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Yesterday I talked about how returns can be not so good for the publisher (any publisher, not just me). Today we'll talk about how returns are not always so good for the bookseller either.

Don't get me wrong. There are some serious pros from a bookseller's perspective for keeping the returns model. And since in my other line of work I am a bookseller, I can tell you what those are. (And I can even sympathize and agree with them.)

1. Reduction of Risk -- this is a biggie, and it's going to be a hard one to convince booksellers to give up. When a bookseller orders a book knowing that he/she will be able to send back unsold copies, it pretty much eliminates the risk. Yes, there are costs for the bookseller to doing returns (I'll talk about them below), but in general they vastly outweigh the risks of being left with stock you just can't get rid of (even with sales).
2. Allows Optimism -- Say you're a bookseller who has read the ARC of a book and doesn't particularly like it. You think it might do okay at your store, so you order a copy or two for the shelf. Then the publisher's sales rep comes in all bubbly about that book. You may not like it but they are expecting x number of star reviews and they're going to do y number of marketing things and be on z number of talk shows, and in the end the rep convinces you to take a 12 book dump. Because of your reduced risk above you can buy this dump even if you don't think that book will do all that great. And if your gut turns out to be right, you just return those extra 10 books back. (All right, this pretty much has never happened at our store because I work for some astute buyers. However if there is a doubt in their mind, they do err on the side of over rather than under ordering because they know they can return.)
3. Allows Events to Have Enough Books -- And this is the only part of the returns system where the bookseller and the publisher in me agree. Books ordered specifically for an event should be returnable. Period. You never, ever want an event with too few books. I've worked events like that as both a bookseller and once as a publisher, and it is just a nightmare for all involved. You end up with missed sales, unhappy customers, unhappy authors, and stressed out bookstore and publisher staff. In this case returning the books is worth any loss on both sides.
4. Take Orders without Prepayment -- Right now you can place an order at most bookstores for a book they don't have in stock without prepaying as long as the book is returnable. Why can't you do this for nonreturnable books? Because a majority of books that are special ordered for customers are never picked up or are rejected when the book arrives. Of course, I have a pretty simple solution for that dilemma, but it would probably reduce the number of people placing special orders to those who actually want the book.
   

1. Shipping costs -- most bookstores pay their own shipping to return books. (I don't know about B&N. When I worked there I was not in receiving but on the floor. I pulled returns, but didn't box them up.) Shipping books ain't cheap.
2. Labor costs -- employees have to physically get the books off the shelf to return. At B&N we were expected to spend a minimum of 25% of our week "zoning" which meant going through bookshelves with a scanner listening for the little ding that told us a book was marked for return. We were also supposed to be alphabetizing and making sure the book belonged on that shelf, but nearly all of us just ended up in a zone that glazed over and listened for the return. At the indie I'm at, we have an employee solely dedicated to returns.
3. Loss of profit -- This is the biggest drawback for a bookstore especially the independents. (Barnes & Noble buys differently.
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If I was a paranoid person, I might think Barnes & Noble had it out for me. Now in reality, the powers that be at B&N haven't the faintest idea who I am. I am just one or two pages in the NBN catalog -- pretty much indistinguishable from every other publisher in there. And from Barnes & Noble's perspective, they actually probably like me. After all, for the two books I put out in 2010 (Book of Maps & The Necropolis), they purchased nearly the entire print run of each. (In fact for Book of Maps, they originally ordered 3x the print run before I pointed out to NBN how unrealistic that was.) And in any other industry, that would be it. I'd pay my authors their royalties and take my remaining money to the bank.

But this is the book industry, and unlike literally every other industry on the planet, we allow returns.

And this is why I become paranoid about Barnes & Noble's intentions. Because although they bought nearly the whole print run of Book 3 of both The Sacred Books and the The Forgotten Worlds Series, they didn't buy any of 1 or 2. You can probably guess how many casual shoppers randomly buy the third book in a series. And since I know my sales numbers for book 2 (a reasonable forecast of sales for book 3), I can tell returns are going to be somewhere in the 85% range. If I'm lucky.

Large scale returns for me are, to put it bluntly, devastating. It would be cheaper for me to print books and toss them directly into a recycle bin or a bonfire or use them to build furniture than it is for me to sell a book and have it returned. Let's do the math:

Say I have a book that retails for $1.00.

That book sells to a bookstore at a discount that we'll say is 50%. (Discounts to people who buy from NBN vary from 47-60%, but 50 is the easiest number to use.) From there it goes to the store shelves. Yeah! On my end I've gotten $0.50. My distributor takes its cut of (this is not the actual number since I legally can't disclose that but an approximate that again is easier to do the math with) of 20% or $0.10 and my author (again this varies but we'll average for ease) gets 10% of that $0.50 or $0.05. I'm now down to $0.35 which after factoring in the cost of printing the book drops to $0.10. I then spend half of that in marketing, and finally I'm left with 5 cents.

(You may have noticed that the author and publisher make the same amount. This is intentional. Authors are considered an equal partner in each book.)

So far everything is looking good for all involved. The bookstore is getting to sell at a 100% markup, the distributor is getting its cut for its hard working sales force, and the author and I are equally sharing the profits. Great.

But then 90 days pass and the bookstore can return any unsold stock. The bookstore employee pulls the book from the shelf and returns it to NBN. Since they get a full credit, I have to give the bookstore back $0.50 for that book. But wait! I only actually got $0.35 for that book. I had to give $0.10 to my distributor and $0.05 to my author. Well, my author isn't going to get to keep that money. We're partners so if the book doesn't sell, neither of us gets anything. That royalty gets credited back to me. (However, if a royalty check has been paid, the author does not send me money back. That check just acts like another advance that has to be earned out. An author never, ever sends me money except for books that he/she buys directly from me.) However, my distributor keeps the money I paid it.

So, to make a long story short, instead of making 5 cents on that book, I have lost 10. If we were talking