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Understanding the Demand Drivers of B ooks in India

Paper pr esent ed at t he works ho p o n Cont em por ar y Indian Wr iting I n Eng lis h And T he
Indian Market , M ar ch 8 – M ar ch 1 0 2007 , J ami a Mi lli a Is lami a, Ne w De lhi .

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,
marketing 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.

A handful of publishers have achieved some scale, with revenues crossing Rs 100 crores. Most of
these are mini Indian avatars of the large international professional/textbook publishers. However
no trade publisher has yet achieved this milestone. Attracted by the potentially huge Indian
consumer market, an increasing number of international publishers have set up operations in India
in the last few years, though on a small scale.

The Indian economy is characterized by strong domestic consumption and will continue to be
among the fastest growing economies in the world over the next decade. The Indian market, while
very attractive, is diverse and lumpy; it is akin to a varied continent like Europe rather than a
country. The Indian consumer is also rapidly evolving, with her needs, attitudes and perceptions
undergoing significant changes.

To understand the books 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 economic access
3. Availability with required proximity and visibility or physical access

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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 desire for learning and knowledge increases, the usage and interest in books also increases. In
addition, these readers turn to books for entertainment.

And as the Indian market evolves rapidly, becomes more globalized, 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 play a 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 play a 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 as well as public and personal role models also
influence the desire for books. Well-publicized prizes such as the Booker Prize also drive the desire
and demand for the books.

2. Affordability or economic access

Books need to be priced right, like any Fast Moving Consumer Product (FMCG), in order to be
economically accessible to a large proportion of the population.

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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 70% of the cost of the ticket.

For instance, in the USA:


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

And in the UK:


• A movie ticket costs UKP 10.
• A mass-market paperback 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 paperback book in English costs about Rs 250 (save those of a few publishers like
Rupa who price such books at Rs 95 or so).

Rajkamal Prakashan, the leading Hindi publisher, prices its books at about Rs 60 – which is
about 70% of the cost of a movie ticket in metros– but almost double the cost of a ticket in Tier
2 and Tier 3 towns.

To achieve mass market economic access, books need to be priced appropriately in India,
significantly lower than what it is currently. Else purchasing power has to increase proportionately,
without a corresponding increase in book prices.

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
physical access and 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 Hindustan 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 sft in size. And with books being a
long tail business where the large backlist as important as the front-list, these shops cannot do
justice to the range of books in print.

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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% fulfillment 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 cater to the growing needs of consumers and 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 and other outlets that stock books 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 artifacts of poor supply and demand
matching – a market response to inefficient distribution.”

5. Stakeholders need to work together to develop meaningful data about the industry (such
relevant and accurate data is just not available) much like the BISG and other bodies.
Data leads to knowledge, knowledge to insight, insight to strategy, and strategy to
execution.

While the future of the book industry in India looks extremely promising, with great potential,
there is much to do and all stakeholders need to work together to transform the industry.

To quote the inventor Alan Kay, “ The best way to predict the future is to invent it.”

We have an unprecedented opportunity to invent our future – let us do it!

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R. Sriram

Cofounder, former CEO & MD


Crossword Bookstores Ltd.

Cofounder, Next Practice Retail


rsriram9@gmail.com, sriram@nextpracticeretail.com

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