Make up your minds

<p>While at Bertrams, I watched a competitor draw up to the Booksellers Association conference in his new Ferrari and thought wholesale was where I felt very comfortable. <br />
I had most fun in publishing and most impact at Dillons&mdash;assisting in bringing the Net Book Agreement to a close&mdash;and golden years of wholesaling lay ahead.</p>
<p>In wholesaling palaeontology local family businesses developed from specialising in taking trade books to non-traditional outlets to holding a substantial range of stock on behalf of the independent bookseller with efficient next-morning supply&mdash;a far more effective model than any chain could then manage to achieve.</p>
<p>City funds eventually understood the difference between publisher distribution and the added value that wholesalers offered, and began to close in.</p>
<p>When I sold Bertrams to Hg Capital in 1999, it was on the expectation of growth in internet supply. At that time it represented just 2% of Bertrams' mix; five years later it was more than 20 times that.</p>
<p>With this background why are there just two national wholesalers remaining? Although major publishers, led by Ian Hudson, have supported Bertram's recent acquisition by Smiths News, they have to resolve a strategic schizophrenia where they are both supplier to, and principal competitor of, wholesalers.</p>
<p>Caught between voracious customer and publisher terms that inadequately recognise the cost of delivering considerable added value, wholesalers often stumble. Bertram's own figures show &pound;4.5m Ebitda on &pound;122.5m turnover. Ten years earlier Bertrams earned &pound;4.8m on just &pound;60m.</p>
<p>With Smiths News ownership, publishers should expect terms demands to rebalance the position. The future looks exciting for the surviving wholesalers. Digital content will require the same selection, acquisition, consolidation and distribution expertise that enabled wholesalers to develop in the first place. Digital technology enables anybody to be a publisher.</p>
<p>Individuals, librarians, booksellers and e-tailers will not bother to search individual websites, but will go to the consolidating service for selection, download, or print-on-demand.<br />
With just two strong wholesalers, publishers will be pressured to resolve their supply schizophrenia&mdash;although it's not time to order another Ferrari. </p>