Monday, June 1, 2009

Essence of Wholesale is lost in the current ebook marketplace

Last week's news of reorg at Ingram and new partnerships for B&T triggered me to try and crystallize some unstructured thoughts I've had floating around. In the physical book world, wholesalers and distributors had distinct, well-understood roles, and success in one business didn't guarantee success in the other.

Wholesalers dealt with a variety of publishers, non-exclusively, as many as they could reasonably do sensible business with. That gave wholesalers the ability to compete on their title selection and availability, and fill a vital role in the 20th century book supply chain. They still do function in this way, but the vitality of their role continues to shrink as the bookseller base shrinks.

On the other hand, Distributors worked with a fixed list of publishers and essentially replaced the warehousing and order fullfillment function (along with sales for most) of those publishers. Distributors occupied a place one notch higher than wholesalers in the supply chain in that they would ship to wholesalers as well as booksellers.

In the ebook world, the plethora of delivery systems and formats have, so far, eliminated the wholesale function. The vertical plays of both Amazon and Sony mean that they occupy the functions of distributor (for format/device), wholesaler and bookseller, going directly from publisher to consumer. The relatively new iPhone distribution channel may be the only place where ebooks can be content-centric rather than device or format-centric. As such, we've seen Amazon now occupying a new role, straddling bookseller (Kindle) with distributor (Kindle titles to iPhones).

Where is the role for Ingram or B&T in this world? So far, despite the attention they've gained and the resources invested, they do not have a vital place in the supply chain comparable to their role in the physical world.


  1. Tim, I'm really glad you started this. Now all we need is to get you on Twitter. You will find a lot of similar minded folks out there.

    As for this post, my take on all these changes is that (to quote Richard Nash) we're moving from a B2B world to a B2C world, and the implications of that change both the physical supply chain as well as the digital one.

  2. Ingram as Lightning Source (the two together aka Ingram Lightning Group) does play a "wholesale" type of role in the ebook industry. Some publishers contract directly with some online bookstores. For places like Amazon and Sony, that's the only option. But stores like Fictionwise, BooksonBoard, and Diesel can and do get their product from LSI as the distributor, in addition to the direct publisher contract.

    So the role is still there, though perhaps not as extensive as it has been historically. But still, I can't think that their role in digital will ever disappear completely because, as a publisher, I can't imagine dealing directly with every online retailer. The logistics of tracking all those accounts...

    And in other news, Fran says you need to get signed up for Twitter. What are you waiting for?

  3. Hi Tim, and welcome to the blogosphere.

    I actually beg to differ on the wholesaler role, unless there is huge consolidation of the Digital Asset Distribution network. There will be more and more web sites selling ebooks direct to consumers; somebody has to supply that. The biggest retailers like Amazon and B&N can set up their own relationships with publishers, but as is pointed out already here, independent operations already rely on Ingram or Content Reserve to aggregate for them. Because the publishers aren't vertical and the points of consumer contact will be, I think the role of the wholesaler in the ebook supply chain is going to be growing for quite some time.