Game Changers in the Bookstore Industry
As far as I know, there is no other country overseas where the number of bookstores has been declining for decades like in Japan, nor where book sales are falling. On the contrary, in some places, they are actually increasing. Since that is the situation in developed Western countries, I believe book sales are growing even more in areas with increasing populations, such as Asia, which is part of the Global South.
Hello. I am the husband of a couple who wants to start a bookstore.
Today is a continuation of the last post. I'm sharing what I learned from reading "Bookstore Revival".
The current bookstore industry is being squeezed by a system that feels like a dream from a bygone era. Each player has been protected by the "consignment sales system" and the "resale price maintenance system." Actually, it might be better to say they have been "spoiled," because these systems have created a situation where bookstores lose their ability to curate books without bearing inventory risk, and publishers mass-produce books that don't sell just for the sake of cash flow.
In the previous article, I summarized the current state of the bookstore industry, but this time I will introduce the game changers who are trying to break through in such an industry. Some are working on game changes from the bookstore side, some are cases of public-private collaboration, some are entries from completely different industries, and some are examples of major, long-established companies starting to move.
To give you the conclusion first, the bookstore industry is incredibly interesting. While one might think they are struggling because they cannot adapt to market changes with the same system and business model for so long (though that is likely true for the majority), there are many new initiatives and changes.
Of course, it takes time for the entire industry to change. Since the current system has aspects that are convenient for bookstores and publishers, there will be people who do not like change, and some will be weeded out by it. Among the 10,000 bookstores and thousands of publishers nationwide, many cannot adapt to change.
But if we leave the situation where the number of bookstores has halved in 20 years as it is, everyone will suffer as if they are being strangled by a silk thread. That is why people have stood up.
If I were to run a bookstore, it would be an entry by a young person from a completely different industry. If I do it, I want to be someone who pushes the industry's changes forward.
Therefore, in this article, I will focus on introducing game changers who are creating new concepts I want to refer to and new systems I want to incorporate into a bookstore if I were to run one.
Tomei Shoten: Entering from the IT industry! But achieving full-year profitability is difficult
The first game changer is "Tomei Shoten," which has been operating in Kuramae, Tokyo, since 2023.
Tomei Shoten has about 3,000 books, which is a scale close to a so-called independent bookstore, but what is most unique is that it is backed by freee, an IT startup that provides cloud accounting software. freee is a large company with nearly 2,000 employees, listed on the Tokyo Stock Exchange Growth Market, and with sales exceeding 30 billion yen last fiscal year. Why would a rapidly growing IT startup run a small bookstore?
As we became a large company, opportunities for members to have challenging experiences like those at the time of founding decreased. So, we talked about returning to our roots, which is small business. That was the origin of Tomei Shoten.
<Omitted>
freee's business is an intangible IT industry; it does not have stores or inventory. So, we thought that by engaging in retail and store operations, which are the furthest things from that, we might be able to learn things we wouldn't notice in our daily work.
<Omitted>
While there is news that even large bookstores are struggling, independent bookstores and select bookstores that express individual values are actually increasing. We focused on that. We thought that the situation, which cannot be fully expressed within the conventional category of bookstores, is connected to the mission we at freee uphold: "Making small businesses the protagonists of the world.".
<Omitted>
The bookstore industry has high affinity with various industries and businesses, such as retail, real estate tenant leasing, and event businesses, and I thought the fact that it becomes a hub for culture is also attractive.
In other words, Tomei Shoten is not intended to be sustained by the bookstore alone, but is operating as a place for freee's challenges and experiments. Therefore, there are many advanced initiatives. They are also trying out shared bookshelves (shelf rental), unmanned operations using systems, and events and galleries.
Indeed, bookstores concentrate elements of small business. Not only can you sell books, but you can also sell miscellaneous goods, and it is easy to collaborate with other retail businesses such as cafes and galleries. You can also combine forms other than retail, such as event management, content sales, and book selection services.
Since Tomei Shoten aims to support small businesses and, by extension, help with freee's branding, they are openly sharing information that is helpful to people who are trying to start a small business.
Although it is introduced in this book, it is also published in more detail on note, and there were many stories that were educational when I looked at that.
First, the money side at the time of founding. In this article, the breakdown of initial costs is introduced.
Instead of grouping them as "equipment costs," it is detailed, such as how much air conditioning cost and how much interior work cost.
In the case of Tomei Shoten, the initial cost was 15 million yen. About 2.3 million yen for real estate acquisition, about 5.5 million yen for equipment costs such as interior construction and fixtures, and about 3.9 million yen for purchasing books and producing goods (of which about 3.7 million yen was for about 3,000 books). 270,000 yen for administrative procedures for company establishment, etc., and 660,000 yen for logos, sales promotion tools, and preparation of supplies. They started with the remaining 2.4 million yen or so as operating funds.
I am very grateful for these figures. If I have a chance to go to Tokyo, I will take a peek at Tomei Shoten. I want to experience what kind of shop can be made with 5.5 million yen for interior work. Although, if I were to do it now, material costs have risen, so it would probably cost more to make the same thing...
Furthermore, they are showing the profit and loss statement in detail since they started operations.
In the first month of operation (only 8 business days), there was excitement for the opening, and sales were about 1.4 million yen (the target was 1 million yen). Since the gross profit was about 440,000 yen, the gross profit margin was about 30%. Although the gross profit on books is about 20%, the gross profit margin improved because there were also sales related to events and goods.
On the other hand, the final profit was a deficit of nearly 1.5 million yen. The reason for that was that selling, general and administrative expenses were high. Thankfully, they are not grouping them as "selling, general and administrative expenses" but are revealing the contents as well.
The selling, general and administrative expenses for the first month were about 1.9 million yen, but this includes about 250,000 yen for salaries, etc., about 940,000 yen for supplies, etc., and about 65,000 yen for payment fees.
Setting aside the salary for a moment, it is surprising that consumables cost over 900,000 yen. This is apparently because it wasn't included in the initial costs, and various items became necessary once they actually started operating (this doesn't mean this much in consumables is incurred every month).
This is helpful information. Even if you think you are fully prepared when you launch a store, there are many things you only realize you need once you actually welcome customers. It is dangerous if you don't leave some leeway, anticipating unexpected cash outflows in the first few months.
Also, it is surprising that payment processing fees are 65,000 yen. These are the system fees for cashless payments, but they quietly add up. Against sales of 1.4 million yen, that is about 4.6%. It depends on what kind of system you install, but if you are having 4% shaved off every time a payment is made on books with a gross margin of about 20%, that means your gross margin is reduced by 20%.
This is another point I, with no store management experience, might overlook, so I am glad to know it.
This article introduces one year's worth of sales and profits, purchasing data such as average customer spend, sales of books and merchandise, and 15 insights realized after one year since opening.
For example, 'Tomei Shoten rents a space for 280,000 yen a month, but I should have thought a bit more about the scale and location,' or 'The fax machine is surprisingly useful,' and 'Merchandise prices are at most around 5,000 yen,' among others.
This is the profit and loss statement for the second year. Roughly speaking, annual sales are around 17 million yen, and the gross profit is around 9 million yen. This is a very high profit margin for a bookstore, but it seems to be the result of incorporating business models such as used book sales and shared bookshelves (shelf rentals) in addition to merchandise and events.
Looking at the composition of the gross margin, items other than books become significantly larger. In terms of gross margin, the book portion is roughly 20% to 30%, while events, merchandise sales, shelf rentals (shared type), and gallery rental fees account for about 70% to 80%.
<Omitted>
Roughly speaking,the profit margins are about 23% for new books, 75% for used books, 60% for original merchandise, 40% for purchased merchandise, and 70% for drink sales. Also, shelf rentals, gallery space rentals, and events have no cost of goods sold, so in terms of profit margin, they are 100%. I haven't calculated the profit margin for unmanned operations, but sales during those hours account for about 30% of the total.
Apart from profit margins, regarding space rentals, whether or not these are filled makes a big difference in management. For example, in the gallery, customers who come to see the exhibition might buy books or related merchandise, or order drinks while they are there.The accumulation of those 'while I'm at it' purchases is surprisingly large.
However, because selling, general, and administrative expenses are nearly 12 million yen, there is a net loss of about 3 million yen. I want to know the breakdown of these expenses. Rent is 280,000 yen per month, which is just under 3.4 million yen per year. Is the rest personnel costs? If it is personnel costs, we might not need to look at it as strictly for our own store, but if there are millions of yen in unexpected expenses, like the 900,000 yen in supplies that weren't in the initial costs in the first month of opening, we have to be careful.
And so...
Since Tomei Shoten also publishes a lot of information on note, this has become too long.
In 'Bookstore Revival,' 10 game changers are introduced, so at this pace, it will never end. I don't intend to cover everything, but I definitely want to record here the services that are useful for us and that we want to use when we build our own store.
So, let's pick up the pace.
Bookstore B&B: A pioneer of independent bookstores that proved new book bookstores can succeed.
The next game changer is 'Bookstore B&B' in Shimokitazawa, Tokyo.
I knew the name Bookstore B&B, but my image of it was as a pioneer of independent bookstores. It was written by the person who wrote '{A Reader's Guide to Future Bookstores,' which you could say everyone who wants to run an independent bookstore has read (I want to introduce this book someday too).
The owner of Bookstore B&B, Shintaro Uchinuma, is not just a bookstore owner. After graduating from university, he joined a company related to book fairs but quit after a few months, and while working part-time at a bookstore, he established an online bookstore. Later, while working as a book coordinator planning events, he founded Bookstore B&B in 2012 in collaboration with Hakuhodo. Although it was a collaboration with Hakuhodo, Hakuhodo's capital was not involved.
He has also been involved in the establishment and operation of various other stores, such as being the editor-in-chief of a publishing information site, producing a brand of reading supplies, and a specialty diary store, and he is currently even serving as a director at the major used book seller, Value Books.
He is involved in every phase of 'books,' not just as a bookstore manager, but also in editing, merchandise, non-bookstore retail businesses, and used book sales.
New book bookstores can succeed. Of course, there are various caveats, but itmust be a world where they can succeed. As proof of that, I manage Bookstore B&B.
For Mr. Uchinuma, who looks at various industries related to books, the current bookstore industry consists of two parts: a 'large industry' and a 'small industry,' and they partially overlap.
The large industry includes large-scale publishers, major distributors, and large nationwide chains. The small industry has a new ecosystem consisting of independent bookstores and small-scale publishing such as ZINEs and little presses. Thissmall industry is steadily increasing its presence.
The bookstore I want to run will likely belong to the 'small industry,' but I also want to step a little into the 'large industry.' I want to handle shared bookshelves and ZINEs, but if I specialize in that, I won't be able to fulfill the media function necessary as a 'town bookstore'.
As I wrote a little in this article, I still find the role of a bookstore as a 'medium that edits and proposes the era.' Of course, movements like shared bookshelves and ZINEs are also symbolic of the current era,so I want to incorporate them, but I also want to fulfill the role as an infrastructure for circulating the 'crystallization of knowledge' output by prominent scholars, intellectuals, and writers.
It is a two-pillar approach of books and events. I say that bookstores can succeed, butit is still difficult with book sales alone.
In 2026, we will reach our 14th year of operation, and one of the things I think I 'managed to do' is that I think I established 'talk events at bookstores' in the world. Bookstore events where authors, editors, and related parties talk about new books are now a fairly common sight, but when we started, it was not common.
<Omitted> (Regarding event pricing)
It is 2,500 yen excluding tax. Every time, most events include one drink, and we place importance on the combination of the author and the interviewer, the content, and the title, and we properly edit it as an event. As a result, the trust and recognition of the events have become established.
When a bookstore sells one new book, the gross margin is a little over 20% of the list price. In the case of an event, for example, if 30 people gather at a participation fee of 2,500 yen, that is 75,000 yen in one day. In addition, since we can also expect sales of related books at the event,events become a department that can cover the low profit margin of books.
Regarding events, establishing online distribution in addition to in-person has also been a plus for management. By the way, the online participation fee is 1,500 yen excluding tax. Also, the content of the events is sold as an archive for a certain period.
It is difficult to sustain a business solely on book sales. This remains true even for B&B, a bookstore that is a pioneer among independent shops. Therefore, revenue from sources other than books becomes important. Information on event pricing and online sales is helpful. Since I have been doing online marketing for a long time, this part seems compatible, and I think I can grow it.
However, in a location like Osaka, it is not as easy to hold events as it is in Tokyo. Most publishers and authors are in the Tokyo area. I should start researching publishers and authors in the Kansai area now. Since I also plan to run a gallery, I want to keep a close eye on artists active in the Kansai region.
I currently do not think it is constructive to talk loudly about the 'extinction of bookstores.' There is a trend in the discourse that bookstores are in crisis. In the 2000s, the 2010s, and the 2020s, about every ten years, books with negative titles stand out, and a boom in talking about the crisis occurs. However, the underlying industry situation is almost the same, and yet bookstores have not disappeared.
While traditional neighborhood bookstores are decreasing, new business models are emerging on the other hand.Rather than extinction, the industry map is changing, that is what it means. If demand decreases, the required number will decrease, but it will not become zero. The problem is that the environment cannot be maintained as it has been, and it is just a matter ofhow well one can adapt to change.
You are absolutely right. Bookstores are indeed decreasing. But large bookstores like Tsutaya Books in Umeda and Kinokuniya are crowded, especially on weekends, to the point where lines form at the registers. There are many young people, too. Without a doubt, bookstores are needed by people.
The problem is not 'books' or 'bookstores,' but the business model and industry structure. If the issue of book returns can be solved, bookstore profits could likely be increased. If bookstores have the ability to curate their stock and select books that will sell, publishers would not have to mass-produce books that don't sell, and could instead focus their efforts on each book that does sell, thereby increasing profits. Then, the publisher's share of each book could be reduced, and that portion could be passed on to distributors and bookstores.
As mentioned in the previous article, publishers keep churning out new books for the sake of immediate cash flow. Since many bookstores do not select books themselves and simply display the books sent to them, a significant portion of their inventory consists of books that do not sell and are returned (incurring double shipping costs). As a result, the profit margin of the entire industry is squeezed.
Of course, such changes might mean that many people who have been able to publish books until now may no longer be able to do so. However, we are now in an era where anyone can publish a book if they want to, using ZINEs or small presses. Since such works are created without the involvement of publishers and are free and unique, they are constantly being born and radiating a new kind of charm.
Major publishers, as an 'infrastructure of knowledge,' should thoroughly create things that will continue to remain for 5 or 10 years, promote them with cost, and properly return profits to the authors.
Things that are left out by that process, but which authors still strongly wish to publish, can be released as ZINEs or small presses, delivering unique value and charm that is only possible because of the small print run.
I think such a division of roles is necessary. Well, it's no use saying this when I haven't even started a bookstore or published anything.
Shintaro Uchinuma, the owner of the bookstore B&B, seems to be actively researching the situation overseas, and one interesting example among them was the case of South Korea. In South Korea, it seems they were able to apply for subsidies for bookstore events such as workshops with authors (though this is no longer the case).
There are various subsidies for starting a business in Japan, but I was surprised because I had never heard of subsidies for events. I'll look into it, as there might be various subsidies in Japan that I'm just not aware of.
As a premise for my actions, I personally do not feel at all that paper books will disappear. Once, when I was talking to a friend, they said, 'If displays had come first and paper terminals had appeared later, it would have been considered a great invention,' and I was struck by that shift in perspective.
<Omitted>
Things on the web don't know when their content will change, and displays change as soon as you touch them a little or as time passes, don't they? In fact, because we are anxious about that, we take screenshots or print them on paper. In other words, there is value only in the fact that it is 'fixed'.there is value only in the fact that it is 'fixed'.
In the last thirty years, the internet has completely spread throughout the world as something taken for granted. In the next ten years or so, AI will likely handle most intellectual labor.
But even though the world is changing this much, for some reason, I don't feel any sign that paper books will disappear. Or rather, they are being re-evaluated. While approaching that mystery and charm, I hope that a world where diverse books continue to circulate will continue, and I want to increase such companions and continue to take on challenges that we can do ourselves.
Wonderful articulation.
I vaguely feel that the importance of paper books might increase in the AI era. AI will provide as much 'knowledge' as one could want. Because of this, web media, videos, and courses that easily provide various how-tos will likely decline. But on the other hand, I think the value of the experience of 'reading,' where you face a single book for several hours, will increase. Even if AI becomes able to output 100,000 characters in an instant, I don't think people will read it.The experience gained from 'paper books' will likely increase in value in the AI era, when the value of individual how-tos disappears.
The idea that there is value in being 'fixed' is a new perspective.
I sometimes wonder if future people hundreds of years from now will understand nothing when they analyze the modern era.
When analyzing the past, various documentary materials remain, but most modern information is on servers. The records of people doing wonderful discourse activities on YouTube might disappear when YouTube ends its service. The records of people continuing to output wonderful things on blogs might disappear with the end of server contracts. Since keeping data on a server is not free either,most of what we see and read now will disappear in hundreds of years.
In the end, I think future people will refer to paper books when analyzing the present. Just as letters from great people of the past remain, even if a paper book goes out of print, at least one copy should remain somewhere. And it becomes a primary source that has not been altered in any way from the time it was printed until the distant future. In that sense, online data is altered, so even if it remains, it might not be useful as primary data.
Paper books are important.
It might be better to print and keep a record of our thoughts and actions when we think, 'We want to run a bookstore!' When I die and want to look back and think, 'What kind of thoughts did I have when I started the bookstore...', there's no guarantee that Note will still be there.
Retirement system for bookstores
In 'Bookstore Revival,' the interviews continue with Fukurou Sabo and Kamome Books. Fukurou Sabo is a business format opened by Doutor Coffee with the theme of books and coffee, and it is produced by the owner of Kamome Books. Fukurou Sabo has two characteristics. While there are more and more cases of bookstores having cafes attached, here, because they emphasize 'time to concentrate on reading,' the concept is 'coffee and books' rather than 'books and coffee,' and they sell books with their covers hidden, a method called 'Fukurou Bunko'.
The concept and management policy of Fukurou Sabo are interesting, but this is the part I wanted to save.
Neighborhood bookstores require a lump sum of capital to open, but at the same time, retirement money is guaranteed by the inventory. Therefore, it is a business format that is easy to quit if you want to.
Since books are sold on a consignment basis, for example, if you have 20 million yen worth of inventory, you can just return it all to the distributor when you close the shop. Then 20 million yen will be returned, and that will serve as retirement money.
Is the return system also a form of retirement benefit for bookstores? This is quite a significant advantage. Usually, when closing a shop, various costs arise, and of course, there are costs to dispose of inventory. Therefore, when ordinary retail stores close, they try to reduce inventory even at a loss through clearance sales. However, bookstores can keep their shelves fully stocked until the very end and receive a considerable amount of cash by returning the books.
It is certain that the return system is an incredibly good system for protecting bookstores. However, because of this, bookstore owners can easily quit if they want to, and when there is no successor, they often choose to close down rather than force themselves to find one. This is one of the factors behind the decline in the number of bookstores.
I found this interview valuable because it revealed the reality of the bookstore industry on the ground.
Since this article is about to exceed 10,000 characters, I will pick up the pace from here using a list format.
The Book Hotel launched by Nippan
Nippan believed there were limits to trying to solve publishing problems solely within bookstores, so they transcended their position as a distributor and launched 'Bunkitsu' and 'Hakone Honbako' through group companies as places to read books.
The bookstore business is tough, but I see it not as shrinking, but as 'fulling' (shukuju). Fulling is like how a wool sweater shrinks and becomes denser. Even as the market size shrinks, bestsellers are still being produced. Independent bookstores with core fans are also increasing.Books will never disappear. They may decrease in number, but they will become tightly and strongly fulled.
The nature of books is shifting from daily necessities to luxury items like wine. Many more convenient media for acquiring information are emerging, and the value of books as mere containers of information will be replaced. On the other hand, things that can only be realized through books and experiences that can only be delivered by them will make books luxury items. As AI streamlines daily tasks, might books as luxury items fill the gaps that open up?
When considering the value of watching a movie, the role of movie theaters has disappeared with the advent of Netflix and others, but they demonstrate value by being designed as an experience that can only be enjoyed at a theater. Similarly, if books are just for obtaining information, they might be replaced by other methods, but if we approach 'the act of reading itself' and 'the reading environment,' new businesses will come into view.
By converting the value that books hold into 'experience' and 'spatial value,' we provide them not by selling books, but by selling an 'intellectual and sophisticated lifestyle,' offering them as luxury items just like wine.
When I was expanding on the image of a bookstore in a previous article, the phrase 'ideal reading experience' came up.
I believe the best time to read a book is the moment you buy it. You could watch a movie on Netflix at home, but you go to the cinema because it's a special occasion. Going to a bookstore in that way might be the value that bookstores can provide in the future.
Ministry of Economy, Trade and Industry: The government also wants to support
This book features not only players in the bookstore industry but also examples of initiatives by local governments. Now that I think about it, libraries and the like are operated by local governments, so the public sector occupies a corner of the bookstore industry. That said, I have omitted some parts that were not very relevant to us who want to run our own bookstores. An interesting initiative from the public sector was the interview with Takehiko Saeki, Director of the Culture and Creative Industries Division at the Ministry of Economy, Trade and Industry.
The report I happened to encounter in a previous article was also created by the Culture and Creative Industries Division of the Ministry of Economy, Trade and Industry.
The Ministry of Economy, Trade and Industry launched a 'Bookstore Promotion Project Team' in 2024. Through hearings with industry stakeholders, they have identified 29 items as challenges unique to bookstores. Among the challenges are 'distribution practices that suppress gross profit margins,' 'too many published titles,' 'high return rates due to the consignment system,' and 'burden of cashless payment fees.'
In the view of the Ministry of Economy, Trade and Industry, bookstores are the foundation of Japan's medium- to long-term competitiveness. For Japan as a whole to be competitive, it is necessary to be exposed to diverse ideas and ways of thinking, and bookstores can fulfill that role. Overseas, bookstores are not just a business, but are considered to be related to national power as hubs for cultural dissemination. Furthermore, the bookstore foundation is also important for entertainment such as anime and manga, which are key Japanese industries.
The Ministry of Economy, Trade and Industry places particular importance on improving the return rate. About 30% of shipped books are returned. Since publishers determine their share of sales while taking returns into account, if the return rate is lowered by 10%, it will not only reduce publishers' profits and logistics costs but also make it possible to increase the bookstore's share by 10%.
To lower the return rate, it is necessary to collect marketing data on what is selling. In addition, the four major companies—Kodansha, Shogakukan, Shueisha, and KADOKAWA—are taking the lead in attaching RFID (small chips for data acquisition) to measure sales data of publications, which has been a black box until now.
By introducing RFID, not only can sales be tracked, leading to more accurate ordering, but it also helps prevent shoplifting. In a demonstration experiment, the number of books shoplifted annually decreased from 1400 to 66. To achieve this, it is necessary to introduce RFID-compatible gates (which sound a buzzer if a product that has not passed through the register passes through), and they are promoting the development of subsidies for system introduction.
An environment is also being developed to lower credit card transaction fees for small and medium-sized bookstores, with plans appearing in some cases that range from the high 1% to the 2% range.
In 2025, a 'Bookstore Revitalization Plan' will be announced to support the revitalization of bookstores at the national level. There are many subsidies that bookstores can utilize, such as the 'Small Business Sustainability Subsidy' and the 'IT Introduction Subsidy'.
The challenges I have written about in previous articles are covered here. It seems that the issues I identified as challenges from an outside perspective are indeed considered important issues from within as well. New information I encountered includes the 'Bookstore Revitalization Plan' and the 'Guide to Utilizing Support Measures for Bookstore Owners'
The latter, in particular, provides a detailed summary of specific subsidies that bookstores can use, so I want to read through it thoroughly and save it in an article.
A long-established company embarking on distribution reform
In 2023, Kinokuniya Company established Booksellers & Companies in partnership with CCC (the operator of Tsutaya Books, etc.) and major distributor Nippan. Instead of the conventional distributor-led distribution, they have realized a direct purchasing scheme where bookstores and publishers commit to each other's terms to determine the number of copies to purchase. They are aiming to reduce return rates and improve profit margins.
Overseas, it is standard for bookstores to purchase directly from publishers. As a result, while the gross profit margin for Japanese bookstores is around 20%, it is typically 40-50% overseas. Booksellers & Companies is aiming for a gross profit margin of 30%.
In Japan, bookstores have been viewed as a low-risk, low-return, stable business, but as distribution costs and other expenses have risen, that stability has turned into decline. There is no other country besides Japan where the number of bookstores has been decreasing for decades. There are also countries where book sales are increasing. A structure that properly takes risks and aims for returns is necessary.
Booksellers & Companies advocates for 'introduction of a direct purchasing scheme,' 'appropriate purchasing,' and 'improvement of sales.' As of November 2025, 609 stores have signed contracts. Regarding direct purchasing, there are two types: 'sales commitment,' where returns are possible but incur a certain penalty, and 'zero returns,' which allows for purchasing under better conditions.
With this mechanism, the more books you sell, the higher your profit margin becomes. On the other hand, if you cannot sell the books you purchased, you cannot return them, which lowers your profit margin, thus shifting the mindset toward a high-risk, high-return business. There is no 'mihakarai' (distributor-selected) distribution at all. They are instilling in bookstores the business fundamental of deciding for themselves which books to purchase and taking responsibility for selling the books they have purchased.
Making a profit by selling books is the true essence of the bookstore business. Even in the digital age, paper books will not disappear, and independent bookstores are thriving overseas. Since the current bookstore business is not viable as a commercial enterprise, it is necessary to transform bookstores into highly profitable businesses.
When I started saying I wanted to open a bookstore, the vague, eerie feeling I had about the bookstore industry was put into words.
Many people in the bookstore industry say that it is difficult to make a profit from books and that it is necessary to combine it with things other than books.
In reality, that is probably true, but it is clearly unhealthy for bookstores to give up on making a profit by selling books. It is truly not viable as a business.
I didn't really question this part either, and I was thinking of making the bookstore just barely avoid an operating loss and generating profit through a cafe & gallery.
But if I do that, I would be admitting that bookstores cannot make a profit by selling books and that it is not viable as a business.
There is a clash between reality and ideals, but I have to think seriously about making a profit by selling books.
Changing an industry of overproduction, over-transportation, and over-returning through DX
As has been discussed many times, the challenge of the bookstore industry is that while the number of bookstores is decreasing and the amount of money spent on new books is also decreasing—even though the number of people reading books has not decreased because there are used books, etc.—publishers produce large quantities of books without knowing if they will sell, transport them in large quantities to bookstores nationwide without knowing if they will sell, and bookstores return them in large quantities without putting effort into selling them because they can return them. The company trying to cut into this and reform it is PubteX.
PubteX is a company established in 2022 by the general trading company Marubeni and major publishers Kodansha, Shogakukan, and Shueisha, and it is engaged in business to lower return rates and increase profit margins through data utilization.
With the 'AI Publication/Distribution Optimization Solution,' they centralize data from the publishing supply chain and combine it with AI to optimize the initial print run of new titles based on the sales performance of similar titles, and to grasp inventory in real-time to enable timely reprints and distribution. With the 'IoT Solution,' they aim to streamline purchasing, inventory management, and sales management on the bookstore side using RFID tags, and prevent shoplifting through coordination with anti-theft gates and surveillance cameras.
For system introduction, even for a compact store, the initial cost is about 1 million yen, and the system usage fee is about 20,000 to 30,000 yen per month, but they plan to provide subsidies for equipment costs in cooperation with the Ministry of Economy, Trade and Industry. If the number of stores introducing it increases, costs can be further reduced.
By using RFID, marketing data on who is buying what and where is aggregated. It is said that the loss due to the distribution structure of the bookstore industry is 200 billion yen per year, and the benefits of industry improvement through data aggregation are significant. Until now, due to the lack of data, things that are taken for granted in other industries, such as KPI design and the PDCA cycle, were not being done.
In Japan, even basic book data is not managed in a unified way. While it is possible to classify formats like paperbacks or comics, there is no distinction between business paperbacks, history/science paperbacks, or children's paperbacks. Overseas, there is a unified format, and standardization has reached the point where you cannot sell a book unless all information is entered into that format.Making the basics of 'producing, distributing, and transporting what is needed, when it is needed, and in the amount needed' function in the bookstore industry as well.
I had no idea that basic marketing data was this lacking.
I knew it was an old industry, but the Japanese publishing industry is even further behind in data utilization than I imagined. They are still using systems from before the concept of data utilization was even born. Overseas, in response to the rise of Amazon, bookstores, publishers, and existing distribution networks rushed to advance digital transformation to compete. The rise of Amazon should have been a crisis for bookstores in Japan too, but they were unable to compete.
Having worked in the marketing field for many years myself, I believe that if you have high-quality data on hand, you can properly stock and sell items. But if the underlying data doesn't exist, there is nothing you can do. You have no choice but to look at things that aren't even really data, like social media or Amazon sales rankings, and make decisions based on intuition.
Should we put an RFID gate in our shop too? It might cost money, but as a couple running a small business, we can't afford to spend time on tedious inventory management. I want to use my time to communicate with customers, stock good items, hold more satisfying events, and organize gallery exhibitions.
Even if there is an initial cost, installing an RFID gate is a viable option. For shoplifting prevention, a small store would usually rely on human eyes, but if I can avoid that, I would prefer to. If it can be prevented in advance with gates and cameras, that would be better.
The future of bookstores is exciting
So, I'm sharing what I learned from reading 'Bookstore Revival'. I read through it once, put sticky notes on it, and then went back and wrote down the parts I thought were interesting or worth keeping. It ended up being quite long, but my understanding of bookstores has deepened once again.
I was encouraged by the person from Tsutaya Books who asserted, 'It is true that bookstores are in a very difficult situation. However, books will sell', and who has actually created a space where books sell like hotcakes by holding book festivals. I was also able to discover services I definitely want to use when I open my own bookstore, such as 'Hon-Colle,' which allows you to search across bookstores nationwide.
Overall, the bookstore industry is more interesting than I imagined.
I wasn't interested in the industry as a whole; I just wanted a place in my area where I could have an ideal reading experience, which is why I started thinking about 'wanting to run a bookstore.' But naturally, a bookstore created with that motivation will also play a part in the large ecosystem that is the bookstore industry.
I want to recognize that responsibility. I was planning to design it to make a profit through a cafe, gallery, and events, and I don't think that is realistically wrong. But if a bookstore owner gives up on 'making a profit by selling books,' industry restructuring will not progress. I might end up being on the side that accelerates the industry's slow, strangling decline.
I don't want that.
Fortunately, there are many game changers trying to push for industry restructuring. Let's keep a close eye on their movements and use what we can. If we can play a part in industry restructuring, let's actively take it on.
If we can do that, bookstores will become even more interesting.
*Affiliate links are used for Amazon product links.
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