Ten years ago I founded Orison Books, a nonprofit literary press in Asheville, North Carolina, with a unique mission to publish exceptional literary work that engages the life of the spirit from a broad and inclusive range of perspectives. At the time, I had experience as a published author and as a literary magazine editor, but I didn’t understand the complexities of book distribution. During our first few years I got a crash course and sometimes learned things the hard way, such as when one of our titles enjoyed positive reviews in some prominent venues, including the New York Times Book Review. Compared with what we had come to expect for new titles, the number of orders for that book from bookstores and Amazon on our distributor’s statements was thrilling. I thought we were making money quickly on the title, that the author would receive strong royalties for the year, and that the book was reaching more readers than most of our previous titles. What I did not realize is that most of those transactions were “soft sales”—meaning that they were orders from retailers and were subject to being returned if the stock wasn’t sold. Later that year I began to see large numbers of returns on our statements, which not only negated the revenue I thought we had brought in, but actually cost us money due to restocking fees, as some distributors—including our own, Itasca Books—charge a press to cover the cost of processing and warehousing returned books. I realized then that there was much I still needed to learn about the book industry. I’ve heard from a lot of writers that they, too, lack a solid understanding of how returns work and how they might impact book sales and royalties. So allow me to explain.
Retailer returns are a unique feature of the book industry. Unlike most—perhaps all—other industries, book retailers are allowed to return unsold stock to distributors and publishers for a full credit or refund. There is generally no time restriction on these returns, meaning that the books can be returned immediately or at any time in the future, as long as the book remains in print with the publisher. (Most distributors stipulate that returns are accepted up to six months after a book goes out of print.) Some publishers that handle their own distribution set time limits for returns, but they tend to be either niche publishers (such as textbook publishers) or very small presses that interact with bookstores on a limited basis. And no one has any control over Amazon’s returns—one either accepts its practices and policies or doesn’t do business with the company.
Usually returned books are not defective or damaged; they simply haven’t been sold to the retailer’s customers. It’s a bizarre arrangement. Could a home goods store, for instance, return a bunch of perfectly fine toasters to the manufacturer just because it hadn’t sold them? Of course not. Kris Bigalk, executive director of Trio House Press in Minneapolis, says, “I wish bookselling was like any other business—that returns weren’t allowed unless something was defective about the book. If we all banded together and said we weren’t going to do this anymore, we could make that happen—but the Big Five [publishers] aren’t likely to join us, which means it won’t happen.” A Big Five publisher can typically absorb the costs of returns because the one or two titles on its lists that do hit it big each year can sell tens or even hundreds of thousands of copies. And if bookstores were able to return books from the major publishers but not from smaller ones, that could drastically reduce or eliminate their orders from small presses.
Given that other industries don’t operate this way, how did retail returns become standard practice in the book industry? In a story for NPR’s Morning Edition in 2008, Lynn Neary explained: “During the Great Depression, publishers were looking for a way to encourage booksellers to buy more books and to take a chance on unknown authors. So they offered bookstores the right to return unsold books for credit. It’s become an entrenched way of doing business.” This unusual business model shows no signs of changing.
An interesting case study is HarperStudio, an imprint of HarperCollins. It was launched in 2008 with ambitious plans to try a new publishing model that, among other things, reduced or eliminated retailer book returns. Author, editor, and former literary agent Nathan Bransford reported on his blog shortly after the imprint’s launch that HarperStudio had struck an unusual deal with Borders—a major brick-and-mortar bookstore chain that went out of business three years later—under which Borders would buy books from HarperStudio on a nonreturnable basis, in exchange for a larger discount on those books. Other attempts to work on a nonreturnable basis were foiled: “[T]hey had originally hoped to have a more expansive nonreturn program, but after six months of discussions they decided they needed to have a mix of returns and nonreturns because some accounts can’t or won’t go the nonreturnable route,” Bransford wrote. So how did things turn out for HarperStudio? Apparently not very well. The Los Angeles Times reported the imprint’s imminent dissolution in April 2010.
The distribution company Asterism, founded in 2021, is challenging this model by not allowing returns except in special cases. On its FAQ page the distributor states: “We…allow returns on orders for events within thirty days of the event. We offer ninety days returns on books ordered by college bookstores for course materials.” Asterism currently represents around two hundred small presses, many of which only recently moved to Asterism in the aftermath of Small Press Distribution’s demise. Most of these presses are quite small and likely have little bookstore presence outside of author events, so Asterism’s returns model may work well for them.
Returns are extremely costly for publishers, especially small presses that already face daily challenges to their survival. When a retailer orders books it hopes to sell, it pays the publisher’s distributor at the industry-standard discount of 40 percent (bookstores) or 55 percent (Amazon and Ingram’s wholesale distribution branch). So if a bookstore orders a book with a cover price of $22.95, it pays the distributor $13.77 and, if a customer buys the book, it makes a profit of $9.18. If the bookstore doesn’t sell the book within a reasonable period, it can return the book, and the distributor gives the original $13.77 back to the bookstore, often in the form of a credit—an expense that is passed along to the publisher. What’s more, the distributor can charge the publisher a small fee for processing and restocking each copy of the book that is returned.
Tobi Harper Petrie, the deputy director of Red Hen Press, says book returns have “a massive impact” in terms of profit from sales at the Los Angeles–based publisher and that “wasted shipping and return and restocking fees are devastating to [Red Hen’s] net revenue.” What makes this bad situation even worse is that online retailers, especially Amazon, routinely return copies and reorder new copies of the same title in the same month. Amazon is infamous for its opaque systems, making it difficult for distributors and presses to work with; the factors that inform its algorithm for book returns are part of complex automated systems that are far removed from the more transparent rationale of, say, the book buyer at your local independent bookstore. Regarding Amazon’s frequent returns and reorders, I often say that my press’s books are waving at each other from trucks moving in opposite directions on the highway. And while bookstores pay the shipping for book returns, Amazon and Ingram—the largest book retailer and the largest book wholesaler, respectively—require the distributor to cover the shipping cost for returns, which then gets charged to the publisher.
Publishers that use print on demand (POD), meanwhile, see lower financial impacts from book returns. Ingram’s POD services, IngramSpark and Lightning Source, for instance, allow publishers to opt for returned books to either be shipped back to the publisher—incurring shipping and handling fees—or be destroyed, in which case the publisher’s “account will be charged the current wholesale cost of each copy returned, but no shipping and handling fees will apply,” according to IngramSpark.com. (“Wholesale” here means the price that retailers pay, after their 40 to 55 percent discount, as previously mentioned.)
Another detrimental aspect of the book industry’s returns arrangement is its enormous environmental impact because of the number of unnecessary copies that are printed and the back-and-forth transport of stock. “We often have to destroy significant numbers of books—‘recycling’ by our distributor Ingram—to avoid warehousing fees,” says Erika Goldman, editor of Bellevue Literary Press. “Sometimes we destroy stock and have to go back to press because of later demand for a title. The whole process is wasteful and expensive.”
If you are a traditionally published author, you may have seen negative line items on your royalty statements. It’s standard practice for publishers to deduct from an author’s royalties, in the amount the author would have received for a sale, for each book that is returned by a retailer. This is because author royalties are paid out of the proceeds a publisher receives from sales. If a book is returned, the publisher has no proceeds from that transaction—and in fact is often in the red. This does not mean that the author will pay out of pocket for book returns. If the negative balance from returns is greater than the earnings from actual sales, that negative balance is usually “rolled over” to the next reporting period. So while returns may reduce or negate an author’s royalty earnings, they should never result in the author paying money to the publisher.
If an author has received an advance against royalties, they may never “earn out” that advance, even if their book is stocked widely in bookstores, if the book doesn’t perform as well as expected and is later returned in large quantities. (According to most industry estimates, only about 25 percent of authors earn out their advance.) The same principle applies for royalty arrangements without an advance—except for the obvious fact that the author won’t have received any up-front payment from the publisher and is owed royalties from the start. Still, what at first may look like strong sales may be negated by eventual returns.
Many publishers observe a waiting period before paying out author royalties due to the likelihood of at least a portion of the “soft sales” (retailer orders) not turning into “hard sales” (customers purchasing the books from the retailers), thus resulting in retailer returns that negate what at first looked like sales revenue. Another way some publishers avoid paying out royalties prematurely due to possible returns is to hold a certain percentage of royalties in reserve for a specified period. Authors should always ensure that their contracts clearly detail the terms and timing of royalty payments before signing.
While there’s no way to prevent book returns, authors can work to minimize them. Strong event promotion is essential. In partnership with the hosting bookstores and other venues, your publisher, and whatever publicity support you may have, make sure you are targeting local media outlets with professional press releases about your book and upcoming events—and that those events are listed with local arts calendars. Try to set up appearances with podcasts or local radio shows in advance of events and personally invite anyone you know in the area to attend. Regularly promote your events on social media, in your newsletter and/or blog, and on your website. All these strategies, especially in combination, can help attract a larger crowd and increase the likelihood of book sales.
Another strategy worth trying is to express a preference for consignment to bookstores where you schedule readings. Consignment is a direct arrangement between the bookstore and the author, in which the author provides copies of their book with no up-front payment from the bookstore; the author is then paid a percentage of sales (usually 60 percent). Any copies that don’t sell are returned to the author, sometimes immediately after the event, or sometimes later (especially if the author is local to the bookstore). This way the bookstore isn’t gambling on paying for copies of a book and then returning them to the distributor for a credit or refund if they don’t sell, and you don’t have to worry about returns from that bookstore negatively impacting your royalties. Working on a consignment basis might require you to purchase more author copies of your book than you would otherwise, but it can be a worthwhile investment. As a publisher I can attest that this arrangement is appealing from the press’s side as well: Instead of selling copies to a bookstore at a 40 percent discount with the risk that they might be returned, the press can sell copies directly to the author at a similar discount (usually 40 to 50 percent, depending on the publisher) with no risk of returns.
Despite the many downsides to book returns—financial, logistical, and environmental—there are few signs of the book industry shifting away from this long-standing practice. Real change would happen only if the largest players (Big Five publishers, major distributors, Amazon, and Ingram) altered the way they’ve done business for many decades, which is extremely unlikely. In the meantime, small presses and authors must struggle along in an industry that is structurally stacked against them. Still, doesn’t that make even small successes feel more gratifying?
At Orison Books, we’ve seen the greatest success with books that sell long and slow. These books sell consistently even years after they were released, rather than just rushing out the door when first published and then experiencing varying levels of returns. A couple of good examples from our list are The Divine Magnet: Herman Melville’s Letters to Nathaniel Hawthorne (2016), edited by Mark Niemeyer and with a foreword by Pulitzer Prize–winning novelist Paul Harding, and the anthology The World I Leave You: Asian American Poets on Faith & Spirit (2020), edited by Leah Silvieus and Lee Herrick. And despite the “learning experience” of publishing the well-reviewed title I referenced at the start, good press certainly doesn’t always result in lots of returns. For instance, a poetry collection we published in 2022, Sanctuary, Vermont by Laura Budofsky Wisniewski, enjoyed both national and regional press in venues such as the New York Times Book Review, the Boston Globe, and Vermont’s Seven Days, and sold steadily for far longer than most of our titles, with few returns.
Such successes cannot be predicted, but when they come to fruition, it’s cause for celebration for authors, publishers, booksellers, and readers alike.
Luke Hankins is the author of several poetry collections, a book of essays, and a volume of translations. He has also edited a number of anthologies, including Breaking Into Blossom: Poems With Extraordinary Endings (coedited with Nomi Stone), forthcoming later this year from Texas Review Press. He is the founder and editor of Orison Books.
Thumbnail credit: Hannah Natalya Photography