FAQ
The Basics
Why are you launching The Publishers Cooperative?
Our industry landscape has become very challenging for independent publishers. We can make our lives better by working together with our vendors to find process improvements and cost reductions. We are using a purchasing cooperative structure to increase our scale and efficiency.
What is a purchasing cooperative?
A purchasing cooperative is a buying group owned by its members. Purchasing co-ops bring billions of dollars of buying strength to independent businesses in a wide variety of industries, including hardware, energy, flooring, roofing, grocery, and even bicycle stores and breweries. A well-known example of a purchasing cooperative is ACE Hardware because the stores adopted a common retail brand. The vast majority of purchasing co-ops operate behind the scenes, bringing scale to independent businesses while maintaining each company’s independence.
For more information on the values of cooperatives, see the 7 Cooperative Principles linked here.
Why would I join The Publishers Cooperative?
This group would be a good fit for you if you are interested in:
- Negotiating better prices by working as a group
- Sharing best practices with respected peers
- Working as a team with other similar-minded publishers.
The cooperatives purchasing power will help members reduce their COGS and operational expenses by at least 3-6%. We will also develop longer term strategies to work towards 10%+ net profits for all members.
How does this change my order and production process – if at all?
As the buying committees start to negotiate pricing, members will have the opportunity to review all terms and conditions before any new contract is signed.
You will always have the option to review pricing, quality, and service before selecting any preferred vendors. If you select a preferred vendor, your production process will not be any different than what you do today, you simply send orders to the participating printer at better pricing and rebates.
You will always be able to choose which vendors you want to use for a project, even if they are not part of the cooperative. You will only receive the cooperative pricing and rebates for projects you send to cooperative vendors.
How does this change my billing and payment process?
In certain categories, in order to operate like a larger national account, we may ask you to pay through the cooperative instead of paying the vendor directly. No member is ever liable or responsible for the payments of another member or the liabilities of the cooperative as a whole. Even if the billing is done through the cooperative, the members are still responsible for their individual payments.
Will I have any liability for other members here? How does a coop structure impact other members in the instance of financial failure of a member/inability to pay a portion of large print obligation?
The cooperative is incorporated so your liability will be limited solely to your membership dues and any bills your company owes directly for your invoices. As will be detailed in our bylaws, you have NO liability for any other members’ actions.
The Money
What is the financial investment and minimum requirement to join the group?
In order to build a critical mass of negotiating volume during our initial launch, we are starting by inviting independent publishers who can provide the group with $1 million+ in print volume. We are asking those publishers to invest $10,000 in yearly membership dues so we can hire up to two shared staff members to support the group. Once we have built a committed base of purchasing volume in a few key categories, we will invite smaller publishers.
How will I get a return on my investment?
For members who provide the $1 million in purchase volume during our initial launch, their membership dues will be $10,000 a year. Since we will not accept any preferred vendor deals below our 3-6% threshold, we expect members will see a positive net ROI inclusive of all fees by the end of year two through rebates based on your purchase volume. We aim to regularly provide at least a 2x return on the annual fees.
Why are you targeting 3-6% savings with preferred vendors?
We will work to reduce costs as much as possible. Based on our initial conversations with vendors, 3-6 % group rebates above and beyond current member pricing is a reasonable initial target; we may be able to exceed those estimates as our group grows in strength. There will also be secondary cost categories where we hope to secure much higher discounts.
What do yearly membership dues go towards?
Like any new enterprise, there is a minimum “price of entry” to launch the cooperative. Out of respect for all of our time as successful entrepreneurs, each running our businesses, we feel strongly that paying for 1-2 shared administrative support employees to execute the members’ shared vision is more efficient.
Vendor Selection
How do you envision decision-making to work as a cooperative for vendor selection?
Since our group exists to support independent publishers, members always retain full control of their business decisions and vote with their wallets. We ask each founding member to serve on a buying committee to help select preferred vendors in categories like paper, shipping, etc. We will ask you to share which vendors you are willing to consider bids from, what your current pricing is, and other criteria. As we receive bids from those vendors based on the group’s collective volume, we will ask you if you are willing to sign off on final contracts with improved pricing.
Can we participate in some vendor programs and not in others? (For example, our printer is down the street, so we don’t want to switch, but we would like to save money on shipping)
Yes, you can always pick the categories that work for you. However, after our first few years, the cooperative may establish a yearly minimum volume in order to remain an active member.
What sort of vendor standards will you have? Will vendors be vetted regarding ethical standards (ecological, child labor, etc)?
Yes, of course! The values of our group are at the very center of our enterprise (for reference, see the 7th cooperative principle of concern for community). We look forward to your feedback on how the group should score and grade potential vendors for consideration. Our buying committees will evaluate not just price but also everything we know is important to our publishers, such as quality of work, service, professionalism, integrity, and sustainability. Social and environmental sustainability is especially important for those of us who are B-Corps or nonprofit organizations.
Membership
Who is on the founding team?
Our organizing team is Brad Farmer, CEO Gibbs Smith; Pete Schiffer, Publisher at Schiffer Publishing; Amy Barrett-Daffin, Publisher at C&T Publishing; and Tom Helleberg, Publisher at Mountaineers Books. Our vision is based on conversations with dozens of publishers over the years and consulting support from Start.coop, the leading cooperative support organization in the country.
Who makes larger group decisions?
The Publishers Cooperative will be 100% member-owned and member-governed. The Cooperative will have an elected board of directors comprising cooperative members. The board is responsible for approving annual budgets, evaluating shared staff, and other organizational duties. Members vote for the board of directors and can also run for seats on the board. Following the cooperative principle of ‘one member, one vote,’ each member, regardless of their volume, has one vote. The board shall start as a 3-7 member board and can expand as the cooperative grows. Board terms will be rotating three-year terms.
Is there a size limit for the total number of members?
There is no legal limit to a cooperative’s size. Some purchasing cooperatives have thousands of members. We are focusing on launching with ~15 strong publishers who can each commit $1 million plus in volume. As we learn together, we will continue to evolve our strategic vision for membership based on member feedback.
How big might this group become?
While there is no upward bound to our potential volume, successful purchasing cooperatives have learned that if they reflect the entire market, they lose their negotiating power with vendors. Therefore, the strongest purchasing co-ops represent a subset of the best and brightest independent players in that industry in order to retain their competitive advantage.
Doesn’t creating economies of scale imply a high level of participation?
Yes, it does! The cooperative will improve its buying power over time based on how well members show up and participate. With high member participation, we will grow our scale and buying power. Without member participation, we will not be able to achieve the economies of scale we hope to achieve. After our first few years, the cooperative may establish a yearly minimum volume in order to remain an active member.
Why will small publishers join later? What is the value to the founders to have the “emerging” lower-paying participants?
To secure the best possible pricing, starting with a base of slightly larger publishers is strategically important. A larger publishing base will also help vendors adjust to the learning curve. In the long run, we are committed to being a force for good in the publishing industry. As we grow, we want to ensure that we are leveling the playing field for any publisher who is a good fit for the group.
We’re a nonprofit literary press – will joining the coop jeopardize our status as a nonprofit? How do we fit into the profitability model?
No, joining the cooperative will not jeopardize your status as a non-profit. Non-profit organizations can be members-owners of cooperatives, and several of our founding members have non-profit / B-Corp status. Any margin improvement would allow you to reduce costs and reallocate those funds to other parts of your organization.
What are the criteria for joining the Co-op, and what is the mechanism for a new publisher to join? Is it all based on personal recommendations?
- Participate in cooperative preferred vendor programs and use your best effort to participate at a minimum volume threshold of $1 million
- Attend annual conference
- Willing to share confidential organizational information
- Ability to bring something of value to the organization other than willingness to to use vendor resources
- Must maintain a good reputation with members and vendors
- Participate in at least one buying committee and actively work with other members to lift all boats
- Maintain confidentiality with membership information
Next Steps
What are the next steps if I want to join?
We are currently looking for publishers who want to actively help us negotiate our first few categories, participate in at least one working group, and can shop $1M+ in total volume through the cooperative. We have started drafting membership documents for your review and will share them once we have that initial commitment.
For more information please contact us: