Having an Account with a Small Distributor—Five Ways to Stock New Books (2)

Separate Volume: The Complete Guide to Stocking Books 2 (2)

The Diversity of Small and Medium-Sized Distributors and Inter-Distributor Wholesale

To hold an account with a major distributor, you must not only anticipate a certain level of sales but also clear the hurdle of providing a guarantee. However, if you cannot sign a contract with a major distributor, it does not necessarily mean you cannot handle new books available through the publishing distribution network. There is the option of using small and medium-sized distributors.

The difference between major distributors and small and medium-sized distributors is, of course, a difference in company scale. But more importantly, their roles are fundamentally different. Consequently, the number of publishers they have contracts with also differs.

A major distributor plays the role of comprehensively stocking all kinds of books on its own. Therefore, they have comprehensive contracts with a significant number of publishers, ranging from major ones to small and medium-sized ones. In principle, bookstores will only contract with one major distributor.

On the other hand, small and medium-sized distributors are not like that. Each is basically specialized in a specific role. Therefore, they only have contracts with a subset of publishers. Whether or not a bookstore has an account with a major distributor, they can use multiple small and medium-sized distributors. This is a major difference.

The roles of small and medium-sized distributors can be broadly classified into the following three categories.

The first is distributors specialized in a specific field. For example, those specializing in textbooks, medical books, or music books. For instance, when you go to a musical instrument store, they sell sheet music and introductory books on instruments; if you only want to stock such items, it is sufficient to contract with a music book specialist distributor rather than a major one. Also, distributors specializing in newspapers and magazines, or so-called foreign book distributors that import and wholesale overseas publications, can be classified here.

The second is distributors specialized in best-selling publishers. If you are a small bookstore, even if you have an account with a major distributor, you often find that best-selling products are not allocated to you, or you cannot get the quantity you want even if you order them. In such cases, if you use a small or medium-sized distributor that is strong in products from Publisher A, you can secure them more reliably than going through a major distributor.

The third is distributors specialized in small-scale publishers. Not only bookstores but also publishers cannot open an account with a major distributor without passing a certain screening, and the conditions are strict. Therefore, there are distributors that play the role of getting books from these small-scale publishers into the publishing distribution network. Many of them also specialize in specific regions or have roles specialized in specific fields like the first category.

I have been using the term 'publishing distribution' loosely until now, but it is connected like a giant web, with products flowing from one distributor to another. This is called 'inter-distributor wholesale' (nakama-oroshi). For example, if Bookstore A, whose main supplier is Distributor X, orders a book from Publisher B, and Publisher B has no business with Distributor X and only wholesales to Distributor Y, the system is set up so that the book reaches the store through multiple distributors: Publisher B -> Distributor Y -> Distributor X -> Bookstore A.

Inter-distributor wholesale can be said to be a mechanism for small and medium-sized distributors to cover areas outside their own expertise. It is also conducted not only between small and medium-sized distributors but also between small/medium-sized and major distributors, or between major distributors themselves. If a publisher wholesales its books to any one distributor that engages in inter-distributor wholesale, it can be said that the publisher's books are generally available through the publishing distribution network.

Therefore, even if you cannot hold an account with a major distributor, you can stock products from almost all publishers by using multiple small and medium-sized distributors for each publisher they handle, and by having one of them stock products from publishers that no one else handles via inter-distributor wholesale. Since the conditions for opening an account are significantly lower than those of major distributors, even those who want to stock books on a small scale can stock a diverse range of books if they use them effectively. Note that, like publishers, small and medium-sized distributors tend to be concentrated in Tokyo, especially in the area near Kanda Jimbocho known as 'Kanda-mura,' but they will certainly consult with you even if you are opening a store in a rural area.

Because each of these small and medium-sized distributors has a different area of expertise, what they can and cannot do, as well as their conditions, vary. Since many are small companies, you should not expect a system like that of a major distributor; building personal relationships becomes more important to get them to cooperate with the kind of store you want to create. Regarding conditions, especially with inter-distributor wholesale, the discount rate (kakeritsu) worsens as more companies are involved, and returns are often restricted. However, because they are flexible, if you can build a good relationship, they should become reliable partners.

Because they are so diverse, it is difficult to state their conditions generally. Below, I will introduce three small and medium-sized distributors that I interviewed directly.

Kuwaya Shoten

Kuwaya Shoten started as a distributor specializing in medical books, but it also handles a wide range of other fields such as architecture and design. It has business dealings with about 800 publishers, and about 100 of them are handled exclusively by Kuwaya Shoten.

They are also active in inter-distributor wholesale, and they say they have opened accounts with major distributors like Nippan and Tohan, as well as all distributors in Kanda-mura, both for wholesaling products from publishers handled exclusively by Kuwaya Shoten to other distributors, and for having other distributors wholesale products from publishers not handled by Kuwaya Shoten to them.

Therefore, bookstores can stock products from all publishers through a Kuwaya Shoten account. While their current clients are mainly specialized medical bookstores and medical book sections of large bookstores, they say that museum shops and the like have also been increasing in recent years. They are also willing to actively open accounts for small stores just starting out. Although you will need to sign an agreement to open an account, no security deposit or guarantor is required.

Regarding stocking methods, first, there is a place called a "storefront" where distributors display and wholesale inventory to retail stores. There are many storefronts in Kanda-mura, and at Kuwaya Shoten, if you pay in cash, it is possible to open an account in as little as one day and stock items on the spot. Also, after opening an account, if you order in advance and go to the storefront to pick it up, you can collect it right there. The wholesale rate for most publishers is the same as that of major distributors. While some publishers may have rates of 85% or over 90%, they generally state that the average is around 80%. Although it is basically a purchase-out system, depending on the business type, order frequency, and delivery method, it is said that it is possible to offer consignment conditions in some cases. Even if you do not go to the storefront, delivery is possible as long as it is within the Tokyo metropolitan area, and even in rural areas, it can be sent via courier service, although shipping fees will apply.

Also, regarding ordering, Kuwaya Shoten has a web ordering system called "Kni/Ght (Night)." Use of it is also free.

It is also possible to order directly from publishers. In that case, you provide the Kuwaya Shoten account number, and the order will be delivered to the Kuwaya Shoten storefront.

Koseido Tosho Hanbai

Koseido Tosho Hanbai is a distributor strong in newspaper-affiliated publishers such as Asahi Shimbun Publications and Mainichi Shimbun Publishing, as well as Shueisha, Shogakukan, Bungeishunju, Chuokoron-Shinsha, and Gentosha.
Their main clients are bookstores nationwide that hold accounts with major distributors like Nippan and Tohan as their primary distributor. It is often used as a sub-distributor specializing in the products of the aforementioned publishers. However, they say that they will basically open an account with any bookstore, even those that do not necessarily have an account with a major distributor, if it is a cash purchase. Also, if a face-to-face relationship can be built, transactions with payment at a later date rather than cash are possible. Depending on the payment cycle, a trust deposit for two months may be required.They also conduct joint deliveries with another distributor in the same Kanda-mura, Sanwa Tosho, and when opening an account with Koseido, they also introduce Sanwa Tosho. Sanwa Tosho is strong in KADOKAWA, Shinchosha, and NHK Publishing, and by doing business with both companies, you can cover quite a large number of major publishers.

Regarding stocking methods, you stock from the storefront in Kanda-mura. If you bring cash, you can buy on the spot, and if it is a product from a publisher they have a relationship with, even if it is not in the store, it will arrive in two or three days if you order it. The wholesale rate is also a general rate that is no different from major distributors, so-called standard net. Shipping is at the bookstore's expense, but they also provide delivery via courier service, so bookstores in rural areas can also use it.

They also accept returns. However, since many bookstores use them in conjunction with major distributors, they have introduced a system where if the number of returns is greater than the number of items wholesaled, it is treated as an excessive return and sent back to the bookstore. They say they want to do business with places that have continuous orders and can build a good relationship, rather than bookstores that return a lot just because it is consignment or order only best-selling products.

Kodomo no Bunka Fukyu Kyokai (Children's Culture Promotion Association)

Kodomo no Bunka Fukyu Kyokai was founded in 1984 with the long-established children's bookstore Crayon House as its parent organization. Initially, it was a specialized wholesaler for picture books and children's books, but now it handles books in almost all genres and has transactions with a wide range of publishers. Including manufacturers of children's miscellaneous goods and teaching materials, they stock products from about 300 companies.

A major feature is that they basically do not do business with bookstores that have accounts with major distributors, everything is completely purchase-out and no returns are allowed at all, and almost all products can be stocked at a 70% rate. In other words, compared to stocking at an 80% rate from other distributors, if you bear the risk of purchase-out, your gross profit margin will increase by 20% to 30%, which is 1.5 times higher. No trust deposit is required, and opening an account only requires filling out simple documents. If you order a total of 30,000 yen or more at list price, shipping is also free.

Clients are diverse, centered on picture book specialty stores that do not have distributor accounts, but also including general stores, toy stores, children's clothing stores, flower shops, art museums, aquariums, and museums. They have opened their doors wide to people who want to sell books and will also provide advice on book selection if necessary. It can be said that it is the most frequently used supplier for retail stores other than so-called general new book bookstores that handle new books.

Regarding stocking methods, you use a dedicated web ordering system. Even if there are products not listed, if they are from a publisher they have a relationship with, you can almost always stock them. There are two order timings per week, and they arrive in five days. Although it is a long-established company with a history of nearly 30 years, they say they want to support the publishing industry with a system that delivers faster and allows even different industries to sell books in order to adapt to the coming era.

Distributors Strong in Small Publishers

So far, we have looked at three small and medium-sized distributors. There are many other small and medium-sized distributors, including those in Kanda-mura, and each has its own characteristics. Although it takes a little effort, by combining them well in a way that suits your own store, it is possible to stock products from a wide range of publishers.

Also, among those not mentioned so far, there are small and medium-sized distributors that specialize in putting products from small publishers into publishing distribution. JRC (formerly: Humanities and Social Sciences Book Distribution Center), Chiho/Sho-Shuppan Ryutsu Center, and Tsubame Shuppan Ryutsu are examples.

Many of the publishers handled by these distributors only do business with that distributor. It is what is called "exclusive sales." That small publishers who create high-quality books are increasing and gaining presence is something that book lovers can feel firsthand. If you have an account with a major distributor or a small/medium distributor that is active in peer wholesaling, you can of course stock through them. However, if you want to actively handle books from such small publishers, it can be said that if you can open an account directly with these distributors, it will be easier to create a unique product lineup.

Small/Medium Distributor-like Services by Major Distributors

Recently, major distributors have also begun to offer services that allow transactions even from small amounts. As an example, there is "Foyer," operated by Osakaya Kurita.
For clients, sales in small spaces other than so-called new book bookstores, such as general stores, hair salons, and cafes, are envisioned. Opening an account is also easy, and no trust deposit or guarantor is required. When you fill out the application form, a transaction contract will be sent to you. You just need to fill in the necessary items and return it along with a certificate of registered seal.

Stocking is ordered from a dedicated website. It is linked to the Osakaya Kurita warehouse, which always has 2 million books in stock, and it is a system where you can only order backlist titles that are in stock there. The wholesale rate is 83%. Returns are possible, but a 10% handling fee is charged. Shipping is free if you order 25,000 yen or more. The transaction limit is set at a maximum of 300,000 yen.

It seems that not only Osakaya Kurita but also other major distributors, or even bookstores, are preparing similar services. If these initiatives by major companies progress, it will likely become easier for new entrants who want to try selling just a few books to enter the market.

Even More Diverse Publishing Distributors

There are other types of distributors that differ from both the large and small-to-medium distributors mentioned so far.

First, there are distributors that specialize in purchasing books from large distributors and performing so-called secondary wholesaling or intermediary wholesaling. Since their primary purpose is secondary wholesaling from large distributors, their nature differs from small-to-medium distributors that only have contracts with a select number of publishers. Many of them take the form of bookstore franchises or specialize in specific regions. It seems that if an account opening with a large distributor is refused, one might be introduced by the large distributor side. Once a contract is signed, in principle, one can handle a wide range of products from a single company, just as with a large distributor.

There are also distributors that hold a large market share with specific types of clients. A well-known example is the Library Resource Center (TRC), which has a large share in the library market. One might also include Nikkyohan, which specializes in wholesaling textbooks. Both are too large to be called small-to-medium distributors.

As we have seen, the nature of publishing distributors is truly diverse, and it is difficult to grasp the full picture. Page 159 contains a list of various publishing distributors. However, please note that because the entire publishing industry is in a period of major change, the information provided here may also change depending on the situation.

*Reprinted from "A Reader for Future Bookstores," pp. 133-140
* (Added November 2018) Sanwa Tosho ended its distribution division operations as of the end of October 2018.