Buy the Book Seeking Economies of Scale, Barnes & Noble's Purchase of America'slargest Wholesale Book Distributor Is Shaking Up the Industry

By Marjorie Coeyman, writer of The Christian Science Monitor | The Christian Science Monitor, January 7, 1999 | Go to article overview
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Buy the Book Seeking Economies of Scale, Barnes & Noble's Purchase of America'slargest Wholesale Book Distributor Is Shaking Up the Industry


Marjorie Coeyman, writer of The Christian Science Monitor, The Christian Science Monitor


Robert Klara is just the kind of enthusiastic young customer giant bookseller Barnes & Noble is seeking.

Mr. Klara, a magazine editor living in New York City, buys at least three to four new books a month. He also likes to give books as gifts and relishes time spent in bookstores, including the Barnes & Noble near his office. "I enjoy the physical act of browsing," he explains.

But the affection Barnes & Noble might feel for Klara is not entirely mutual. He has been reading about the company's proposed acquisition of another industry titan, wholesale book distributor Ingram Book Group, and he's worried. The acquisition "would seem to be giving Barnes & Noble an unfair competitive advantage," he frets. "They're a business predicated on moving popular books, not the best books." Klara's concern is only one among a number of unhappy scenarios haunting book lovers. They worry that the $8 billion consumer book publishing industry is rapidly consolidating into a handful of corporate monoliths interested only in cranking out predictable bestsellers. At the same time, they fear the demise of the friendly corner bookstore. And for many, Barnes & Noble's $600 million bid to buy Ingram - the world's largest wholesaler of books, with 11 high-volume, high- speed distribution centers - spells cause for further alarm. (See story right.) Book wholesalers - also known as distributors - are middlemen who constitute a vital link in the industry chain for most booksellers. They offer one-stop shopping: a single source for books from scores of different publishers at discounted prices and rapid turn-around times. For most operators - especially in today's increasingly competitive market - such services are not a luxury but a necessity. Once Barnes & Noble owns Ingram, many industry observers worry, it will not only have first dibs on all the high-volume blockbusters, but will also have access to all sorts of sensitive information about Ingram's many other customers - the independent booksellers. Access to details such as profit margins, credit lines, and buying patterns, some say, would enable Barnes & Noble to steamroller smaller competitors. Of course, the company has issued assurances that its only interest in the purchase is to increase speed and efficiency throughout the industry, and that safeguards will be built in to protect all Ingram customers. But most independent booksellers remain up in arms. "It's as if Wendy's and Burger King were suddenly forced into buying french fries from McDonald's," says Mitchell Kaplan, an independent bookseller, who owns Books & Books in Miami Beach. And yet, there are dissenting voices in the industry, those who insist that the reverse is true - that thanks to new technology and economies of scale, the consumer book industry is actually on the brink of a change for the better. All that's really going on, says David Cully, president of distribution for Barnes & Noble, is a major shift.

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