A report in The Economic Times (Oct 03, 2006) throws some light on Reliance's plans for book retailing in india.
Reliance has tied up with Delhi-based publication house Roli Books and is in talks with Prabhat Prakashan, which publishes books in both English and Hindi.In typical Reliance style, they are trying to force suppliers to settle for low margins, with a promise of high volumes. I'm not sure if Reliance is planning to sell at the cover price or offer readers prices lower than the cover price, or keep the added margins for themselves.
Book sections in Reliance’s proposed retail outfits would also sell home videos and multimedia music formats, along with related gift articles.
“We have been witnessing a serious lack of shelf space for displaying books. The entry of Reliance would provide us more space for display as well as supermarket and hypermarket formats would bring in better sales for the publishers,” says Kapil Kapoor, marketing head of Roli Books.
Increasing dominance of organised retailers would also systemise operations like timely payments in the publishing industry. Mr Kapoor confirmed that Roli Books has already signed an agreement with Reliance.
Piyush Kumar, director of Prabhat Group’s Prabhat Prakashan, said the company is evaluating Reliance’s proposal. An industry source told ET that Reliance is not offering very attractive margin to the books publishers. Instead, it is promising high volumes.
The NDA covers terms like margins and clauses related to inventory. Chintan Sheth of Ahmedabad’s oldest publisher, Gujarati Publisher, too has struck an agreement with Reliance.
“We have inked an agreement with Reliance and a lot of interest is being shown by organised retailers. We are expecting to get better canvas for vernacular titles with the help of organised retailers,” said Mr Sheth. According to him, the number of copies to be sourced by Reliance would be finalised shortly.
Whether Reliance's promise of high volumes at low margins (how low is low?) will work out remains to be seen, especially in the case of Indian language books. The cover price for most English titles is set fairly high after taking into account the high discounts demanded by distributors/retailers (ranging from 45% to 65% of the cover price). One rarely finds English titles with a cover price lower than Rs. 150 per copy.
Our experience with Tamil publishing has shown that Tamil readers are far more price sensitive. We price our titles very aggressively - a paperback title (of about 160-200 pages) is priced in the region of Rs. 60-70 per copy and a hardbound title (of about 850 pages) at Rs. 350 per copy. This leaves little room for high margins after offering discounts of 25-30% to distributors/retailers, for a high quality production comparable to the best of English titles. Given our aggressive pricing model, it would be well nigh impossible to offer discounts of 50% or more if that is what Reliance has in mind.