Should Publishers Sell Direct-to-Consumer?

Dominique RaccahPublisher and CEO

Deciding if direct-to-consumer is the right move

for you

What are the challenges and opportunities?

Online retail is still

around 10% of retail $ in

America

Book Busines

s Magazin

e Survey

Shoppers’ Top Priorities

Spending as little as possible Feeling like I got a good deal Having a stress-free experience Doing all/most shopping in one place Completing my shopping quickly

Omni-Channel is shaping what’s important:

Average Number of Retailers in Shoppers’ Networks*

Shoppers Eliminate Retailers from Their NetworksSTREAMLINING, SIMPLIFYING, AND ENGAGING IN “RETAILER RATIONALIZATION”

GREEN: TOTAL RETAILER PORTFOLIO; ALL RETAILERS SHOPPED IN ANY GIVEN MONTHBLUE: CORE RETAILER PORTFOLIO; RETAILERS SHOPPED EVERY MONTH, AT LEAST ONCE A MONTH, ON AN ONGOING BASIS

*INCLUSIVE OF VISITS TO STORES AND ONLINE SHOPPING WEB SITESSOURCE: KANTAR RETAIL SHOPPERSCAPE®, JANUARY–SEPTEMBER 2007, 2013, 2014

Total

12.4 5.8

Core

10.7 5.0

Total Core Total Core

9.7 4.6

Online, Especially Prime, Resets Shopper Expectations Across Retail

Penetration of Amazon Prime Membership(among all U.S, primary household shoppers)

How Prime Membership Changes Shopping Patterns

(among all Prime Members)

Source: Kantar Retail ShopperScape®, December 2011–2014, Kantar Retail estimates

Source: Kantar Retail ShopperScape®, December 2014

It’s very, very hard to create a destination site because we

don’t represent the entirety of the market.

Chantal Restivo-Alessi, Chief Digital Officer, HarperCollins

“”

Why Sell Direct-to-Consumer?

01 Generate More Brand Recognition

02 Adding a New Sales Channel 03 Communicate

Directly With Your Readers

Deciding if direct-to-consumer is right for you

What Are You Currently Doing?

What are your current capabilities?

How do you currently sell to and communicate with your

readers/customers?

Do you have a cart on your website?

Do you have someone who manages your website?

Do you have someone who looks at and interprets web analytics?

What Can You Afford To Do?Do you have someone who…

Can manage an ecommerce

website?

Knows Google Analytics?

Knows SEO? Knows about paid search?

Will be looking at the metrics to

optimize the site?

Can run an email marketing program?

“If we were to go direct-to-consumer, what additional tools, software, people, or knowledge

would we need? How much would it cost?”

These things don’t have to cost a lot of money, but they do cost time and knowledge. And they take time to ramp up…

What Are You Trying to Accomplish Strategically?

01 Brand Awareness/Recognition

02 New Sales Channel 03 Selling a product retailers aren’t set up for

04 Build Your Customer List 05 Something else?

IterateModel that’s different from traditional book publishing

Look at your metrics.

Listen to your customers.

Experiment and test based on what the data and your customers are telling you.

Then do it all over again.

How Are You Going to Tackle The Funnel?

The Conversion Funnel—Creating a Sale

Do they know about you?Do you have something that would interest them?Would they spend money on it?Purchase made, customer acquired!

Key Strategic Decision Point:How do you add value

without directly competing with your retail partners?

What Is Your Unique Value Proposition?

Why should readers buy

from you instead of one of your retail

partners?

Some examples…

F + W MediaMany different sites aimed at different enthusiast

audiencesBooks

Niche Publication

s

Community

Platform

Ancillary

Products

O’ReillyFiction Publisher

Books

Training

Events

Daily Deals

5.50M

Hay HouseNonfiction Publisher

Books

Training

Events

Ancillary

Products

532K

Berrett-Koehler PublishersNonfiction Publisher

Books

Digital Subscription Service

Community Center

55.7K

Baen BooksBaen Books. The best in Science Fiction and Fantasy publishing.

Books

Sell eARCs

Community

Platform

416.2K

Put Me In The Story:A Case Study in Children’s

Books

Could you create additional revenue for bestselling authors and brands

through personalized books?

How We Started

Marianne Richmon

dGregLang

“”

innovation is

iterationMichael Cader BISG Making

Information Pay 2008

The Lean Startup Model

What Do We Do Now + What Will It Cost = Version 1

+ =

Iterate—Creating a Keepsake

Developed in-

houseControl of

the Experienc

e

107.1K

Our Bestselling License Partners

Creating a

destination site

We continue to iterate with our partners to develop the best possible personalized experiences

Partnerships Within PublishingWe continue to iterate with our partners to develop the best possible personalized

experiences

Creating a

destination site

Creative PartnershipNew Methods of Customer Acquisition Through Retailer Partnership

CONFIDENTIAL

Barnes and Noble: Immediate in-store experience : Espresso Machine

Our direct-to-consumer websites are among Sourcebooks’ Top Customers

#3

#4

The #1 Personalized Books Site in America

The Internet Retailer Top 1000And the book publishers on it

Source: Internet Retailer, May, 2016

#802

#886

#926

“”

…nothing says 'transformation' more than revenue sources you didn’t used to have.

—Mike Shatzkin, ideolog, Nov. 5, 2015

Put Me in the Story adds significant value

0 10 20 30 40 50 60 70 80 900.00%

10.00%

20.00%

30.00%

40.00%

50.00%

60.00%

70.00%

80.00%

90.00%

100.00%

PMITS % of Sales

PMITS % of Sales

AVERAGE 36%

On average Put Me in the Story

adds 36% NEW units

How Put Me in the Story Creates Value For

Authors, Agents, and Publishers

Creating a new channel for picture books, illustrated books, gift books for all occasions and non-book

products

Higher price point: $24.99-$39.99

Incremental sales dollars! Data indicates that our online

marketing of personalized books is lifting retail sales of non-personalized versions of those books (tens of millions of impressions in Q4)

As well as adding additional units

Put Me in the Story creates additional revenue for bestselling authors and brands through personalized books

The #1 Personalized Books Site in America

Creating an extraordinary customer experience

How Do You Make Sure You Are Not At A Disadvantage?

Data and Experimentation

eMail Marketin

g

Marketing Spend

Publicity

Metadata: Price

Metadata: Descriptio

n

Metadata: Covers

Metadata: Keywords

Should publishers sell direct-to-consumer?

Key Points to Consider

CONFIDENTIAL

1. What are you trying to accomplish, strategically?

2. What unique value are you adding?3. How are you going to tackle the conversion

funnel?4. What are your current capabilities?5. What can you afford to invest?

Questions? Thoughts. Comments. dominique.raccah@sourcebooks.com

@draccah