Ingram Suspends Full Trade Discount to Small Stores
March 31st represented the annual culling of the herd at Ingram, better known in the Christian market as Spring Arbor, as stores failing to purchase $5,000 in 2015 had their trade discount reduced to 30% on books. If you’re looking for a notice you missed, it may be because the announcement appeared as a “service alert” posted on the right hand side of iPage that you had to click to read in full:
Dear Valued Ingram Customer,
As with any business, Ingram must closely monitor our expenses and make adjustments when needed so we can continue to provide the speed, accuracy, and support that you’ve come to expect. Sometimes, as our costs decrease, we have been able to pass that savings on to our customers.
However, to cover increased freight and operating costs, we’ve found it necessary to explore and evaluate our discount structure. On March 31, 2016, all accounts that fell below $5,000 in net sales for 2015 will have a new discount structure of 30% on all regular discount items. Please note, this discount applies only to regular discount titles, regardless of quantities purchased or order method. All other items such as video, short, audio, etc., will continue to be discounted as they have been. Also, Ingram does review each customer’s account sales annually and offers volume discounts based on net annual purchases.
We truly value your continued business and appreciate your understanding in this matter. Please contact your Ingram sales representative or call Customer Care at 800-937-8200 if you have questions about this new discount structure.
Ingram Content Group
So once again, it’s survival of the fittest. They didn’t even wait until April 1st, the policy is now in effect. Once again, I have some opinions on this, some of which I shared last year at this time.
- Small stores often get large orders. The bookstore owner or manager in a small market who works to get a 100 copy order gets no reward for their efforts. All other distributors base the discount on the size of the order, an approach Ingram has constantly resisted. I have orders currently holding from a couple of publishers waiting for me to add a few more titles. I have no problem working with that constraint. Send the Light’s minimum is 20 books. I understand why they instituted that and it’s not that hard for me reach their quota. As I said the last time this happened, I probably use some of my university publisher accounts once every 2-3 years, but my legitimacy and entitlement to a trade discount is never challenged.
- Ingram is a victim of their own system. Yesterday I received a $3.99 booklet from them. I have no idea why they do this or how they can afford to. When I placed my first iPage order, I was told to “click DC Pairs and where it says ‘hold/release’ click ‘release.'” I did what I was told. If I could change this, no one has ever told me what ‘hold’ signifies or how it would help save costs at their end and save the planet. They say they are “constantly monitoring expenses.” Uh…no, I don’t think so. If they streamlined their operations at their end, such as merging backorders or running multi-order invoices, they would not have to penalize small stores like yours at your end. Relatively speaking, this is all about shipping costs. The actual picking costs are minimal by comparison and the cost of a small store using the website is infinitesimal.
- Ingram already ships to addresses buying less than $5,000. In this case I’m referring to the host of individual consumers whose orders to companies like Chapters are fulfilled through Ingram. I feel like when I do place a larger order, I’m indirectly subsidizing the inefficiencies of Ingram’s costs in filling orders for online competitors.
- This shouldn’t apply to Ingram Publisher Services accounts. When Ingram is the exclusive distributor of a particular imprint, they are making money twice over. For a small store, they are the only game in town, and even if you approached the publisher directly and were willing to pay any importation costs, that publisher is contractually bound to Ingram as its exclusive warehouse distributor. Personally, I find scaling back the discount with respect to those publishers somewhat reprehensible.
- Canadian stores were forced to scale back. Christmas season purchasing from the U.S. was greatly curtailed when our dollar crashed. With Ingram, accounts are settled by credit card on the 15th of the month following, so there was the added variable of not knowing what Canadian prices to set because no one knew how low our currency was going to fall.
- Ingram has other options. They could change the minimum order on iPage from 10 to 15 items or set a dollar-value minimum. They could change the “low” discount threshold from $2.99 to $3.49 or $3.99. They could adjust discounts on hardcovers as Send the Light did. They could modify discounts on publishers where they feel they are being squeezed. They could scrap the “cascade” system and have stores meet a 10-unit minimum per warehouse. They could scrap the minimum order altogether and change it to a minimum shippable. (The last two involve some major system reprogramming changes, but this is about saving shipping costs, right? And the price of oil is going to turn around eventually and courier fuel surcharges will again go up.)
In my community, a large, general-market bookstore is closing today. We put the word out to our customers that we would happy to take their orders on a variety of different subjects; not knowing our access to full margin on those items might be restricted. (At least I can do Hachette, HarperCollins, Wiley, and Penguin/Random House.) It’s more possible now that a store in my position (or a store that finds itself being given some larger orders) would have no problem meeting that $417 per month average.
If you don’t know what your purchasing from them was in 2015, a phone call may be in order.
Sadly, for stores now facing a shorter discount, their relationship with Ingram vis-a-vis dollar volume, has now become a self-fulfilling prophecy.
It should be about the order, not a store’s performance in 2015.
Update: I want to make clear that while this is partly personal, I just think this particular strategy is bad policy. It’s bad for bookstores, bad for publishers, bad for authors and really bad for Ingram itself, since it simply makes everyone angry.
If my account is a drain on their bottom line, then they should put structures in place that force me to consolidate orders, or higher minimum orders.
In our Christian product sales sector of the larger market, people are often well-networked and vertically integrated. So if I’m talking to a new publisher or a new author and they have a choice between Ingram Publisher Services and Advocate Distribution Services, I think it’s obvious which one I’m going to recommend.