Wednesday, May 06, 2009

Espresso and print-on-demand

One of the most exciting innovations I have seen recently is the Espresso Book Machine. In essence, the device is a large printer that can that can print a single copy of virtually any book in only a couple minutes. Think of a vending machine with some two million books inside.

This is the type of innovation that could potentially disrupt the entire publishing industry. What Microsoft did for computers, what Skype did for telecommunications,
OnDemandBooks could conceivably do for books.

The publishing industry’s historical business model is “print, ship, sell.” Publishers print the books, which are delivered to bookstores and eventually sold to consumers. Like in any retail environment, inventory management is critical. If a bookstore stocks too many copies of a book, it risks unsold inventory. If it stocks too few, it misses out on sales. Another variable is the number of different books to stock. Large inventories mean (1) typing up lots of capital and (2) renting expensive warehouses or retail stores. On the other hand, large inventories also mean that a store is likely to have whichever book a particular consumer wants.

The bookstore wars of the last thirty years reflect advances on this front. In the good ol’ days, every town had a corner bookshop. The 1980s gave us chains like Waldenbooks and B. Dalton, which featured centralized purchasing and inventory management systems. The 1990s witnessed mega-stores Borders and Barnes & Noble. With fewer (but significantly larger) retail locations, these mega-stores could manage inventory even better. They also became “destination” locations and encouraged shoppers to linger and browse. And of course, the internet age spawned Amazon, which dispensed with the storefront altogether. While innovative in its own way, Amazon nonetheless needed a large technological and logistical infrastructure. What’s more, they manage their inventory as carefully as any other retailer.

The Espresso Book Machine is different. Print-on-demand flips the entire business model on its head: “sell, print.” First the consumer buys the book, and then it is printed. Meanwhile, shipping is eliminated altogether.

Suddenly, inventory management – the most difficult problem faced by every retailer – is a non-issue. The bookstore always has exactly the right number of books in stock – never too many, never too few. Whatever book the customer wants is always in stock. Moreover, the store faces zero inventory cost, which frees up capital. The store can “stock” millions upon millions of titles without needing large stores or warehouses. And shipping costs are eliminated altogether.

In short, print-on-demand is a radical innovation in the publishing world. It will be very interesting to see how things shake out.

And for those who wants to see the Espresso Book Machine firsthand, it’s available at
these locations.

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