concentrated in central Canada. This has created a supply chain where inventories are largely aggregated and stored in and around the Greater Toronto Area—both with respect to titles originated in Canada and the large volume of books imported to Canada—with supply routes running east and west to the relatively lower population regions in the rest of the country. 

Figure 1. The geography of the book supply chain in Canada's English-language market. 

 

Notes

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