Returns 101: What New Authors Need to Know

In the publishing industry, all sales are definitely not final.

Returns are a lousy part of the book business. Publishers brace themselves for the eventuality of them. Authors try to wish them away. Some indie authors even think they’re exercising control over their destiny when they make their books non-returnable—though nothing puts the nail in the coffin of a book’s sales potential faster than that.

Book publishing is a returns-based business, which means authors who want to play in the leagues at all—big or small—need to accept this reality. If you’re an independent author and you want your book to be available to bookstores, libraries, wholesale markets, and beyond, your book must be returnable and set to standard discounts. If you’re a small press or hybrid author, your publisher, by default, is adhering to industry expectations when it comes to discounts and returns, selling your book to accounts for as much as 55% off the list price and absolutely allowing for your inventory to be returned to its warehouse (for a full refund) if it doesn’t sell.

Here’s what authors need to know:

If an account buys your book, it’s not a hard sell until it’s sold “through the register.” You need to consider any buys from major accounts (Amazon, B&N, Hudson, and even your regional bookstores) as soft sales—because they’re returnable.

If you have traditional distribution through your publisher, books will automatically be sold and shipped to various accounts, sometimes to their warehouses, sometimes to individual stores or libraries. But, if you have extended distribution through CreateSpace or IngramSpark, your book is only available to be ordered. It’s not otherwise being physically shipped (or presold into the marketplace).

Once your book is available for sale, stores and other retail accounts either have inventory or access to inventory. They may put your book on the shelves for a while to see how it does. Online accounts will stock up in the early months in anticipation of demand. If libraries order your book, you’re golden, because those sales are non-returnable—an author and publisher’s dream.

Usually around six months post-publication—and sometimes sooner than that—accounts start to return books. The industry standard for returns is 30% -- which means if you sent out 100 you can expect 30 to come back. All this means is that your book didn't sell, and now these accounts are demanding a refund on the product they bought. If you have a publisher, you will see those refunds on your royalty statements as a negative dollar amount -- but it’s critical that you avoid falling prey to the mentality that this is in any way a sale lost. It was, in fact, a sale never made.

Book publishing is a consignment business. Retailers sell what they can, and if they sell a lot, the author (and by extension the publisher) wins. If they don’t, the author loses, but not in the way she thinks. Authors tend to think of returns as something they’re paying for, but in fact, they’re not. Selling to the book trade is a gamble, and as an author you need to decide your comfort level at playing the game. If you don’t play, you won’t sell. And when you lose, it’s more like losing the gamble. You bet on your book, but it didn’t sell what you thought it might. 

It’s important to remember that selling a book, whether it’s one or 100, to a retailer is the equivalent of asking that retailer for the favor of shelf space. Until a customer buys your book, you don’t make any money. Distributors also charge authors for returns, so publishers lose all over the place in this business. The fee is minimal, but it’s a per unit fee that covers the cost of restocking the book. This means your returned books go back into inventory. Only if they’re damaged do they become what’s known in the industry as a “hurt,” a non-sellable copy.

If you’re an indie author without a distributor, deciding to take returns means that your returns come back to you, to your office or home. You get to decide whether those books are good enough to resell—and generally they are. A returned book is not a damaged book; it’s simply an unsold book.

I understand authors’ pain with this whole returns-based business. They get a raw deal because they see presales on their royalty statements as “hard” sales. They believe their book has sold 500 or 1,000 copies to the trade when these are in fact “soft” sales. Publishers hold returns against author earnings specifically because they know, from experience, that lots of books will come back, and that those books can come back any time—well past the one year anniversary of a book’s publication date.

I know from my personal experience that authors struggle to wrap their minds around returns. It feels amazing to receive a royalty statement that has a firm sales number (despite the hold against returns). The brain allows you to believe that whatever that number is equals readers who’ve purchased your book, taken it home, cuddled up on the couch with it. But that is not at all what that number represents. It’s a much colder, harder number that represents books shipped to warehouses and bookstores where your book sits alongside hundreds and thousands of other books trying to get the attention of a consumer. And then, when the time comes, the inventory manager or bookstore buyer ships back what they can’t sell—and you have to take them, and absorb the refund, which shows up as a negative balance on your royalty statement.

There’s nothing fun about returns, and I wish I could say their demise was on the horizon, but this is not the case. No one in this industry thinks book publishing will let go of its consignment legacy. But as authors you can at least understand, and brace yourself for, the reality of what returns mean, so that you sit at the gambling table with an understanding of the odds, and not with your head stuck in the clouds. 

Brooke Warner is publisher of She Writes Press and SparkPress, president of Warner Coaching Inc., and author of Green-light Your Book (June 2016) and What’s Your Book? This is the seventh installment to a new monthly column she is writing.