[b17m4p]

Whats the deal with audio dealers? I'm wondering if some audiophile veterans can clue me in on what goes on behind the scenes. How-come some really nice gear is sometimes only available from a few dealers? Do the manufactures have a hard time finding more retailers or is there some purpose behind why they would want to limit the distribution like that? Also do dealerships oppose manufactures that sell directly from a website - are they afraid customers will use their facilities to demo units and then try to buy them directly from manufactures? Is this the reason more gear is not available for sale directly from manufactures? What else should a hi-fi enthusiast know about the business side of things to try to make sure he is getting the best values?

 

[Uncle Erik]

I can't comment much on dealers since I've only dealt with a couple of them. There are some benefits for advice, setup, warranty work, etc., but I mostly see them as middlemen there for a cut of profit. I think that business model is obsolete - which is why it's difficult to find hi-fi shops today.

I prefer to either buy direct from the manufacturer or buying used. I also buy gear I can fix myself, except for digital sources. For digital, I plan to replace rather than repair. By the time something breaks, there's usually a better unit out that costs less.

 

[obobskivich]

most dealers that I've dealt with are there to take a very nice commision on the sale, without really doing all that much

I'm like erik, and prefer to buy direct, or at least buy online (like amazon or something, where the markup is very very minimal, and usually much less than SRP), however the dealer "feel" is sometimes nice to demo equipment....

 

[mark_h]

Most of the prices I see in the store I shop at are the same as the online vendor prices? With the advantage of, it being close, no shipping and I can audition whatever I like, no problems. I would not feel comfortable receiving a cd transport or turntable through the post?! Occasionally you may encounter the, if you don’t know don’t bother to ask attitude but on the whole the guys in the shop are as enthusiastic about audio as anyone.

 

[Skylab]

Complicated question. Whole books are written on distribution strategy (and this is an area of professional expertise for me, but not in the audio business).

Manufacturers want lots is sales, and generally think this means lots of dealers. However, they want dealers who will represent their products well, including demonstrating them, and normally this means the dealer must buy demo equipment, which can be very costly. Therefore, convincing a dealer to carry your product if you are someone other than B&W or Harmon can be difficult.

But even B&W is careful to get dealers who will do a good job because this effects the customer experience. I have bought much of my audio gear in the last 10 years online (before that there WAS no online

). But I bought my big B&W's from a local dealer because I wanted the support that comes with it. For no cost other than the (admittedly substantial) cost of the speakers, the dealer delivered them, and helped me "dial them in". If I had ever had a problem (which I have not), they would have immediately come to my house to fix it. No extra charge. Try getting that from a website.

And yes, dealers will most actively promote products they make the most money on. They SHOULD - they are a BUSINESS. That said, most hi-end stores don't discount too much, and margins are generally very similar for hi-fi gear (dealer gross margins are 20-30%).

It is unethical, IMO, to go to a dealer, demo a product, and then buy it online. You are using a dealer's valuable time, and he should be compensated for that. As such, many dealers do avoid manufacturers who sell online, for that very reason. Again, an audio dealership is a business, and needs to make money to be a business.

Here is the other key "hidden" fact - buy ONE fairly pricey item from an audio dealer, and they will love you long time

After buying my speakers from a local dealer, that dealer will let me borrow for a free home audition any piece of equipment they have in the store. No problem. And they greet me with a smile when I walk in!

 

[Uncle Erik]

Quote:

Originally Posted by mark_h /img/forum/go_quote.gif Most of the prices I see in the store I shop at are the same as the online vendor prices? With the advantage of, it being close, no shipping and I can audition whatever I like, no problems. I would not feel comfortable receiving a cd transport or turntable through the post?! Occasionally you may encounter the, if you don’t know don’t bother to ask attitude but on the whole the guys in the shop are as enthusiastic about audio as anyone.

If the price is the same or lower then you'd be fine buying from a dealer. Last weekend, I got a pair of PSB Alpha B1 speakers from a dealer - his prices were better than anything I found anywhere.

I've bought a few CD players and turntables through the mail. They all came through fine, no problems. If you do buy used, look for someone who kept the original boxes for the gear and will pack it in those. My turntable came packed in its original box, completely disassembled and bagged just like when it was new. I don't think buying a new one would have been any different. The seller was awesome. It's worth paying a little extra to find someone who will do that.

I completely agree with not demoing gear at a dealer you don't intend to buy from him. I won't do that if I'm going to buy online or used.

 

[mark_h]

/\ Agreed but I lack the skills to put together a turntable properly, although some players/transport come with transport screws. I believe it is important to build a relationship with a dealer and the trust that comes with it. Recently I was looking at a balanced CD player I knew little about, very nice but I was told it was 4 years old, I eventually found the manufacturer who told me they went out of production in 1997, no trust there, that’s 11 years, components start to need replacing as a matter of course after that time.

 

[ktm]

Is the dealer a dead concept? For some things, yes!
But for better quality gear, it's a big chance
to buy stuff without seeing/hearing it.
I am happy to use and buy from some dealers.
My favorite has very good listening rooms, a great
headphone test area(They have almost all the Grados out,
plus the Stax 202/303/404). And their trade ins are 1st rate.
I've bought used sr125, several CDPs, and a number of
speakers/amps.
Distribution is often limited to protect dealers.
As much as I like cheap online pricing, I still like
to go touch and listen in person.

 

[dvse]

Quote:

Originally Posted by Uncle Erik /img/forum/go_quote.gif I completely agree with not demoing gear at a dealer you don't intend to buy from him. I won't do that if I'm going to buy online or used.

There is really nothing wrong with wasting delears' "valuable" time (if for no other reason that these people are usually quite incapable of any worthwhile activity) - I would be happy to pay a fee for a home demo or such, but too often the only way to get to listen to a piece of equipment is to pretend you are willing to buy at the RRP.

 

[Skylab]

Quote:

Originally Posted by dvse /img/forum/go_quote.gif There is really nothing wrong with wasting delears' "valuable" time (if for no other reason that these people are usually quite incapable of any worthwhile activity) - I would be happy to pay a fee for a home demo or such, but too often the only way to get to listen to a piece of equipment is to pretend you are willing to buy at the RRP.

Sorry, but I completely and totally disagree with this. If you have no intention of buying from a dealer, you should not waste their time. Your very post indicates you believe you are somehow superior to people who work at audio dealers - I just can't understand attitudes like this.

 

[dvse]

Quote:

Originally Posted by Skylab /img/forum/go_quote.gif Your very post indicates you believe you are somehow superior to people who work at audio dealers - I just can't understand attitudes like this.

Not so much, it's just not possible to do anything productive in the context of such moribund business model, irrespective of audio dealer employees' personal qualities.

 

[Skylab]

Well I am sorry but I still completely disagree that it is OK to occupy a dealer's time auditioning a product and then buying it on line just to save a few bucks. The only way this would be fair is if you told the dealer this was your plan, but I highly doubt he's be interested in helping if you were honest about it. That should tell you something right there.

 

[Orcin]

Quote:

Originally Posted by b17m4p /img/forum/go_quote.gif How-come some really nice gear is sometimes only available from a few dealers? Do the manufactures have a hard time finding more retailers or is there some purpose behind why they would want to limit the distribution like that?

Yes, there is a purpose. The purpose is to avoid price competition. Dealers will be more active in promoting a product if they are assured of maintaining a strong margin and building an installed base of a protected product line.



Quote:

Originally Posted by b17m4p /img/forum/go_quote.gif Also do dealerships oppose manufactures that sell directly from a website - are they afraid customers will use their facilities to demo units and then try to buy them directly from manufactures?

Dealers don't particularly like this, but they also know it is a reality. The dealer is getting traffic that might generate future sales on another product, so they are getting some benefit from this practice. Sometimes people come in with the intent of doing this, but then ultimately buy from the dealer for the reasons of convenience, warranty, customer service, bundled discount with other products, etc.

The last thing a dealer wants is an empty showroom. They will do almost anything to generate foot traffic, including demonstrating equipment that they don't expect to sell. If done well, this generates goodwill and repeat business that you cannot buy with advertising.

 

[Kicksonrt66]

Quote:

Originally Posted by b17m4p /img/forum/go_quote.gif Whats the deal with audio dealers? I'm wondering if some audiophile veterans can clue me in on what goes on behind the scenes. How-come some really nice gear is sometimes only available from a few dealers?

As someone posted, it keeps down the price competition.

Not just high end audio, but everything from toaster-ovens on up. Manufacturers often make similar models that might only differ in the position of the controls, so that stores can advertise they will "beat any local price!"
because they know the other department stores stock a different model number.

 

[Yikes]

[size=small]Most people will not purchase a product without auditioning it first. This means that a manufacturer needs dealers to demo and promote the product in order to spur on sales. The problem is that if the manufacturer allows dealers to sell on-line customers will shop every dealer looking for the biggest discounter (Whore). These Whor…Discounters for one reason or another are satisfied making very small margins, usually because their costs are less (No brick and mortar, few if any demos, and no labor involved in the sale).[/size]

[size=small]The problem is that if the product is commonly available at huge discounts on-line legitimate dealers (Those with demo facilities, staff and the ability to properly show a product) will soon stop promoting the product because they can’t make sufficient margin to justify carrying the product. Sooner or later customers have extreme difficulty finding someplace to audition the product, since they can’t audition the product sales begin to decline, and the manufacturer is forced out of business.[/size]

[size=small]There are exceptions. Products that are small and easily shipped can be successful with mail-order only. [/size]

[size=small]Dealer Model: Limited distribution with strict MAP policy.[/size]

[size=small]Grado follows this model. [/size]

[size=small]Advantages – Many Brick and Mortar stores carry and demo Grado’s products. This allows potential customers the advantage of hearing before buying. Having a dealer network provides a local outlet to promote the product to customers who might not be On-Line shoppers (Another potential customer demographic)[/size]

[size=small]Disadvantage – Customers who must get big discounts (Discount Whores) won’t buy because they can’t get their 30-50% off.[/size]

[size=small]Mail Order Distribution: Widely distributed with little or no price control.[/size]

[size=small]AKG follows this model.[/size]

[size=small]Advantages – Product is readily available at huge discounts so it appeals to Price Shoppers.[/size]

[size=small]Disadvantages – Difficult to audition (No local dealers). Very high return rates.[/size]

[size=small]Some observations: [/size]
[size=small]Most products that use Mail Order Distribution have grossly exaggerated retails. This allows the dealer to absorb the added cost of returns and the large discounts that they usually offer. This fools the buyer into believing that they have received a better deal.[/size]

[size=small]The Internet is forcing everything to the lowest common denominator: Price and Discount.[/size]

[size=small]Demoing at a store and then buying on line is stealing. You have stolen the dealer’s time and resources. You have also accelerated the time when you won’t have a local dealer to abuse.[/size]

But I am biased. I was a dealer for years, and now import and distribute.