It is a widely acknowledged fact that no country can prosper without sufficient accumulation of human capital. The literacy rate in Pakistan is substantially low. A large chunk of the population cannot read and write. Therefore, in order to increase the literacy rate, we should promote circulation of reading materials (books) in different parts of Pakistan which will ultimately help in enlightening the youth of tomorrow. There are a number of students who can read but they don’t read in the rural areas because they are indulged in making money and also because there are no books available to them. This is the economic aspect whereby literacy rate of the population can be improved. But if we take a closer look at the cities, almost every single individual can read and write. This is a raised eye brow for investors. In cities like Islamabad, Lahore and Karachi, there are a number of book stores but very few are quality stores. The main emphasis of the shopkeepers is on stationary items. One reason could be that the stationary items yield huge profits as it is the basic need of every house hold and office.
Present situation
There are numerous book stores in the cities but very few are quality ones. There has been a decline in the trend of reading books because life is getting busier by the day and people are busy making money. They don’t have time to read books until or unless it’s a course book for a student. But at the same time, the sale of stationary items is increasing because new businesses and offices are opening up, and stationary is the basic requirement of everyone. As the population is increasing, business activities are also increasing day by day in cities, so there is a huge demand of stationary items. If a person has started a shop with a small setup and not a very good location, he is not in a position to purchase the books from abroad. There are suppliers or dealers in Lahore and Karachi, who purchase the books from other countries in bulk and then sell to the local shopkeepers in the market.
Local books are published locally, so there are no copyright problems and the supply and circulation is very easy for them. Most of the local books business comprises the course books for the schools and universities. These books have a profit margin of 5% to 15%. On the other hand, international or general readers’ books are purchased in bulk from London and India. Most of the books are imported from India because of low prices and due to lesser printing costs. There are also some players in the market, who buy the books in bulk from London in various exhibitions and other events. The big book shops in Islamabad,Lahore and Karachi, which have a large collection of general books, buy the books from London. The reason behind this is that in London once the book is obsolete, they sell the books in whole sale rates and even sometimes in kilos. So that is the best place to get the general books collection and sell them in Pakistan by establishing a huge outlet of books. For example, if a person is interested in guns or music or architecture, he would be able to find all such books in big stores like Saeed Book Bank in Islamabad, and at the back end they are purchasing those books at very cheap rates. Hence the profit margins would be very high.
Another phenomenon has been observed that while every other business fell victim to the prevalent economic crisis, bookstores is the only business that remained unhurt.
Target Audience
Apart from stationary items which are sold through walk-in customers, main book stores usually target the schools, colleges and universities for their advertisements and make deals with certain institutions to sell their books. Big stores usually make deals with libraries of the institutions to sell the general books apart from course books. Government approves certain amounts of grants for the schools, colleges and universities for their library books. So if a store has struck a deal with institutions, he can get huge orders every year as almost all the institutions purchase books for their libraries every year from the money given by the government. Similarly, one can make deals with different institutions and offices for the supply of stationary, which is also very profitable. A bookstore owner has to target the schools and colleges for its sales; otherwise this business cannot survive on just walk-in customers. But now the government has slashed the education expenditure by more than 70%, which means the grants for libraries are also reduced which is a bad indicator for bookstores.
Piracy
Book Piracy is termed as deliberate infringement of copyright on intellectual property and an absolute disregard for ownership or authorship of literary works. Pakistan has been plagued with piracy since long. Most of the books that are being sold are pirated. Even the course books are also pirated and people have made a lot of money from this pirated books business. But now a proper institution in Pakistan takes care of the piracy problems and they are very strict in their policies. That is the reason the sales of books have declined because the shopkeepers cannot purchase the expensive original books and even if they will, the customers will not purchase those books. Although the profit margins are more than 25% in original books but the buyers are very less. Nowadays a reputable book store does not sell pirated books as they are being checked by the piracy department. But the small book stores are still dealing in pirated books and it is very difficult to catch them. In the past few years, it was a very common practice that an original book was bought from other countries and local suppliers made hundreds of copies of those books and sold them in local markets hence making huge profits. This practice has been done in course cooks of universities also. But nowadays this practice has slowed down in the major book stores of the main cities because of strict policies and checks. This is the reason when, recently, new addition of Harry Potter came in the market, it was very expensive because it was the original edition.
Breakeven
This is the business which has a niche market and that is the reason we haven’t seen any new major players stepping into the market lately. First of all the overall reading trend in Pakistan has been decreasing over the years and secondly the sales do not yield as attractive a profit as in a number of other businesses. You need to have a very good location which means more investment. After that you have to target the educational institutions in the surroundings to sell your books. Targeting the offices for stationary items is a very good option for the investors. A normal business of a bookshop can be started from 7 to 10 lacs of Rupees. A small scale business can even be started from 5 lacs Rupees. This price is separate from the rental cost of the location. Once you have established your store, then you have to keep marketing your shop in different areas of the cities especially in libraries and educational institutions. The average break even time is 1 to 2 years which largely depends on the location of your business.
