Do Dealers Who Deeply Discount Gear Hurt the Industry?
- Thread starter caesar
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I d say they keep the industry afloat, as those so called "deep" discounts are in effect the most realistic prices for the gear that is being ""discounted". IMHO of course.
many shades of grey, depending on where you are standing.
"hurt the industry" refers to manufacturers. cheap selling certainly hurts manufacturers since it makes selling that product less attractive for sellers. and one thing is for sure, cheap sellers are putzes that are not capable of increasing sales to somehow connect the dots. so they are strictly short term....or maybe have little or no commitment or investment so cannot be relied on for anything.
"hurt the hobby" is a different question. does cheap selling harm end users? probably, since manufacturers are generally harmed, therefore less creative energy gets invested in the long run. while low prices might increase a dealer's short term market share, actually increasing overall sales of hifi gear due to 'good deals' is a stretch. too many ways to view that and varied buyer motivations.
the 800 pound gorilla in the room is that high end audio is very cyclical in it's ups and downs. if the business model is too fragile and there is no profit, then everyone loses every time there is a downturn. company fails, customers left holding the bag. that great deal becomes a door stop.
after my own 50 years in retail, i do realize that customers are going to want to get a 'good deal' and mostly don't care about a retailer's problems. but if i don't protect the business then i cannot be there later to take care of the customer and keep my promises.
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Do Dealers Who Deeply Discount Gear Hurt the Industry?
It depends on who you ask.
There are all sorts of sales models.
Direct sales -- manufacturer to customer -- no layers.
Manufacturer to retail dealer to customer - 2 layers.
Manufacturer to distributor to retail dealer to customer -- 3 layers.
And no doubt other relationships. But at each layer everybody makes a profit.
There is msrp which is typically fixed, set by the manufacturer and is the end-point sales starting price. Larger manufacturers with desirable products tend to have the most control over pricing and tend to more protective of brand equity -- there is a retail price below which the product cannot be sold at the risk of the manufacturer yanking the franchise.
And there are margins. Some manufacturers set a high msrp to allow the retail dealer to offer discounts. The most 'extreme' examples of this that I've run across are in the cable business from 'top brand' manufacturers. I won't name names.
Most retailers have the ability to negotiate on price. This is minimal in the situation where the manufacturer limits supply. Desirable products with limited volume see little to no discounting. But typically there is a price below which the product is not discounted. Dealers will not take a loss.
There are successful products and not so successful products. Brands and specific models come into favor and go out of favor. Out of favor products and unsucessful products are more likely to be discounted.
Rogue dealers who offer deep discounts against a manufacturer or distributor's expectation don't last long as a dealer for that brand.
So ... if a dealer regularly offers deep discounts to msrp then assume that has been worked out ahead of time. And as Mike suggests, luxury product pricing is at the whim of the economy.
Over many decades I have highly valued my relationship with audio dealers. I have recieved more value from their experience and the ability to wander through a brick and mortar store filled with gear I would otherwise neither see or hear in a personal venue than the few dollars saved from any other source. It's a hobby and the dealer experience is an important part of the hobby for me. Audio gear is not an investment as a perusal of Audiogon will attest. I have found that the weak link, as it were, is often on the manufacture that will not stand behind a component problem leaving both dealer and customer high and dry.
I think it is a difficult question to answer. I think we only know about some cable and footer companies because a few people get big discounts and talk about them on forums. That would seem to create awareness for these products which helps the manufacturer, but not necessarily the industry at large. There may also be a negative effect when people see great reports about this expensive stuff not knowing the owner received big discounts and then be disappointed by the sound because expectations are so high because of the positive reports and high retail prices. Those cables and footers are barely discussed a year later.
One could argue that the glossy magazines with glowing reports where everything is excellent and an improvement over what was before can hurt the industry because people don’t perceive value or hear real improvements when they actually listen to the shiny new object.
Products that are deeply discounted by dealers might possibly be discussed and promoted on forums. This will help the manufacturer as a kind of loss leader serving to promote the component and brand, but it is not clear to me that that helps the actual industry at large.
It’s a good question, but I think it’s difficult to answer.
One could argue that the glossy magazines with glowing reports where everything is excellent and an improvement over what was before can hurt the industry because people don’t perceive value or hear real improvements when they actually listen to the shiny new object.
Products that are deeply discounted by dealers might possibly be discussed and promoted on forums. This will help the manufacturer as a kind of loss leader serving to promote the component and brand, but it is not clear to me that that helps the actual industry at large.
It’s a good question, but I think it’s difficult to answer.
Republicoftexas69
Well-Known Member
I think dealers that are giving deep discounts often do not know how to sell, and undervalue their service proposition and do not know how to sell the value proposition they offer. They do harm themselves and the industry Deep discounts undermine the value the manufacturer is offering and drive the secondary market down. When a manufacturer does not align them selves with dealer and distributors that have this vision, you will find they have a short lifecycle in the channel. My goal is to find a manufacturing that is high quality, has high quality dealers that will be here to service my needs for a long, long time. I am looking for value not necessarily a cheap price.
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What is meant by "the industry"? As a stereo salesman for over 10 years long before the internet a sale I made meant that a piece of gear was moved by either my salesmanship or by dumb luck and I was simply in the right place at the right time. With the internet now many manufacturers go direct and cut out the retail store befitting one industry at the cost of the other.
So no I don't believe cutting the price to survive is hurting the industry it's actually strengthening it.
So no I don't believe cutting the price to survive is hurting the industry it's actually strengthening it.
Republicoftexas69
Well-Known Member
Beg to differ and possibly the dealer needs to have a secondary or value line. Discounting devaluates premium products and could alienate premium customers. Secondary lines that are value oriented would be a better business plan than discounting. Sears was the king or this. Good, Better, Best and sold more premium products than value line in their prime. Same holds true in my industry, mechanical power transmission products. In Aerospace OE and HDD segments we are the premium proposition and outsell our peers 10-1 in our distribution channels. We are able to do this with clear understanding and knowledge to sell our value proposition, not discounting, preserving our margins as well as our distributors margins.
Republicoftexas69
Well-Known Member
“Luck Is What Happens When Preparation Meets Opportunity" I am not a believer in luck rather in preparation (knowledge and solution selling) and finding opportunities not waiting for the phone to ring or looking in my inbox.
A manufacturer taking a consumer direct channel is showing the lack of confidence in the normal distribution channel to sell their value prop and preserve market value. I also think that many of these companies/manufacturers also want to keep tight controls on quality and price. Indeed the internet has changed the playing field.
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Most high-end products are so ridiculously overpriced these days, that slashing the price by 50% just brings things down to a more realistic level. The prices reflect the high discount you should be getting when you buy new ! 
Look at real used prices, not fake "factory refurbished " scams like Wilson offers when you consider the real value of a product. You might just get stuck with a expensive boat anchor when you try to sell it for what you thought it was worth.
Look at real used prices, not fake "factory refurbished " scams like Wilson offers when you consider the real value of a product. You might just get stuck with a expensive boat anchor when you try to sell it for what you thought it was worth.
The elephant in the room is that information is largely ubiquitous with the internet and forums such as these. Whether it be user impressions on a forum or reaching out to a real user for their experience- information is largely available and many times out paces whatever a biased retailer is prepared to offer.
The real retail model is flawed in this hobby. Most of the time the retailer does not really have what you want to listen to and if they do , its hooked up in such a way that you could never triangulate performance. In home auditions may exist but - even those are limited and there is talk of paying for those as you go as well.
Assembling a audio system is a systematic process of synergy . You're not buying a fridge or even a Honda Civic that everyone is the same that comes off the line and you use in absence of ancillary equipment. With an audio "system" you have your room, your tastes, your cables and your remaining equipment when you make a purchase. Dealer's experience IMO is variable, could be limited and probably is biased.
If you educate yourself enough and immerse yourself with the right crowd you will often know more about the product you want to buy than the dealer.
In order to make judgements on equipment you have to go beyond the magazines and the dealer showrooms. Most of the time in this hobby you have to try- buy and sell. The traditional channel makes this practice possible but not very affordable. Once you are around a bit you figure out how to approach this.
Everyone deserves to make a living and get paid for what they do, however, what they know, what they really have may not be enough for me to pay full retail.
How many here have a channel that bypasses the real brick and mortar experience to get what you want?
The real retail model is flawed in this hobby. Most of the time the retailer does not really have what you want to listen to and if they do , its hooked up in such a way that you could never triangulate performance. In home auditions may exist but - even those are limited and there is talk of paying for those as you go as well.
Assembling a audio system is a systematic process of synergy . You're not buying a fridge or even a Honda Civic that everyone is the same that comes off the line and you use in absence of ancillary equipment. With an audio "system" you have your room, your tastes, your cables and your remaining equipment when you make a purchase. Dealer's experience IMO is variable, could be limited and probably is biased.
If you educate yourself enough and immerse yourself with the right crowd you will often know more about the product you want to buy than the dealer.
In order to make judgements on equipment you have to go beyond the magazines and the dealer showrooms. Most of the time in this hobby you have to try- buy and sell. The traditional channel makes this practice possible but not very affordable. Once you are around a bit you figure out how to approach this.
Everyone deserves to make a living and get paid for what they do, however, what they know, what they really have may not be enough for me to pay full retail.
How many here have a channel that bypasses the real brick and mortar experience to get what you want?
Republicoftexas69
Well-Known Member
Yet to end up with a boat anchor but I also do my research and like what I like.Most high-end products are so ridiculously overpriced these days, that slashing the price by 50% just brings things down to a more realistic level. The prices reflect the high discount you should be getting when you buy new !
Great post.
My last purchase from a brick and mortar store was a few years ago. I got both the Octave amp (6 years ago) and preamp (5 years ago) from them after extensive auditions at home and am still fully satisfied. Yet while I also got my still beloved JL Audio subwoofers from them, to your point I already knew more about these from a friend than they could convey.
Since then everything was direct:
ZenWave power and signal cables (from WBF member DaveC), all after extensive home audition. All to full satisfaction. Also purchased a 6-way Furutech power distributor from him an authorized dealer, but not brick-and-mortar dealer.
Schiit Yggdrasil DAC, based on reviews and 15-day refund -- ok, that was 7 years ago. But newer upgrades to the DAC after auditioning friend's versions. As good or better than other DACs multiple the price; Big-shot DACs in general are overpriced. No reason to buy the super most expensive ones unless you want SOTA. The best system I have heard also featured an only $2,700 DAC:
Jim's Powerful Sound
www.whatsbestforum.com
Continuing:
Mutec reclocker, based on industry reputation and reviews, very happy with it. Only purchase not direct from manufacturer (next the Furutech power distributor), but through Sweetwater, who are not a brick-and-mortar dealer either.
PranaFidelity Dhyana speakers, based on fantastic sound at show (T.H.E. Show 2023) where I could intensely audition over one and a half days, critically going through all my playlist. Direct purchase from manufacturer (who exhibited at the show himself).
ASC Isothermal TubeTraps, upgrade from my regular TubeTraps based on web info and phone call/emails to factory. Also ASC SoundPlanks, based on hearing in friend's system and web info. Direct purchase from manufacturer.
So yeah, not much need to go through a brick-and-mortar dealer anymore on my side. As long as for the riskier items you get in-home audition and/or refund policy you're good without them.
Unless of course you want big-brand items that are heavy and bulky, such as speakers.
I do, and it made all the difference. After years in the hobby, I heard what I want and found the right guy to provide it and teach me about good set up.
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Most high-end products are so ridiculously overpriced these days, that slashing the price by 50% just brings things down to a more realistic level. The prices reflect the high discount you should be getting when you buy new !
I used to own Wilson though now have a changed direction. Wilson's re-purchase program and re-sale is near brilliant. It gets people to trade-in their speakers and makes it very very ease to move the customer to a new model -- it is compelling to those who want to upgrade. They won't take junk on the trade-in and the re-sale offerings are often like new -- they're not boat anchors. Wilson, like them or not, has always had good resale value.
If you want to find compelling value, look at the used market.
To paraphrase Warren Buffett “I’d rather pay a fair price for a great piece of gear than a great price for a fair piece of gear”. YMMV
For my two major analogue sources, I have a top notch tech for each - for my turntable/cartridge Sterling Trayle does my setups, for my tape recorders - Krieg Wunderlich does the work. Neither is a dealer. Fortunate to have them not too far away from me in the SF Bay Area.
Larry
Larry
Most high-end products are so ridiculously overpriced these days, that slashing the price by 50% just brings things down to a more realistic level. The prices reflect the high discount you should be getting when you buy new !
What do you consider that prospective customers should really be paying for Karmeli’s latest record player then Milan ?
Here in the UK, other than for esoteric or bespoke products, there is little if any discounting. If you're buying a pair of XVX there will be a negotiation between the distributor, dealer and customer. Ex-demo prices of dealer stock are generally -20%. The same goes for open box returns. If they want to clear stock which will only shift at a deeper discount, they appear to do it anonymously through certain well respected used goods dealers.
As @Republicoftexas69 said, dealers were a good service proposition can prosper and the UK dealer market seems pretty good. It's not like the 1980s when there was a hi-fi dealer on every street Corner, but, if anything, the number of dealers is increasing.
Also bear in mind that in the UK and EU there is legislation deriving from the EU's Commercial Agency Directive. In the US if a manufacturer wants to start selling direct exclusively, they can simply tell the dealers that they will no longer be supplying them stock. In the UK and EU and authorised dealer is considered to have built-up valuable business goodwill for the manufacturer and if the manufacturer wants to cease supply and sell direct they have to buy out the dealer for the value of the goodwill.
Also in the UK and EU, we have statutory 2-year manufacturer warranties. So if you buy a product direct from Asia or the USA you get whatever limited warranty they offer and the hassle of shipping around the world if there's a problem. If you buy from a dealer, it doesn't matter where it comes from, you have statutory protection. So cheaper prices from an international dealer or direct selling manufacturer are not equivalent to domestic dealer prices because of the lack of consumer protection.
As @Republicoftexas69 said, dealers were a good service proposition can prosper and the UK dealer market seems pretty good. It's not like the 1980s when there was a hi-fi dealer on every street Corner, but, if anything, the number of dealers is increasing.
Also bear in mind that in the UK and EU there is legislation deriving from the EU's Commercial Agency Directive. In the US if a manufacturer wants to start selling direct exclusively, they can simply tell the dealers that they will no longer be supplying them stock. In the UK and EU and authorised dealer is considered to have built-up valuable business goodwill for the manufacturer and if the manufacturer wants to cease supply and sell direct they have to buy out the dealer for the value of the goodwill.
Also in the UK and EU, we have statutory 2-year manufacturer warranties. So if you buy a product direct from Asia or the USA you get whatever limited warranty they offer and the hassle of shipping around the world if there's a problem. If you buy from a dealer, it doesn't matter where it comes from, you have statutory protection. So cheaper prices from an international dealer or direct selling manufacturer are not equivalent to domestic dealer prices because of the lack of consumer protection.
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