The collapse of Exertis Supplies earlier this year left evo Group’s VOW Wholesale as the dominant force in UK OP wholesaling. Six months on, two new businesses have emerged with very different ideas about what the future of distribution should look like – not as direct challengers to the market leader, but as alternative routes to market for dealers and suppliers.
At the time of Exertis’ demise, many questioned whether there was room – or even a need – for new entrants. After all, as Exertis’ experience – like that of Spicers before it – clearly demonstrated, profitability in OP wholesaling has proved extremely challenging. However, two businesses now believe that they have viable business models to play in the space, although both are taking markedly different approaches.
LSM Wholesale has launched as a conventional wholesaler with an emphasis on relationships and service, while Consolidis is pursuing a sustainability-led distribution model built around consolidation and reducing the cost to serve. Neither, however, is attempting to recreate Exertis or to compete head-on with VOW.
A relationship-led approach
The first of the new propositions, LSM Wholesale, officially went live on 1 July. The business was created through the merger of LSM Consumer & Office Products’ wholesale activities with a wholesale project developed by dealer Kingswood Business Supplies.
The new company is jointly owned by LSM founders Marcel and Tony Landau and Kingswood owners Kevin and Jonathan Cropper. Marcel Landau is keen to stress that the venture is not an acquisition. LSM Consumer & Office Products continues to operate independently as an agency and consultancy business, while LSM Wholesale becomes the vehicle for the combined wholesale operation.
The business is initially operating from Kingswood in Blackpool and LSM’s existing warehouse complex in Spalding, giving it around 4,500 SKUs across categories including traditional OP, business machines, facilities supplies, catering, medical products and packaging. It also brings a portfolio of exclusive European brands that LSM has represented for many years.
For Landau, Exertis’ collapse was the catalyst for accelerating plans. Having previously supplied both VOW and Exertis – the latter becoming one of LSM’s largest customers – the disappearance of Exertis prompted the company to reconsider its role in the market.
Kingswood proved a natural partner. Unlike many dealers, it has long maintained direct purchasing relationships with manufacturers rather than relying exclusively on wholesale supply, while its owners had already begun developing a wholesale proposition of their own. Although Kingswood is a longstanding member of Nemo Office Club, both parties are keen to clarify that LSM Wholesale is not a Nemo wholesale business. Nemo is neither a shareholder nor a formal partner; LSM remains an approved supplier to the group, as before, and the wholesaler will continue to supply dealers across the UK regardless of group affiliation.
Landau describes the company’s ambition as providing dealers with a dependable second source of supply rather than replacing VOW. “We’re not trying to become a £100 million wholesaler,” he says. “We’re trying to build relationships with dealers that want to work with us and grow steadily.”
He argues that many dealers have been looking for greater choice following Exertis’ departure and suggests that wholesalers should once again focus on service, reliability and supporting dealer profitability rather than simply processing transactions.
In fact, Landau says that LSM is looking to “take wholesaling back 20 years”, when support for dealers was the industry’s defining principle. He believes that wholesalers should once again earn dealers’ trust by delivering consistently on service, availability and pricing, with the dealer – rather than the wholesaler – at the heart of the relationship.
Rethinking the distribution model
Meanwhile, Consolidis shares the belief that there is room for another route to market, but its proposition looks very different. Founded by former Exertis execs Raj Advani, Kim Thurgood-Brown and Ben Appleby, the company is positioning itself as a wholesale distribution and logistics partner centred on consolidation, scheduled deliveries and carbon reduction, while continuing to offer next-day delivery where appropriate.
Its model is based on approximately 4,000 stock lines covering around 80% of customer demand, which will be supported over time by cross-docking and consolidation of additional products from suppliers in other categories.
The founders argue that wholesaling has gradually evolved into an increasingly expensive model as dealers have adopted consumer-style purchasing behaviour. According to the company’s analysis, 30% of orders placed with a typical UK OP wholesaler are worth less than £25, while 45% contain just a single product. “We’ve got consumerism in a B2B world,” says Thurgood-Brown. “Just because you can deliver something tomorrow doesn’t mean you should or need to.”
Rather than encouraging ever-faster delivery, Consolidis wants dealers and end users to eventually shift more routine purchasing to scheduled deliveries that reduce both transport costs and environmental impacts – although it will offer next-day when needed.
The concept brings to mind award-winning dealer Red-Inc (read Sustainability spotlight: Leading the charge), whose consolidated delivery model has demonstrated significant reductions in both deliveries and carbon emissions while supporting continued business growth.
Start small and scale
Consolidis plans to combine conventional wholesaling with third-party logistics services, helping dealers to consolidate products from multiple sources into fewer deliveries while providing reporting around carbon savings and operational efficiencies. It is a model Consolidis believes will result in lower cost to serve, greater profitability and less paperwork for its customers.
The company has secured warehouse space near the M1 in Bedfordshire and has set deliberately conservative growth ambitions. According to Advani, the priority is to build the business sustainably, keeping costs under control and ensuring that the operation is fully established before accelerating expansion.
It’s a similar situation at LSM Wholesale, where Landau reports that the business chose not to exhibit at the recent Superstat conference because it was keen not to “bite off more than we can chew”.
The priority has been to establish a solid operational base first among Nemo Office Club members, with growth coming at a pace that the business can comfortably support.
There is also other common ground shared by LSM Wholesale and Consolidis despite their different approaches. Both describe dealer choice as healthy for the market and each believes that suppliers are receptive to additional routes to market following Exertis’ exit.
Vendor reaction has been encouraging, they both note. LSM says that several well-known brands approached the company during its launch to discuss expanding their ranges; while Consolidis reports strong support from manufacturers, with just a couple of exceptions.
Whether either proposition ultimately reshapes UK wholesaling remains to be seen. However, their emergence suggests that the market’s response to Exertis’ collapse is to be receptive to solutions that do more than simply replacing one – loss-making – national wholesaler with another.
