Originally Posted by thune
If this is true and not misleading, it certainly explains why high-end audio dealers are uninterested in headphones
. No sane person could operate a storefront with these margins.
Video products work on an even slimmer margin. Sony standard line averages 10 gross points of profit at most retailers. Of course, that's why places like Circuit City went under. And yes, if retailers don't sell you a stand, cables and an extended warranty, they might as wel not bother with the TV.
High end Headphones are a different animal. They are still a relatively small niche with a cult following. That's the perfect recipe for online direct-to-consumer sales. Manufacturers tend to price themselves out of the option for retail. Bose, Beats, skullcandy etc go in with a retail strategy from day one...that's why Beats Solo has to be $199 rather than the $129 they ought to be. They are giving Best Buy etc a nice 40% margin to justify the shelf space. I'd wager Dre, Inc makes siginifcantly less per headphone than Best Buy, but they do well with the volume and corresponding economies of scale that come with that volume. Net result is that as consumers we get good value at the high end, while the retailer gets squeezed by the fact that the manufacturer didn't take into account the retailer's margin when the started out selling direct.
This is even more prevalent when it comes to headphone electronics...and even smaller and cult-ier niche.