Do Dealers Who Deeply Discount Gear Hurt the Industry?

There just don't seem to be that many buyers around. I was offered a PS Audio BHK250 and BHK pre-amp combo for £8,000, a little over half price. The BHK pre is a current model and these are fine units, but I don't have the space. The dealer said he'd had them in stock since January.

On the other hand, I saw a Holo May L2 DAC on eBay after speaking to the European distributor. I had a trip planned to Amsterdam to have a listen and perhaps buy one. I called the seller, who was nearby. He told me that in three hours he already had four people contact him and were going to visit him over the next couple of days. I asked him what he was doing that afternoon, arranged to pick him up at 4 pm, had a home demo and bought it. It was just over two years old, out of warranty and only about 30% discount from new price. The seller was a friend of Cameron Oatley (Goldensound) and they jointly bought two of these DACs from Wildism in Hong Kong in 2021. There was no way to get a home demo of a new unit as there is only one European distributor, near Amsterdam.

Holo May have only got three dealers globally and due to their extreme popularity I doubt they have ever discounted anything from Holo Audio. Same withEverSolo.

I suspect whatever discounting goes on is primarily a matter of supply and demand and often dealers making a living and keeping their customers happy.
Those Holo products are a lot cheaper than Gryphon, that is maybe a reason, no 50% dealer markups on prices. More potential customers at a lower price range.
 
"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." So, you are buying insurance embedded in the product price.
So many rules and regulations.... helps me understand why the England and EU stock markets perform so poorly. Invest instead in the SP500 you don't need no stinkin' discounts.
It’s really simple. In the EU and the UK, there is a two year manufacturers warranty by law. This has been the case for many years and anyone with half a brain knows it.

If you buy additional warranty cover you know it’s only needed for after two years. So, for example, lots of people buy AppleCare because it includes accidental damage which is not included in the statutory warranty.

The responsibility for the statutory warranty lies with the manufacturer, so you don’t have to worry if the dealer goes out of business. For imported products, the responsibility lies with the distributor.

We also in the UK have The Consumer Credit Act. This statute celebrates its 50th anniversary this year, although it was updated in 2006. This provides consumers with a range of protections, in particular in relation to credit finance agreements. It includes “fit for purpose”, “quality“ and “description“ clauses. So if a product doesn’t work, doesn’t do what it’s advertised to do or doesn’t look like the product in the picture, you can just send it back and get a full refund.

Recently, I bought a tonearm and the nice looking titanium arm lift had been replaced with a nasty plastic black thing. I returned it and said I wanted one that looked like that advertised, so they sent me one with the titanium lift. It turned out that the arm lift had been changed because it didn’t work properly so I sent it back again and got a full refund. That was all done under the protection of The Consumer Credit Act. The Consumer Credit Act is quite complicated, but if you are unhappy with a product there are many organisations who will give you free advice, the largest of which is actually funded by government.

These laws are very popular because they work. Back in the 1990s I remember that the U.K.’s largest electrical retailer (my cousin was the CFO) made more profit selling insurance and warranties than they did on selling the TVs and hi-fi systems themselves.
 
Those Holo products are a lot cheaper than Gryphon, that is maybe a reason, no 50% dealer markups on prices. More potential customers at a lower price range.
To some extent, but the Holo May DAC is more expensive than the PS Audio BHK pre-amp that has sat unsold for 6 months.
 
It’s really simple. In the EU and the UK, there is a two year manufacturers warranty by law. This has been the case for many years and anyone with half a brain knows it.

If you buy additional warranty cover you know it’s only needed for after two years. So, for example, lots of people buy AppleCare because it includes accidental damage which is not included in the statutory warranty.

The responsibility for the statutory warranty lies with the manufacturer, so you don’t have to worry if the dealer goes out of business. For imported products, the responsibility lies with the distributor.

We also in the UK have The Consumer Credit Act. This statute celebrates its 50th anniversary this year, although it was updated in 2006. This provides consumers with a range of protections, in particular in relation to credit finance agreements. It includes “fit for purpose”, “quality“ and “description“ clauses. So if a product doesn’t work, doesn’t do what it’s advertised to do or doesn’t look like the product in the picture, you can just send it back and get a full refund.

Recently, I bought a tonearm and the nice looking titanium arm lift had been replaced with a nasty plastic black thing. I returned it and said I wanted one that looked like that advertised, so they sent me one with the titanium lift. It turned out that the arm lift had been changed because it didn’t work properly so I sent it back again and got a full refund. That was all done under the protection of The Consumer Credit Act. The Consumer Credit Act is quite complicated, but if you are unhappy with a product there are many organisations who will give you free advice, the largest of which is actually funded by government.

These laws are very popular because they work. Back in the 1990s I remember that the U.K.’s largest electrical retailer (my cousin was the CFO) made more profit selling insurance and warranties than they did on selling the TVs and hi-fi systems themselves.

I'm not taking sides on this issue even though I have my own personal feelings.

His point was that these laws and warranties cost you money whether you want them or not - whether you use them or not. They are not "free" like so many people (I'm not saying you do) ignorantly think.

The companies pay ZERO percent of the added costs. Instead they simply add in those extra business costs in the price you pay upfront.

Just like when taxes are added on companies they simply raise their prices and pass that new cost on to the consumer.

Again - I am NOT talking sides. Just helping to illustrate his point.
 
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On the other hand, I saw a Holo May L2 DAC on eBay after speaking to the European distributor. I had a trip planned to Amsterdam to have a listen and perhaps buy one. I called the seller, who was nearby. He told me that in three hours he already had four people contact him and were going to visit him over the next couple of days. I asked him what he was doing that afternoon, arranged to pick him up at 4 pm, had a home demo and bought it. It was just over two years old, out of warranty and only about 30% discount from new price. The seller was a friend of Cameron Oatley (Goldensound) and they jointly bought two of these DACs from Wildism in Hong Kong in 2021. There was no way to get a home demo of a new unit as there is only one European distributor, near Amsterdam.

Holo May have only got three dealers globally and due to their extreme popularity I doubt they have ever discounted anything from Holo Audio. Same withEverSolo.
There is another thread that asks us to break down how many of your components come from what country. I was surprised that about 60% of my components are from the USA (where I am). I realised that this is because the pricing of local products is much lower than say a "Euopean tax" of an import. For me, the value of USA products are much higher than imported products.

I rarely buy at retail, and the only major component I have bought at retail currently in my system is the Holo Audio May KTE which I purchased at Kitsune Audio the USA dealer. I bought it in the first 6 months of the release and any on the used market were only about $200 less than the $4,800 retail price. Today the May and the Serene from Holo are rarely discounted more than 20% on the used market, they hold their value. I think this is because they represent extreme value at their full retail price.
 
I'm not taking sides on this issue even though I have my own personal feelings.

His point was that these laws and warranties cost you money whether you want them or not - whether you use them or not. They are not "free" like so many people (I'm not saying you do) ignorantly think.

The companies pay ZERO percent of the added costs. Instead they simply add in those extra business costs in the price you pay upfront.

Just like when taxes are added on companies they simply raise their prices and pass that new cost on to the consumer.

Again - I am NOT talking sides. Just helping to illustrate his point.
I fully get what you're saying. However, there is no extra cost having a law that requires a manufacturer or distributor to be truthful when they sell a product.

It's called Consumer Protection and it requires manufacturers and distributors to operate in a way that customers would expect. Here we don't consider it an additional cost, we consider it what all good manufacturers should be doing as a matter of course and it is therefore a normal cost of operations.

There is nothing stopping you importing a product from an unregulated market with no come-back or from some random person on the internet.

Moreover, under the Consumer Credit Act, for most items (some are excluded, such as bespoke made to order, etc.) you can return for any reason within 14 days.

It leads to a state of mind that products should not fail during their expected lifetime. I bought Gryphon, a Scandinavian business. Their attitude is generally that if something fails due to a fault, they are honour-bound to repair it irrespective of any warranty issues. I had this with Primare some years ago. I had an amplifier 8 years old, it failed, I called them, they collected, repaired and returned it and charged me nothing.
 
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I fully get what you're saying. However, there is no extra cost having a law that requires a manufacturer or distributor to be truthful when they sell a product.

It's called Consumer Protection and it requires manufacturers and distributors to operate in a way that customers would expect. Here we don't consider it an additional cost, we consider it what all good manufacturers should be doing as a matter of course and it is therefore a normal cost of operations.

There is nothing stopping you importing a product from an unregulated market with no come-back or from some random person on the internet.

Moreover, under the Consumer Credit Act, for most items (some are excluded, such as bespoke made to order, etc.) you can return for any reason within 14 days.

It leads to a state of mind that products should not fail during their expected lifetime. I bought Gryphon, a Scandinavian business. Their attitude is generally that if something fails due to a fault, they are honour-bound to repair it irrespective of any warranty issues. I had this with Primare some years ago. I had an amplifier 8 years old, it failed, I called them, they collected, repaired and returned it and charged me nothing.
You can spout all the talking points you'd like. I worked for multi-nationals and am VERY familiar with the laws there, and saw first hand how we in business made you the consumer pay for it.

Again, I'm not here to argue whether the laws/regulations are right or wrong.

An understanding of basic business economics (and real life experience vs. just theoretical) proves thinking these laws have no financial cost and thinks business absorbs costs and don't pass them along to the consumer is not based in reality.

Remember - when laws give something to someone for free they first need to take it from someone/somewhere else.

You are welcome to like / dislike the law. Just be informed enough to know it's not free.

I know you like to argue over everything on this forum, create arguments where none exists, never let anything go and always need to get in the last word, but I am not arguing with you about the law. Just explaining nothing in life is free.

It's very simple.
 
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There is another thread that asks us to break down how many of your components come from what country. I was surprised that about 60% of my components are from the USA (where I am). I realised that this is because the pricing of local products is much lower than say a "Euopean tax" of an import. For me, the value of USA products are much higher than imported products.

I rarely buy at retail, and the only major component I have bought at retail currently in my system is the Holo Audio May KTE which I purchased at Kitsune Audio the USA dealer. I bought it in the first 6 months of the release and any on the used market were only about $200 less than the $4,800 retail price. Today the May and the Serene from Holo are rarely discounted more than 20% on the used market, they hold their value. I think this is because they represent extreme value at their full retail price.
In Europe we have sales tax that varies by country, but is mostly between 17% and 27%. In the UK it is 20%. If you're selling to consumers who cannot claim back VAT/sales tax, you have to state the price including VAT. If you buy from a UK business and import into the USA, they will exclude the VAT and you will pay whatever import duties and sales tax that apply in the USA.

I think USA prices are stated locally excluding sales tax. Is that correct? Here all consumer products should be priced inclusive of 20% VAT. I have seen some people advertise consumer products excluding VAT to make them look cheaper. Network Acoustics do that, they really shouldn't. If you export a lot of consumer products, like Magna Hifi who are the European distributor for Holo Audio, the prices should still be stated including VAT/sales tax.

Magna Hifi do it correctly. They state the price including VAT and in brackets the price excluding VAT for export customers. Cross-border sellers usually give the option of exporting (a) exclusive of VAT or (b) VAT and duty paid. The first way you have to pay the VAT to get the goods through Customs, the second way the item gets through Customs automatically and you get it quicker.

Probably the best value UK product is Cambridge Audio. Designed in the UK, globally shipped from China to international distributors, and under common ownership of the UK's largest hifi retailer. They've been manufacturing in China for 40 years and have got it state of the art. Brilliant distribution process.
 
You can spout all the talking points you'd like. I worked for multi-nationals and am VERY familiar with the laws there, and saw first hand how we in business made you the consumer pay for it.

Again, I'm not here to argue whether the laws/regulations are right or wrong.

An understanding of basic business economics (and real life experience vs. just theoretical) proves thinking these laws have no financial cost and thinks business absorbs costs and don't pass them along to the consumer is not based in reality.

Remember - when laws give something to someone for free they first need to take it from someone/somewhere else.

You are welcome to like / dislike the law. Just be informed enough to know it's not free.

I know you like to argue over everything on this forum, create arguments where none exists, never let anything go and always need to get in the last word, but I am not arguing with you about the law. Just explaining nothing in life is free.

It's very simple.
I've advised thousands of businesses over the last 40 years and have been on the board of two listed companies. Nothing is for free in business.

I fully appreciate that we are far more regulated in the UK and EU than you are in the USA, but it is part of our consumer culture. It likely leads to different business practises and different cost structures. Some of us remember the days before these regulations when you took a real risk buying without a warranty. The warranty business was a real scam, often adding up to 25% on to the retail price, most of which was pure profit.

The main factor in recent years has been the general increase in manufacturing quality and product reliability, in large part thanks to the internet.

Take for example Topping. Some is very good value. Shipped from China. Good luck if you have a problem. Over time people have realised they are very well made and some dealers are starting to carry Topping products. Their No. 1 concern is warranty costs and returns. Sometimes the manufacturer will indemnify the dealers for their warranty costs. This happens in the automobile market.

It's just different, what people are used to. Some people in the UK want the cheaper USA prices and there are businesses that do the 120v to 240v conversion (if needed).

The other massive difference is of course that that the USA is big and the UK/EU is small. So here dealers likely have a greater proportion of customers visit their stores. More relationship building, more opportunity to offer added value service. Less price dependency. Who knows.
 
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I fully get what you're saying. However, there is no extra cost having a law that requires a manufacturer or distributor to be truthful when they sell a product.

It's called Consumer Protection and it requires manufacturers and distributors to operate in a way that customers would expect. Here we don't consider it an additional cost, we consider it what all good manufacturers should be doing as a matter of course and it is therefore a normal cost of operations.

There is nothing stopping you importing a product from an unregulated market with no come-back or from some random person on the internet.

Moreover, under the Consumer Credit Act, for most items (some are excluded, such as bespoke made to order, etc.) you can return for any reason within 14 days.

It leads to a state of mind that products should not fail during their expected lifetime. I bought Gryphon, a Scandinavian business. Their attitude is generally that if something fails due to a fault, they are honour-bound to repair it irrespective of any warranty issues. I had this with Primare some years ago. I had an amplifier 8 years old, it failed, I called them, they collected, repaired and returned it and charged me nothing.
It actually has a cost and that is the cost of underwriting the additional warranty. There is always a cost to the consumer. You are naïve to think otherwise.
 
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Gentlemen, thank you for your replies - Great Stuff!

What percentage of manufacturers truly care about their stuff being deeply discounted? Those that care, probably eliminated the offending dealers. The rest?
 
Those manufacturers with dealer networks sell their products to the dealers. The dealers are their customers, not the retail buyer
That may be the case, but if the dealer can only make the sale worthwhile with a price adjustment from the manufacturer or distributor, then a negotiation will take place. This can be necessary to sell high value items that are usually made to order.

On stock items there is no point in making regular deals and eroding the profit margin. There are ways of keeping customers happy with deals without regularly discounting new stock items. The easiest way to give a 20% discount is simply to open the box.
 
Those manufacturers with dealer networks sell their products to the dealers. The dealers are their customers, not the retail buyer
Unfortunately, a myopic, short sided business model in my view. They should be a team and joined at the hip. If implemented properly, this approach can foster a mutually beneficial environment / partnership and also provide long term benefits to the consumer. Brand loyalty and subsequent success is essentially a three way street.
 
Gentlemen, thank you for your replies - Great Stuff!

What percentage of manufacturers truly care about their stuff being deeply discounted? Those that care, probably eliminated the offending dealers. The rest?
Those manufacturers with dealer networks sell their products to the dealers. The dealers are their customers, not the retail buyer

Some smaller manufacturers may sell to dealers. If a brand is sucessful, especially if international, it is more likely sold to a regional or country-based distributor. Distributors are the enforcers.
 
What's really hurting the industry is a lack of knowledge by the sales people and management of the few existing brick and mortar institutions that are still around. For example I contacted a store that was a three hour drive away because they showed a pair Klipsch Jubilees on their website and they did have them available for demo.(!) The Jubilees by its' size alone have a limited following plus they retail for over 20K so you would think if someone was willing to call make and make an appointment for a listen and then agree to arrive an hour before the store opening (that meant I was on the road at 6AM) for an uninterrupted demo you would present them with the best you had. All I can say is setting them up way to close together with Legacy Audio IV2 Ultras (ICE amps) and a Bluesound node as the DAC did 20K speakers no favors. I'm a horn guy but I have no better idea what the Jubilees sound like now than I did before the demo. By reputation alone I should have been blown away and looking for the cash and a moving company that could heft them up the stairs instead I'm writing about my frustrations on a forum listening to my current system going hmmm this isn't all that bad. So in my opinion it's not discounting that's hurting the industry but the reality of what can really be accomplished in the harsh environment of retail sales.
 
What's really hurting the industry is a lack of knowledge by the sales people and management of the few existing brick and mortar institutions that are still around. For example I contacted a store that was a three hour drive away because they showed a pair Klipsch Jubilees on their website and they did have them available for demo.(!) The Jubilees by its' size alone have a limited following plus they retail for over 20K so you would think if someone was willing to call make and make an appointment for a listen and then agree to arrive an hour before the store opening (that meant I was on the road at 6AM) for an uninterrupted demo you would present them with the best you had. All I can say is setting them up way to close together with Legacy Audio IV2 Ultras (ICE amps) and a Bluesound node as the DAC did 20K speakers no favors. I'm a horn guy but I have no better idea what the Jubilees sound like now than I did before the demo. By reputation alone I should have been blown away and looking for the cash and a moving company that could heft them up the stairs instead I'm writing about my frustrations on a forum listening to my current system going hmmm this isn't all that bad. So in my opinion it's not discounting that's hurting the industry but the reality of what can really be accomplished in the harsh environment of retail sales.

I agree. When that happened there is no perceived value in supporting the local dealer.

I saw a video review of a very expensive amp yesterday and this well known (supposedly high end) dealer with a YouTube channel was shocked - SHOCKED I tell you that this very expensive amp sounded a bit rough out of the box and needed burn in. He "couldn't believe his ears" when after it had time to burn it sounded better and he stated "yeah, maybe it needed burn in".

All I can say is I would NEVER take his advice on anything nor ever buy from him.
 
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