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Positive Feedback ISSUE 16
november/december 2004


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Auroville 33: Are dealers really as useless as teeth on a wild boar?
by Srajan Ebaen

Having worked in audio retail for four years myself, this question isn't quite as belligerent or moronic as it might appear. Take the following reader commentary:

“…Recently, I was searching for an integrated amplifier. I had read a number of reviews and audio chat on the net and broken it down to 2 units. I secured the phone numbers for the respective companies and contacted them to find out who my local dealer would be. The people who spoke with me at the manufacturers were helpful and knowledgeable, and naturally quite sold on their own efforts.

So, I call my "local" dealers, neither of which is within 150 miles of my home. Oh joy! I learn that neither dealer actually stocks either of the products for which I am searching. Also, neither dealer has actually heard the product. Finally, neither really wants to give me a break on the price if I order the item.

Well, I think a brief review of what a retail store theoretically offers might be best now. It really is not that much. When you think about it, you are paying a markup of 35-50% for the following.

  • Access: That is actually being able to purchase the product, to see it, to hear it

  • Expertise: That is actually getting some valuable information regarding the product from the retailer

  • Follow-up service: In case problems should arise.

Now let us review what my "local" dealers have to offer.

  • Access: They do not stock the product, and if they did, I would have to travel nearly 200 miles to audition/purchase it

  • Expertise: Since they never stocked the product, they probably won't have much to offer there either. They certainly did not sound like they wanted to discuss audio

  • Follow-up service: If my purchase breaks, I can either ship it 200 miles to the retailer, so that they can ship to the manufacturer, or I can ship it to the manufacturer myself.

Basically, my "local" retailers have nothing to offer in this particular case, and of course they still want to make their cut. I don't know too many businesses where one would feel entitled to a 50% profit for taking an order and having an item drop-shipped. Additionally, the manufacturer, in an effort to try to protect these outfits, will not permit me to make a phone order with another dealer, who might actually offer some useful advice.

And here is the final kicker - both of these amps were listed on AudiogoN. I spoke with the sellers and both actually spent some time with me and discussed the product. Unlike the authorized local dealer, they had access and expertise, and they were just guys like me, not professional retailers.

Well, there you have it…"

Don't believe for a moment that most manufacturers are ignorant about such scenarios. I hear about them all the time. What to do about it really is Hamlet's question. The easiest response seems to sell factory-direct to those customers not serviced by one's dealer network. Alas, many a manufacturer worries that this might undermine dealer trust. The dealer might think that if they sell to a guy outside his market, why wouldn't they sell to one inside it? How about a customer who refuses to do business with the store because the store refuses to discount? If the shopper contacts the manufacturer, will they steal the sale from the dealer? Conversely, what if the maker actually close the customer with better attitude, better product knowledge and better support but the dealer insists it must have been a discounted transaction or insists he deserves a commission?

While it's convenient to blame AudiogoN on the seriously battered status quo of the old dealer model, it's akin to the old chicken-and-egg story: Did AudiogoN start the problem or did AudioGon start in response to an already existing problem? Clearly, only the luckiest and oldest of manufacturers will have truly comprehensive distribution to capture all markets and customers themselves.

It's everybody else who currently must deliberate between sticking to the old ways, to sell direct or both. StarSound of Audio Points has a unique solution to the latter—they credit a dealer on his margin for every direct sale made in his territory. Other makers are considering launching a separate direct-sales product line that won't be available through dealers to avoid conflict.

It's common knowledge that dealers make far more profit per transaction that the manufacturers selling to those dealers. As the above reader rightly argues, consumers do have a right to expect more in return than just be handed or shipped a box if they're asked to pay for value-added services. Otherwise, the transaction is reduced to a commodity's trade and bazaar-level discount haggling. Who then is to blame for that but the dealer?

Know your product. Be up to date. Demonstrate what you sell. Know more about setup, compatibility, tweaks, system and room tuning than your customers so they have a good reason to see you. Develop creative solutions for customers who you're allowed to service but who can't visit with you in person. Don't just move boxes. There's no way you can compete with those already in that business. Whatever happened to work ethics and enthusiasm?

It's a truism to anyone in the biz how actually making a living in audio isn't exactly what it's cut out to be. Sell burritos from a roadside wagon and you'll make more hassle-free steady dough than most audio guys who are happy if they can just shoulder their bills and not fall behind. If you don't love what you do, it's not the money that's the allure of audio. If the love has wilted and the money ain't there to compensate so you can pursue love elsewhere (if you still have the time), why bother?

Our reader's anecdote is very common these days. Manufacturers can't be blamed for questioning the sanity of putting up with under-performing dealers refusing to do their jobs. Of course recognizing the problem and coming up with workable solutions are two different things. Selling direct becomes problematic for anything bigger and heavier than your average integrated and nearly prohibitive for speakers. Then there's the issue of a satisfaction guarantee. What to do with returned products that might no longer be mint? What about shipper issues which are becoming harder and harder to collect on? How about factory personnel that's good on the phone and good with people?

This whole subject is like fishing in the toilet. No matter what you catch, it ain't pretty. Actually, most of it stinks. For today, we'll simply conclude that where dealers are concerned, it's time to get off the pot or not be surprised if vendors take measures. Where consumers are concerned, it's important to be fair. Don't insist on upfront services like demonstrations, consultations or explanations, then demand a discount or pit dealer against dealer for a price war. In the end, we're all in this together. Customers have to reward good dealers just as good dealers have to reward good customers. Part of the High-End audio equation is try-before-you-buy. We should remain cognizant about how our actions undermine or support the ongoing availability of demonstration facilities. Remove those from the picture and what's left —assembling a system by mail order and reviews? Goodie for us writers then. We'll be more important.

None of this is news in the least. It's a tired old hat in fact. But unless you're ready to hang it up and finally kiss your active involvement in audio good-bye, it's one that needs to be worn and minded and cleaned up on a regular basis as good as each one of us knows how to. Well, there you have it…

Visit Srajan at his site

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