flatpopely
Trade - AudioFlat
Hello ZG
I thought it would be good to put down my thoughts on the buy direct or buy from dealer's debate. I did not put 'dealer v direct' because both have a place.
Background
I have been into hi-fi/music ever since the mid 70s when my interest in music really started and I used to listen to my fathers system. He bought this from Comets. I don't remember this purchase but I do remember him buying a Rotel Cassette deck from them. I distinctly recall that comets had a really large hi-fi section ad the sales person knew his stuff.
I started to assemble my own system and this consisted of a TD150 (bought from a friend), a NAD3020 (bought from the classifieds in a hi-fi mag) and some Diamond MKIs (A Christmas present from the parents). I loved this system and was well and truly hooked into hi-fi. In the early 80s the Sound Organisation moved to York and I used to go in there and ogle at the kit. Although I had no chance of buying anything Hamish et al were always friendly. I had one aim in life at that point, an LP12! At the age of 18 I bought an LP12 from the SO in York.
Time moved on and I eventually bought an ONIX OA21 from the SO and some Linn Helix. I was a constant visitor and was always dealt with politely.
After this nearly all of my system was bought second hand off eBay or friends. The only new purchases being the Radikal and Cirkus for my LP12 about a year ago.
In my working life I now run an Audio Visual distribution company, specialising in Audio and Video conferencing and Digital Signage. I have always worked in a Manufacturer, Distributor, Dealer, end user type of industry model. I have also recently started a new venture that will sell hi-fi and we have chosen the dealer model for sales.
Introduction
All of the comments and statements I make must be taken in the context of hi-fi products. You must also remember that these are my views.
Many people view dealers as nothing but a percentage that is put onto a product making it more expensive than it should be whilst other value their role. Likewise there are those who will only buy direct to get the best price and those who would never buy something without listening and having some tactile experience.
I will attempt below to show the pros and cons of the dealer and direct model.
Dealer
When I mean dealer I mean someone who buys from the manufacturer, demo's equipment to an end user and (hopefully) sell the item to the same end user.
One thing we have to right straight from the beginning is that dealers exist to make money. They are running a business and they need to make money. That money can only be made one way, by profit on selling equipment, their margin. Depending on the manufacturer this margin can be anything from 30% to 50%. So if they buy something for £600 it's going to, usually retail, for about £1000. Now that sounds like a lot but what you must remember is that out of that they have to:-
Pay wages
Pay for the running of the premises (rates, electricity etc)
Buy demo equipment
Make a profit to re-invest in the business
I for one like the experience of buying from a dealer. There is something very satisfying about spending a couple of hours listening to kit with someone who has the same interest as you, albeit with an agenda to sell to you. I will however be the first to admit that I only do this for expensive items. Things like cables, stands (not a FRAIM!!!) etc. I am confident enough to buy off the internet but remember, not everyone is confident enough at this and dealers for some people represent an end to end solution to buying hi-fi.
So to sum up:-
Pro:
Comfortable environment to listen to a range of equipment
Provide advice
Offer credit
Cons:
More expensive than buying direct (but most kit they sell can't be bought direct anyway)
May persuade you to buy something that makes them more money
Direct
The direct sales model has only really come of age with the internet. People can now see and read reviews of products and then make a buying decision without leaving the comfort of their PC. Now for most non hi fi audio like iPod, cables, stands etc. this is the model I use. But I only do this because I know the sound I like and take advice from the people whose ears I trust. Plus I only buy from reputable places. I would never (again) do this with a piece of hi-fi; the risk is too great IMHO. The only hi-fi piece I have ever bought over the internet is a valve headphone amp, it's been sold…….. The thing is that with the internet if you search long enough there is always the viewpoint you 'want' to find. i.e. I like the look of this CD player I wonder what its like. You search and find some bad reviews, you search some more and find a review that says what you want to hear; you buy it, then it arrives and it doesn't sound like you expected.
When buying amps, cd players, etc I think that unless you know the house sound then it's a massive risk to invest £300+ on something that you have not heard before no matter how reputable the vendor. I think Linn are doing themselves no favours at all by allowing people to buy the DS model off the page.
Pro:
Cheaper than buying from a dealer, though not always the equipment you want.
No hassle sales cycle.
Cons:
You might not like what you buy.
Returns might not be as easy as you think (China et al).
Manufacturers
Whenever a manufacturer starts up they have a decision to make. Do they sell direct and make more profit at the start with a faster start up time, or do they take the time to promote the product to the dealer. I have been in this position and it's not an easy one to make. It can be made easier depending on what you make. In my case to get un-official OK from the factory it was necessary to sell via dealers. Plus the product is not plug_and_play and a certain amount of expertise required. If you sell direct then your reputation rests on the capability of the buyer to install the product correctly. If they can't set it up 100% you can be sure that your products will be rubbished on the internet with no chance of you being able to rectify the matter.
But moving forward and as the business increases is when dealers come into their own. Dealing with 10 dealers is a lot easier than dealing with 1000+ customers. Plus you minimise your payment and invoicing issues not to mention customer support. In the beginning selling 5 items a week is easy to deal with but if the business grows you find yourself having to employ people and all of a sudden that margin you set based on selling direct is not enough, you have to put your prices up or sell via dealers.
Conclusion
Times have changed since the glory days of the 70s, 80s and mid 90s. There are far fewer dealers around because quality music replay is now accessible via supermarkets or the internet. The ones that have survived have changed and stock a wider range of products. I think that the number of dealers is now in tune with the number of customers willing to buy hi-fi from them. I don't think it will decrease because the customer base is there and willing to pay. We have a skewed view when it comes to hi-fi forums, we think that the whole world thinks like us, well guess what, they don't.
Dealers exist and perform a useful role for many, many people. That function has to be paid for. It's not 'slurping' its not 'shark selling' its just commerce, that's a fact. They will also continue to survive because many manufacturers won't sell direct.
Direct sales will of course continue to grow but not at the expense of the dealers. There is a groundswell of companies who sell direct to their customers. I strongly believe that for hi-fi products this is not a sustainable model because if the company wishes to grow the direct sales method just does not work for hi-fi. For mini systems and in ear headphones et al. its 100% perfect, for £££ (£) hi-fi its not. Even direct sales people have to make money and unless they set the margin high enough sales/cash flow will eventually be a bar to growing the company.
Executive summary
Buy hi-fi from a dealer
Buy cables from the interweb
Andrew.
I thought it would be good to put down my thoughts on the buy direct or buy from dealer's debate. I did not put 'dealer v direct' because both have a place.
Background
I have been into hi-fi/music ever since the mid 70s when my interest in music really started and I used to listen to my fathers system. He bought this from Comets. I don't remember this purchase but I do remember him buying a Rotel Cassette deck from them. I distinctly recall that comets had a really large hi-fi section ad the sales person knew his stuff.
I started to assemble my own system and this consisted of a TD150 (bought from a friend), a NAD3020 (bought from the classifieds in a hi-fi mag) and some Diamond MKIs (A Christmas present from the parents). I loved this system and was well and truly hooked into hi-fi. In the early 80s the Sound Organisation moved to York and I used to go in there and ogle at the kit. Although I had no chance of buying anything Hamish et al were always friendly. I had one aim in life at that point, an LP12! At the age of 18 I bought an LP12 from the SO in York.
Time moved on and I eventually bought an ONIX OA21 from the SO and some Linn Helix. I was a constant visitor and was always dealt with politely.
After this nearly all of my system was bought second hand off eBay or friends. The only new purchases being the Radikal and Cirkus for my LP12 about a year ago.
In my working life I now run an Audio Visual distribution company, specialising in Audio and Video conferencing and Digital Signage. I have always worked in a Manufacturer, Distributor, Dealer, end user type of industry model. I have also recently started a new venture that will sell hi-fi and we have chosen the dealer model for sales.
Introduction
All of the comments and statements I make must be taken in the context of hi-fi products. You must also remember that these are my views.
Many people view dealers as nothing but a percentage that is put onto a product making it more expensive than it should be whilst other value their role. Likewise there are those who will only buy direct to get the best price and those who would never buy something without listening and having some tactile experience.
I will attempt below to show the pros and cons of the dealer and direct model.
Dealer
When I mean dealer I mean someone who buys from the manufacturer, demo's equipment to an end user and (hopefully) sell the item to the same end user.
One thing we have to right straight from the beginning is that dealers exist to make money. They are running a business and they need to make money. That money can only be made one way, by profit on selling equipment, their margin. Depending on the manufacturer this margin can be anything from 30% to 50%. So if they buy something for £600 it's going to, usually retail, for about £1000. Now that sounds like a lot but what you must remember is that out of that they have to:-
Pay wages
Pay for the running of the premises (rates, electricity etc)
Buy demo equipment
Make a profit to re-invest in the business
I for one like the experience of buying from a dealer. There is something very satisfying about spending a couple of hours listening to kit with someone who has the same interest as you, albeit with an agenda to sell to you. I will however be the first to admit that I only do this for expensive items. Things like cables, stands (not a FRAIM!!!) etc. I am confident enough to buy off the internet but remember, not everyone is confident enough at this and dealers for some people represent an end to end solution to buying hi-fi.
So to sum up:-
Pro:
Comfortable environment to listen to a range of equipment
Provide advice
Offer credit
Cons:
More expensive than buying direct (but most kit they sell can't be bought direct anyway)
May persuade you to buy something that makes them more money
Direct
The direct sales model has only really come of age with the internet. People can now see and read reviews of products and then make a buying decision without leaving the comfort of their PC. Now for most non hi fi audio like iPod, cables, stands etc. this is the model I use. But I only do this because I know the sound I like and take advice from the people whose ears I trust. Plus I only buy from reputable places. I would never (again) do this with a piece of hi-fi; the risk is too great IMHO. The only hi-fi piece I have ever bought over the internet is a valve headphone amp, it's been sold…….. The thing is that with the internet if you search long enough there is always the viewpoint you 'want' to find. i.e. I like the look of this CD player I wonder what its like. You search and find some bad reviews, you search some more and find a review that says what you want to hear; you buy it, then it arrives and it doesn't sound like you expected.
When buying amps, cd players, etc I think that unless you know the house sound then it's a massive risk to invest £300+ on something that you have not heard before no matter how reputable the vendor. I think Linn are doing themselves no favours at all by allowing people to buy the DS model off the page.
Pro:
Cheaper than buying from a dealer, though not always the equipment you want.
No hassle sales cycle.
Cons:
You might not like what you buy.
Returns might not be as easy as you think (China et al).
Manufacturers
Whenever a manufacturer starts up they have a decision to make. Do they sell direct and make more profit at the start with a faster start up time, or do they take the time to promote the product to the dealer. I have been in this position and it's not an easy one to make. It can be made easier depending on what you make. In my case to get un-official OK from the factory it was necessary to sell via dealers. Plus the product is not plug_and_play and a certain amount of expertise required. If you sell direct then your reputation rests on the capability of the buyer to install the product correctly. If they can't set it up 100% you can be sure that your products will be rubbished on the internet with no chance of you being able to rectify the matter.
But moving forward and as the business increases is when dealers come into their own. Dealing with 10 dealers is a lot easier than dealing with 1000+ customers. Plus you minimise your payment and invoicing issues not to mention customer support. In the beginning selling 5 items a week is easy to deal with but if the business grows you find yourself having to employ people and all of a sudden that margin you set based on selling direct is not enough, you have to put your prices up or sell via dealers.
Conclusion
Times have changed since the glory days of the 70s, 80s and mid 90s. There are far fewer dealers around because quality music replay is now accessible via supermarkets or the internet. The ones that have survived have changed and stock a wider range of products. I think that the number of dealers is now in tune with the number of customers willing to buy hi-fi from them. I don't think it will decrease because the customer base is there and willing to pay. We have a skewed view when it comes to hi-fi forums, we think that the whole world thinks like us, well guess what, they don't.
Dealers exist and perform a useful role for many, many people. That function has to be paid for. It's not 'slurping' its not 'shark selling' its just commerce, that's a fact. They will also continue to survive because many manufacturers won't sell direct.
Direct sales will of course continue to grow but not at the expense of the dealers. There is a groundswell of companies who sell direct to their customers. I strongly believe that for hi-fi products this is not a sustainable model because if the company wishes to grow the direct sales method just does not work for hi-fi. For mini systems and in ear headphones et al. its 100% perfect, for £££ (£) hi-fi its not. Even direct sales people have to make money and unless they set the margin high enough sales/cash flow will eventually be a bar to growing the company.
Executive summary
Buy hi-fi from a dealer
Buy cables from the interweb
Andrew.
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