Delhi Workshop Presentation 1, Contemporary Indian Literature Project

Understanding the Demand Drivers of Books in India
R. Sriram. Cofounder, former CEO & MD Crossword Bookstores Ltd.

Paper presented at the workshop on Contemporary Indian Writing In English And The Indian Market, March 8 March 2007, lamia Millia Islamia, New Delhi.

The book business in India has been, and still is, essentially a cottage industry. Using a simple "print then distribute" model, like in the US between 1900s to 1960s, individual publishers print books and then sell them to distributors who would then sell them to book shops and libraries. Many of these started off as family businesses, and continue without talented business or finance professionals. While the publishers have an understanding of the publishing process, few, if any, have the requisite organizations, systems and people to scale the business significantly.

To understand the book business we need to study it from two sides:
•The Supply Side
•The Demand Side

Since we have many publishers here to discuss the Supply side, I would like to take up the Demand side of the business.

The Demand drivers of book buying can be defined in terms of three types of access: 

1. Desire for books or psychological access 
2. Affordability or commercial access
3. Availability with required proximity and visibility or physical access

1. Desire or psychological access

We use books for essentially three reasons -for information, for knowledge and for entertainment. 
People' s need for books arise after their basic needs of food, clothing and shelter have been fulfilled -as they move higher up Maslov' s hierarchy of needs.

Since the vast majority of India still features on the lower levels of Maslov's hierarchy, demand for books in India is small. But with the rapid growth in the economy and the resultant growth in purchasing power as well as needs and aspirations, book sales is poised to grow much more rapidly than what we have seen in the last decade.

As people desire for learning and knowledge increases, their interest in books increase, and they also turn to books for entertainment.

And as the Indian market evolves rapidly, becomes more globalised, with the constant of change, the need to update one's knowledge and competences become more pronounced.

Also, with the rapid shift from joint to nuclear families, the source of knowledge and wisdom with regard to the conduct of our lives no longer comes from the elders, whether to do with parenting and child-care, religion and rituals, cuisines, improvement of self etc. These trends present a great opportunity for books to playa larger role in providing relevant knowledge and even wisdom.

Exposure to books and their many pleasures and values at an early age has a major impact on book reading and purchase through our lives. The presence of good libraries and exposure to books in the schools playa vital role in this. There is a severe shortage of libraries in India and there is an acute danger of generations of children growing without the experience and habit of books.

The portrayal of authors and books in the media also influence the desire for books. Well- publicized prizes such as the Booker Prize also drive the desire and demand for the books.

2. Affordabilitv or commercial access

Books need to be priced right, like any FMCG in order to be accessible to a large proportion of the population.

If we study the affordability factor in the countries with a large book market we can observe that books are priced cheaper than a movie ticket -infact they are only 700;0 of the cost of the ticket. 

US: A movie ticket costs UDS 10; A mass-market paperback (PB) book cost about UDS 7.

UK: A movie ticket costs UKP 10; A mass-market PB book cost about UKP 7.

In India however this is not the case -rather it is an inverse situation.

A movie ticket costs about Rs 75, at an all India average. (In the affluent metros, this would be Rs 100, while in smaller towns it would be below Rs 50.)

A mass-market PB book in English costs about Rs 250 (save those of a few publishers like Rupa who price such books at Rs 95 or so).

Hindi books of say Rajkamal Prakashan costs about Rs 60 -which is about 70% of the cost of a movie ticket in metros -though much more than what a it costs in smaller towns.

3. Availability with required proximity and visibility or physical access

Having the desire for a book and being able to afford a book is still not adequate if there is no availability of the book at a convenient location.

While there has been a growth in the number of bookstores, there is still a huge gap. While 
FMCG companies like Hinduston Unilever, ITC etc have their products available through some 5 million outlets, the book industry -comprising the textbooks, professional and trade books have only some 5000 outlets to reach the continent that is India.

Moreover, the average bookshop is very small, less than 1000 sEt in size. And with books being a long tail business where the large backlist as important as the front-list, these shops can' t do justice to the range of books in print.

The distribution process in India is also in the cottage industry stage, with little ability to manage the complexities of the long tail of books. Bookstore chains like Crossword are able to get only a 60% fulfilment at best, thus leading to a huge loss for all stakeholders.

Without significant changes in the current distribution model, the industry will continue to be shackled and unable to participate in the extra-ordinary growth that our country experiences over the next decade.

To summarize, we need:

1. More libraries to build the reading habit and create desire and demand for books. We need all stakeholders to work together to position and market books effectively for great demand generation.
2. Relevant pricing to make books an FMCG. Currently pricing will not enable penetration beyond the top of the consumer pyramid -the example of the telecom industry is valuable -200 million mobile users, still growing rapidly.
3. More bookstores to make books physically accessible to the people -at least 10,000 outlets to start with -and maybe 50,000 to reach out to a billion+ people.
4. More sophisticated and effective supply chain to have better availability of books at the stores. For this we need a digitized books-in-print that enable all players in the value chain to benefit from the long tail. To quote Chris Anderson (The long Tail) -"Many of our assumptions of popular taste are actually artefacts of poor supply and demand matching -a market response to inefficient distribution."
5. Stakeholders need to work together to develop meaningful da1o about the industry (such relevant and accurate da1o is just not available) much like the BISG and other bodies. Data leads to knowledge, knowledge to insight, insight 10 strategy, and strategy 10 execution. While the future of the book industry in India looks extremely promising, with great potential, there is much to do and all s1okeholders need to work 1ogether 10 transform the industry. To quote the inventor Alan Kay, "...The best way 10 predict the future is to invent it." We have an unprecedented opportunity 10 invent our future -let us do it!

R. Sriram 
Cofounder, former CEO & MD Crossword Bookstores ltd. 
Cofounder, Next Proctice Retail 
sriram@nextpracticeretail.com