Reseller body count remains at eight-year high

Graydon expresses concern as its data indicates 93 UK resellers hit the wall this quarter

The third quarter of 2011 saw the second-highest number of reseller insolvencies in nearly eight years, according to the latest data from Graydon UK.

The credit reference agency has given ChannelWeb a sneaky peek of its preliminary Q3 numbers, which show 93 resellers hit the wall in the three months ending today.

This is down slightly from the eight-year high of 99 recorded in the previous quarter but compares unfavourably with the 68 and 76 firms that went under in Q4 2010 and Q1 2011 respectively. It is also up 18 per cent on Q3 last year, when 79 resellers bit the dust.

Alan Norton, head of intelligence at Graydon, cautioned that the Q3 figures were even more worrying than Q2 because most of the casualties were established businesses.

"There were not as many new market entrants and those failing tended to have been incorporated for a number of years," he said. "Usually, it is the start-ups that are regarded as high risk because many fail after 18 to 24 months when the initial capital runs out."

High-profile casualties during the quarter include Sonex, an operator of 14 Sony stores and Itopia, a VAR owned by Sunday Times Rich List regular Robin Lodge - both of which were revealed exclusively by ChannelWeb.

Norton attributed the Q2 and Q3 spike to the tough economic background and the failure of some resellers to move with the times.

"Those that have not adapted to value-add and embraced the cloud, and are still box-shifting, will find themselves in trouble," he added.

Nitin Joshi, founder of ChannelMoney, said most of the recent reseller casualties had been smaller firms with "nothing to offer except box-shifting".

"We have not seen any substantial insolvencies in the channel," he said. "It has been a trickle of smaller dealers which have done very little damage when they have gone bust."