Alliance Entertainment’s 661,000-square-foot distribution center in Shepherdsville, KY.
Raise your hand if you predicted the hot recorded music format of this decade would be…the vinyl record. In the U.S. alone, sales of the throwback records have climbed from under a million in 2007 to a whopping 11.9 million in 2015, their highest total since 1988. Aside from the questions this raises about listening habits and technology, here’s one more to consider: Who’s providing all the records? For about 50% of vinyl record sales in the U.S., the answer, at some stage, is Alliance Entertainment. Based in Sunrise, Florida, Alliance is a distributor for CDs, DVDs, Blu-ray, and vinyl records, as well as musical instruments, pro audio, and a variety of other entertainment products. It’s Alliance’s focus on recorded media, however, that centers it in one of the fastest-changing—and most disrupted—categories of this century. Digital media and streaming services have irrevocably changed the market for CDs and DVDs, yet Alliance has set a blueprint for how a company in this arena remains at the top of its game. It’s currently billed as the nation’s leader in vinyl record sales, and the largest U.S. home entertainment wholesale distributor to mass merchants, internet retailers, and independent stores.
“Technology can be a double-edged sword when it comes to home entertainment media,” says Jeff Walker, president and CEO of Alliance Entertainment. “It has put some of our competitors out of business, but has allowed us to grow a brain trust of unmatched industry insiders and given us perspective to innovate and be more forward thinking when new products or opportunities come to us.”
For Walker, who started his career as a music retailer, heading up Alliance Entertainment is the latest link in a chain of moves through the music and entertainment industries. His original music distribution company, Super D, was founded as a side business—but emerged as a powerhouse that acquired all of its competitors: Phantom, MSI, Infinity Resources, and finally, in 2013, Alliance Entertainment, which lived on as the name of the merged company. Under Walker, Alliance would distinguish itself by the “one-stop” nature of its model. While some competitors have made their living on a relatively narrow, curated selection of music and film titles, Alliance carries the entire depth and breadth of its vendor catalogs, stocking a physical inventory of 400,000 titles within its distribution center. It’s a wholesaler to 2,900 customers and ships to 14,500 locations throughout the U.S.—as well as retailers in 76 countries worldwide. In addition, Alliance produces exclusive children’s home entertainment products through a dedicated subsidiary company, NCircle, and a full line of vinyl preservation and care products through a second subsidiary, Vinyl Styl. Its industry-leading AMPED Distribution operation offers physical and digital distribution services for both audio and video.
It’s Alliance’s success in this core category that’s allowed it to diversify, expanding from recorded media into categories as varied as video games, comic books, health and fitness products, and collectibles. With a formidable network of facilities, the company also provides third-party logistics (3PL) for some of the largest retailers in the world. Its inventory control systems, electronic data interchange (EDI), and data warehousing capabilities are also cutting-edge, “allowing us to maximize use of time and minimize costly mistakes,” says Walker. “With our dynamic sales and purchasing teams, even in lean years we have been able to survive and thrive. Our ability to adapt, quickly using state-of-the-art technology to face a changing economy, helps us to serve our ever-expanding customer base. We are the model of a 21st century one-stop distributor.”
For Alliance, the newest piece of the puzzle arrived just this summer with its acquisition of the AN Connect LLC retail music business. In purchasing AN Connect’s business and assets, which include vendor-managed inventory accounts for Walmart and Best Buy, Alliance added to its SKU base a huge assortment of CD, vinyl, DVD, Blu-ray, and electronic products. “With this acquisition, we will likely surpass the threshold of being a billion-dollar company,” says Walker. “We continue to expand our reach and service level domestically and internationally, as the world grows smaller through technological advances. We plan to keep chasing the dream of being the largest one-stop distributor in the world, while supporting our retail partners and allowing them to grow with us.”
(This article originally appeared in the December 2016 issue of Music Trades/www.musictrades.com)