Dealer Direct

James Tanner · « **on:** 10 Dec 2011, 12:44 pm »

Interesting concept by Magnepan in the USA

http://www.theaudiobeat.com/blog/dealer_direct.htm

james

youravhandyman · « **Reply #1 on:** 10 Dec 2011, 01:58 pm »

James,

Do you think this is very far from how Bryston is running currently? I only say this due to the customizable nature of the Bryston products as it stands. Don't most dealers simply order their amps/pre-amps as the customer requests? Even the BDP-1 and BDA-1 have your choice of faceplates though stocking of these pieces seems more reasonable due to demand.

Matt

James Tanner · « **Reply #2 on:** 10 Dec 2011, 02:08 pm »

Quote from: youravhandyman on 10 Dec 2011, 01:58 pm

James,

Do you think this is very far from how Bryston is running currently? I only say this due to the customizable nature of the Bryston products as it stands. Don't most dealers simply order their amps/pre-amps as the customer requests? Even the BDP-1 and BDA-1 have your choice of faceplates though stocking of these pieces seems more reasonable due to demand.

Matt

I think the idea here is that most dealers will not or can not stock specific models for customers to hear so Magnpan will ship directly to the customer and allow a home trial through their dealer base on specific models only.

James

Anonamemouse · « **Reply #3 on:** 10 Dec 2011, 02:22 pm »

I think that the whole dealership system is outdated. We live in a global economy, I buy my stuff via the internet from all over the world.
If I can get an amplifier for 40% less on the other side of the planet (including shipping), why should I be restricted to the guy 30 km away from here? He adds nothing to my amplifier, if I need service there are many other possibilities to get things fixed.

James Tanner · « **Reply #4 on:** 10 Dec 2011, 02:29 pm »

Quote from: Anonamemouse on 10 Dec 2011, 02:22 pm

I think that the whole dealership system is outdated. We live in a global economy, I buy my stuff via the internet from all over the world.
If I can get an amplifier for 40% less on the other side of the planet (including shipping), why should I be restricted to the guy 30 km away from here? He adds nothing to my amplifier, if I need service there are many other possibilities to get things fixed.

I believe Magnepan would still insist it go through a Local dealer though.

James

budt · « **Reply #5 on:** 10 Dec 2011, 02:40 pm »

In the event a customer doesn't wish to keep the product there should be a small fee( ie. $150 or so ). Otherwise I believe it would be a disaster in the long run. Audiophiles are notorious for "demoing" with no intention of buying. Personally, I also pay the store a fee even if they don't require or ask for it...

James Tanner · « **Reply #6 on:** 10 Dec 2011, 03:02 pm »

Quote from: budt on 10 Dec 2011, 02:40 pm

In the event a customer doesn't wish to keep the product there should be a small fee( ie. $150 or so ). Otherwise I believe it would be a disaster in the long run. Audiophiles are notorious for "demoing" with no intention of buying. Personally, I also pay the store a fee even if they don't require or ask for it...

Yes apparently the customer has to pay the shipping back.

James

Phil A · « **Reply #7 on:** 10 Dec 2011, 03:18 pm »

Quote from: Anonamemouse on 10 Dec 2011, 02:22 pm

I think that the whole dealership system is outdated. We live in a global economy, I buy my stuff via the internet from all over the world.
If I can get an amplifier for 40% less on the other side of the planet (including shipping), why should I be restricted to the guy 30 km away from here? He adds nothing to my amplifier, if I need service there are many other possibilities to get things fixed.

For the most part I agree. There have been more and more high end audio dealers going out of business. Many due to the fact that they don't want to meet somewhere in the middle between list price and what one can get it for on the internet. I don't mind paying a bit more if I have someone local but not 40% more. I just bought a couple of power reclining chairs locally. I could have gotten them cheaper on the internet. They made some concessions and made a decent profit. I understand they have to eat and pay bills and I'm OK with that. Many, like one of my local Bryston dealers don't carry a full line and have not for years (like one processor, one amp, one preamp, a DAC or CD player). Years back when I had my 14BSST (and 6BSST which I still have), I bought them both lightly used. No place to audition them. The dealer had more expensive things of other brands but told me he doesn't like Bryston and their 20 year warranty and thinks the warranty transfer should only apply when it is sold through an authorized dealer. He doesn't like the fact that I was able to buy a year old amp from a dependable company and have a long warranty. Not who I personally would want representing my product. Since I could not audition them and was going to be a guinea pig, it is easier to go the lightly used route.

youravhandyman · « **Reply #8 on:** 10 Dec 2011, 04:23 pm »

Phil,
IF the price difference wasn't huge are you saying you would prefer to purchase locally or not? I find this is a big part of the problem. Let's use an example of something you can buy new on the internet, say a TV. There's $50 difference between your local AV store and an online price. Would you still choose to purchase this online knowing if there is a problem with the device you will have to ship back to the online store (your expense) or deal with the manufacturer directly. If you purchased this locally you would have a dealer to assist you with this. Value for that $50?
I'm not trying to single you out because I've been guilty to some extent in the past. Acutally Anonamemouse posted an even more extreme view. If you spent time in that store researching or bending the ear of the sales person and then you purchase that same product online would you not feel guilty? I'm not talking a huge price gap but something reasonable.
Mean streets out there for a dealer these days...

Phil A · « **Reply #9 on:** 10 Dec 2011, 04:38 pm »

I'll always purchase locally if the dealer is taking a reasonable profit. A few years back I could have gone to accessories4less.com and got a factory refurb. Marantz SR6003 rec'r for the secondary basement system and got an extended warranty for less than the dealer gave it to me. My point was that if the dealer was going to charge the $1k list I was going elsewhere. I was not going to take up much time and frankly it is easier to click on the internet. I could have gotten the two chairs I just bought for probably a shade under a couple of hundred less each via the internet. It is easier to deal with the local store and their delivery and I paid the guys a few dollars to move the heavy old recliner to the secondary basement system. I probably paid a couple of hundred more or almost that for the rec'r. I was not going to pay $400 more.

I can understand that time is money. I did go into the local store for the power recliners several times to narrow down what I wanted (I ordered a model that was not on the floor). The guy took the time to speak to the rep a couple of times to ask where the controls would be and how the seating would feel vs. the many other models they had from the same company on the floor. I bought my last recliner (the one I had moved to the baement) there about 8-9 years back. That being said, if I decide I want a new bedroom receiver tomorrow and want a new Marantz, why should I pay the 40% mark-up for having a local store order it. I can order it myself. That's the problem I have with dealers. Many are out of business partially due to the attitude that they are the only game in town.

If I decide I want a 14BSST squared amp tomorrow, why should I go into a place that it is going to charge me list or almost list. I can merely sit in the comfort of my own home and order from Audio Advisor for that deal.

youravhandyman · « **Reply #10 on:** 10 Dec 2011, 04:52 pm »

Phil,

I can appreciate how you operate.

James Tanner · « **Reply #11 on:** 10 Dec 2011, 04:54 pm »

Hi Folks,

Yes it brings to light a lot of issues with current distribution models and peoples purchasing decisions. I fear the fallout will be severe and a game changer for high end audio.

james

budt · « **Reply #12 on:** 10 Dec 2011, 05:07 pm »

I believe the average consumer is willing to pay a little more to buy from a store locally BUT there is a "common sense" limit to this ie.For highend audio if it is a $5000 item I believe most of us are willing to pay $200-$300 more but not $500-$1000 more. Often the local dealer doesn't even have the product so "orders" it and expects a 40% or more return for picking up the phone to order it.I believe this is the main reason most of these guys are going out of business.They simply don't have the product and are simply not competitive. Let's be honest, price matters to most of us.......

James Tanner · « **Reply #13 on:** 10 Dec 2011, 05:15 pm »

Quote from: budt on 10 Dec 2011, 05:07 pm

I believe the average consumer is willing to pay a little more to buy from a store locally BUT there is a "common sense" limit to this ie.For highend audio if it is a $5000 item I believe most of us are willing to pay $200-$300 more but not $500-$1000 more. Often the local dealer doesn't even have the product so "orders" it and expects a 40% or more return for picking up the phone to order it.I believe this is the main reason most of these guys are going out of business.They simply don't have the product and are simply not competitive. Let's be honest, price matters to most of us.......

What would you think it takes margin wise for a high end dealer to stock and demo product properly? In other words what markup does it take to run a store and pay the bills as opposed to a warehouse type model?

James

Phil A · « **Reply #14 on:** 10 Dec 2011, 05:30 pm »

Quote from: budt on 10 Dec 2011, 05:07 pm

I believe the average consumer is willing to pay a little more to buy from a store locally BUT there is a "common sense" limit to this ie.For highend audio if it is a $5000 item I believe most of us are willing to pay $200-$300 more but not $500-$1000 more. Often the local dealer doesn't even have the product so "orders" it and expects a 40% or more return for picking up the phone to order it.I believe this is the main reason most of these guys are going out of business.They simply don't have the product and are simply not competitive. Let's be honest, price matters to most of us.......

Exactly. I'm not that tough of a customer. I'm probably going to buy a car today and I tell the dealer or dealers the way it is (they tried to lowball on the trade-in and told me to go to Carmax, which I did this AM and am getting $1.5k more and the dealer has verbally indicated they will match it as they need used cars). I don't mind someone eating a nice steak a couple of times on a week on my dime. Retail is tough, both the hours and dealing with the public. But they don't have to eat steak 7 nights a week on me.

The problem filters to manufacturers. The more dealers that go belly up, the less places one can go to a dealer to see the product. Some dealers today are likely not doing all that well and are a financial risk to the manufacturer. If they are owed money, the manufacturer may never see it.

When I bought the BCD-1 (have a BDA-1 now which I bought lightly used - like 3 weeks old) when it first came out, the dealer took time and I auditioned players and I embarrassed him to give me 2% off (I told him I could charge it and get a reward or pay via check) and I was fine with that. He took the time and I knew no matter where I went it was around the same price. Just wanted to prove a point. His attitude when I was listening to player was a particular model was $700 more (and he said it in exactly those terms) and was $700 better. It is a business to him and that's OK. He took time to set-up a system with the speakers I had at home so I could get a better idea.

Many just want the list price for existing rather than even spending a minute of time. Many get annoyed if they spend minimal time and someone buys something elsewhere that is better for them, either price wise or a different brand. Sorry, but that is retail. If you don't want to deal with the public, I understand. But take a job as a mad scientist in the back of some laboratory.

Phil A · « **Reply #15 on:** 10 Dec 2011, 05:35 pm »

Quote from: James Tanner on 10 Dec 2011, 05:15 pm

What would you think it takes margin wise for a high end dealer to stock and demo product properly? In other words what markup does it take to run a store and pay the bills as opposed to a warehouse type model?

James

James, may of the dealers stock very little. The dealer I know may have a few items but for the most part what he has is on the floor. I know at the end of the day by the time they pay the electric bill, rent, taxes, etc., there is a a lot less. I also realize there are long hours in retail. In today's market, a large portion of their sales if they have anything on the ball is custom HT installs where they can make more money over and above the equipment. That's why you see many custom installers carry higher end stuff today.

budt · « **Reply #16 on:** 10 Dec 2011, 05:39 pm »

Quote from: James Tanner on 10 Dec 2011, 05:15 pm

What would you think it takes margin wise for a high end dealer to stock and demo product properly? In other words what markup does it take to run a store and pay the bills as opposed to a warehouse type model?

James

I would have to give it some thought but the internet has changed everything.So in my opinion the current model of most companies has to change or they will go out of business. I have a few ideas but they are just that. One would really have to think it through.

youravhandyman · « **Reply #17 on:** 10 Dec 2011, 05:44 pm »

So several manufacturers work direct now. How would the buying public know what margin the manufacturer is making on their product? It's been noted that %40 seems excessive for a dealer to make on an item. But what happens when that same manufacturer goes direct and then sells for the same price? The manufacturers margin that they earn is very much higher. Has anyone had success in negotiating price with a direct buy manufacturer?
James has a tag line about it all being in the demo. Has anyone had a good demo over the internet lately?
I'll come clean...I'm a custom integrator. But my dream is to have my own shop. And from the tone of things it seems my dream is a suckers bet. No matter, it's my dream and it's up to me to make it happen. My target market seems to be the Phil's of the world so there is still hope for me yet.

Phil A · « **Reply #18 on:** 10 Dec 2011, 05:52 pm »

Many custom installers are renting places in traditional non-retail locations like office buildings/industrial parks where the rent is a bit cheaper. Not just in the audio industry. You see people selling hot tubs and a variety of other goods that way. The internet is just a fact of life whether you like it or not. So I think as a dealer today, you have to take that into account. Make money on services, rent a cheaper place, etc. There may be some markets that support the old way of doing things but probably not the majority. Some dealers even work out of their houses. Many dealers just want to live in the past. If I am going to buy a $10k list amp that I can get on the internet for $7.5k, the dealer needs to recognize that $10k might have been OK if were were living in the world of 15 years ago, but not today. He doesn't have to do $7.5k, that would not be doing him justice. But he does need to recognize reality.

budt · « **Reply #19 on:** 10 Dec 2011, 06:05 pm »

If I was a manufacturer I would have different dealer costs ie. if you were in a retail location in Toronto your dealer cost would be a certain amount. If you were in a small town your cost would be 10% more( just an example).It would make a more level playing field and would take into account the higher costs and benefits of greater customer exposure in prime locations to your product( the Toronto dealer should get a break compared to the guy taking little risk).