The subtext of REDGroup's collapse

Some good insight, Josh (See The subtext of REDGroup's collapse, February 23).
As we speak, a large offshore publisher is setting up shop in Australia to provide support to the local distribution market – but this is to also complement their offshore drop ship supply. Given our population, it stands to reason that offshore locations are going to produce a more cost effective product.
The cost of shipping is insignificant in comparison to domestic delivery, footprint or no footprint.

What happened to the concept of in-store printing? (See The subtext of REDGroup's collapse, February 23.) By that, I mean printing on dead tree, the book which the customer selects from a physical in-store display.
I have this week ordered two paperbacks. On-line. From an Australian bricks-and-mortar distributor. These books are available overseas and I probably could have purchased them through one of the foreign majors, but I choose not to do. I like bricks and mortar, physical shops, and so on.
So, why not save the costs of distribution, sale-or-return, the dramas involved with distant suppliers and so on, and print most books on demand in-store? Of course, coffee-table colour laden, large format books cannot be supplied this way, but why not the other 90 per cent of books – and especially textbooks, and books which originate overseas but which appeal to a wide market, such as scholarly works on climate change?
At today's print speeds and with basic bookbinding capabilities, books should take about the same time to download and print as it takes for a pharmacist to package and dispense medicines.

Josh, your article is quite interesting (See The subtext of REDGroup's collapse, February 23).
However, you state that for bookshops, the "retail margins [are] 45 to 55 per cent". I have managed retail bookshops, and the best discount was typically 33 per cent with returns or 45 per cent without returns. Also, your statement that "all the big names have used another business to subsidise their publishing" is interesting, but I think it needs a bit more evidence to back it up.

Hi Josh,
You mention only in passing the major contributor to REDGroup's demise, when you say in your article: "The bookstore share of the publishing pie, low-risk as it is, is shrinking. It certainly won't pay off too much debt" (See The subtext of REDGroup's collapse, February 23).
Following the classic private equity model, PEP loaded up REDGroup with debt, significantly increasing its risk profile. This high gearing magnified the impact of reduced revenues and gross margins (the reasons for which are well described in your article) to the point where the company could not service the debt, equity value was wiped out and administrators were called in.
It's only a shame that PEP's inappropriate and overly-optimistic exercise in financial engineering has led to the demise of these long-standing businesses, the unemployment of many experienced and knowledgeable staff, and even fewer opportunities for bibliophiles to experience the physical pleasures of a bookstore.
Regards,

Part of the reason for the collapse of Borders could be that they did not offer online shopping. A visit to their site was like going back in time (See The subtext of REDGroup's collapse, February 23).

Hi Josh,
Your article got my wife and I thinking and talking, yet again, about the future of books and bookstores (See The subtext of REDGroup's collapse, February 23).
As writers (and regular advisers on the impact of digital tech to arts companies), we have often been perplexed as to why publishers can't see that the future of e-book publishing is actually, potentially quite rosy, compared to their current arrangements with retailers, which you describe in your article.
We have put together a response to your article on my wife's blog if you are interested, about the future of books and bookstores – it's at http://thosecreativetypes.com.
We don't really think that bookstores becoming shopfronts for online sales is the answer – there are too many ways that online stores can fulfil the role of shopfronts to make this sort of outlay unnecessary. But there are other functions which physical bookstores can still retain, either physically or online. These are, to our mind anyway, most importantly: taste setting, selling books as objects, and bookstores being simply cool places to hang out.

I have been involved in retail bookselling in an independent book store for over five years (See The subtext of REDGroup's collapse, February 22).
My previous background had nothing to do with the industry so I was a newbie. Over the last five years I have been on a steep learning curve but I am constantly amazed that the publishers and distributors within Australia are so dysfunctional and inefficient. I think the biggest reason that REDgroup is in administration is because of the mismanagement of their debt. The industry in Australia did play a small part, because they greedily maintain their RRP's high and haven't adjusted their prices quickly enough to adjust to the strong Australian dollar.
This puts massive pressure on booksellers who in turn find it hard to compete with overseas sellers shipping to Australia. When your wholesale price for a title is $12 and you are trying to sell it for RRP$19.95 and an overseas retailer can ship the thing for about $9.50 freight free direct to your home, you know there is something very wrong with the wholesale pricing in Australia.
I feel that lots of what is said in this article is industry spin. It seems that Josh is too influenced by the rhetoric of the big publishers and distributors. He doesn't seem to really get what the real problems are.