Business Ethics in the Audio Industry


I wonder if anyone else has run into problems with audio manufacturer/retailers that raise ethical (if not legal) issues. In mid-April, I ordered a Schiit Freya on Schiit's website and authorized credit card payment. The website said that shipment would be delayed until April 30th. After that, I received another email message from Schiit saying shipment would be delayed until May 15. I made one further inquiry after that, and Schiit responded that I would have to wait a little longer. Then, just yesterday, I received a message from Schiit saying that the Freya had been replaced by two new models, and I could choose between them. Either way, I'd have to pay $100 to $200 more than for the Freya I had ordered in mid-April.

Before yesterday, there was no sign on Schiit's website or anywhere else that the Freya was being discontinued in favor of the new model (with two options). Nor did any of the email messages I received from Schiit indicate that the Freya was being discontinued and that I would have to pay more than previously agreed for what I had ordered. The messages only ever referred to shipping delays.

Do you consider this a fair business practice on the part of Schiit? I feel like it's a bait-and-switch, which they tried to justify by noting that my credit card charge was reimbursed three days after the initial order, as per company policy. But I assumed that was only because of the delay in shipping, and that the card would be charged once shipping occurred. I don't know whether this rises to fraudulent misrepresentation, but it certainly seems to amount to a dishonest business practice. I'd be interested to hear what others think about this.
dancole
I don't think it's a bait and switch that you're being subjected to. Just bad timing. The fact that your card was reimbursed is a good thing.

Announcements of new product happens when it happens, and not a moment sooner. With all that goes on in a small company, one can overlook an order and leave it sitting as there are far bigger fish to fry when a new product is going through the final phases before being sold.

One scenario could have been to have two different lines running at the same time until it came down to exhausting existing stock or upgrading everything all at once.

Your card was reimbursed and they've given you the option of buying an even better version for a bit more. There's not much else they can do.

All the best,
Nonoise
Cancel your order if this co is so bad buy something else from a good company.Keep on trucking!!
dancole
Do you consider this a fair business practice on the part of Schiit? I feel like it’s a bait-and-switch ...
No, I do not consider this a fair practice and it has more than a whiff of "bait-and-switch," even if it was inadvertent. If the company really wanted to do the right thing by you, it would have honored the price it quoted you.

I’d walk away from any business that works this way, even though the behavior really doesn’t rise to the level of fraud, imo.

I understand what you are saying about the delay and all.  Not a Schitt fanboy but do think they are a honest company.

Truthfully, if it was me I would be glad it all happened as it did and would order the new freya + for the extra money.  But that's just the way I look at it, no reason you should agree.
I believe they actually acted more ethically than is typical. Let me take the conversation a step further to explain why. First of all, they don't owe you anything upfront and they refunded your money promptly. That could have been the end of it. But what if they had shipped you the original Freya on the day you ordered it on or about April 15 and then announced on May 28 a new and upgraded version. How would you feel today? Would you have felt like your new preamp came with it the implicit promise of being a current model in their product line for a period of time? Who decides that?

While I have no idea whatsoever your original desires for a preamp spec wise but let's say, for the sake of argument, that you only wanted the Freya for the balanced ins/outs and for the jfet and passive stages and did not care at all about the tube stage. Would you have been torqued over the fact that the new Freya S would have saved you $100? In my opinion, they did you a huge favor and they actually saved you money in the event you would have chosen to upgrade to the new Freya + model and left you to sell your 45 day old Freya. 

I don't know you and you don't know me so I'm not trying to impose my beliefs of value and fairness on you but you may be over-reacting ever so slightly. People throw around the term "unethical" when that can really harm someone. Think about it for a moment. They chose NOT to take your money when they sure could have and shipped you a product that was about to be discontinued/replaced in the lineup. They did so promptly and without prompting or you having to ask. They couldn't very well tell you why because, short of an enforceable non-disclosure agreement, your silence couldn't be guaranteed. It was a $750ish product that is now either $600 or $900. You get to choose how you want to go forward...where is the harm to you?
a couple of scenarios.

1) If they had a Freya in stock in April they would have sold it to you. Done.  In May they released the Freya Mk2 . That would have pissed me off but they have no obligation to tell anyone that although it would be a nice thing to do.
So now in a matter of 30 days, my original Freya would have depreciated a good 40% with the release of the Mk2

2) Schitt wasn't quite sure in April that the MK2 would be released in May so yes, they strung you along as they probably would need to order parts for yours and other orders in case the release of the Mk2 was delayed

Could it be that Schitt felt that they were  not only working in their own best interest but also the consumers?






They should have given you the new model at the same price of the discontinued one! A small price for them for the inconvenience they caused you!
I disagree completely that they owed anyone a new one at the old price.

If that were the case what's good must be good for both parties.  If the price had dropped rather than increased then should the buyer have to pay the old price to get the new model? Even though the new one was less money?

Besides...it only went up about $100 bucks when you consider the upgraded Tung Sol tubes are now included in the base price rather than an upcharge as in the past. Man, maybe I don't feel entitled enough!
+1 @yogiboy . 
I had the same situation with one of our favourite vendors on Audiogon. I ordered an item, then was notified said item was replaced by an upgraded model. I was offered the new item at the original price.
The owner of the shop saved me $250. A real class act.


I agree.
It would have been nice if Schiit offered the new Freya at the original price, seeing as you had already placed the order.
I doubt they would be loosing too much money, but instead gaining greater customer loyalty.
Just think if you posted that they gave you the newer model at the old price, instead of what has happened?....
Bob
They should have upgraded you for free. No brainer. Could be a blessing as I am not a fan of their products and think you can do better.
Well, that's Schitty! 

In all seriousness, no I don't think it's fraud or bait and switch, but they could have been more transparent and didn't handle this particular situation well. 

They gave you information and you had choices at each turn.  The first choice was either wait a little longer or cancel the order.  The second choice was to buy the new model or not. 

Would I have been upset?  Probably.  Did they do something criminal?  No.

At no point were you forced to do anything against your will or taken advantage of in any way.
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I agree with @yogiboy and @lowrider57  It would have been nice of them to give you the new model for the same price and inspired customer loyalty. Nothing they did was wrong but they missed an opportunity to really shine.
I guess I won't be be buying that Schitt any time soon?
I don't find it unethical at all. Actually I see it as quite ethical in the fact they reimbursed your card. A nice business move would have been to offer you the upgraded component at the same price though certainly not obligated to.  If it were me, I would have been extremely happy if they offered myself such a deal and would have been a return customer in the future. Otherwise, I would not have been effected either positively or negatively. Up to you to decide whether to continue to support or not.

Rich
Per your opening post...Let's assume you ordered on Monday, April 15th ("mid April")

Order Date: 4/15

Charge Reversed: 4/19 (spotting you a day..."my credit card charge was reimbursed three days after the initial order, as per company policy")

Schiit communicated "delays in shipment" first 4/30 and then 5/15.

Schiit, on 5/28, notifies you of a NEW replacement model and the NEW pricing for each 'model.'

1. Your charge was reversed, near immediately by business standards.

+1 Schiit.

2. The company communicated with you letting you know of possible delays.

+1 Schiit.

3. The company communicated and gave you the option to place an order for the replacement product.

+1 Schiit.

You:

-10  Post a 'Revenge' Thread.  "run into problems" ... "raise[s] ethical (if not legal) issues" ... "Do you consider this a fair business practice on the part of Schiit?"... "I feel like it's a bait-and-switch" ... " don't know whether this rises to fraudulent misrepresentation, but it certainly seems to amount to a dishonest business practice."

....YES, the Zero after the 1 is intentional.

-1 You want the old version to save $100 while immediately losing street value on it.

-1 You don't want the New version (hopefully, improved and given Schiit's track record, likely so).

-1 You don't understand (nor accept) why a company cannot or does not inform you of future product changes.

-1 You don't want to jump on a USED Unit and save even more (assuming that many will be moving to the newer model and unloading their older units) 

-1 You ordered online and didn't 'like' the online response process

I'd be interested to hear what others think about this.

From what I can tell, if based on one post...your Opening Post...

...Schiit is a standout company!!!
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@helomech,
That should have been the story behind the title of this thread.
Schiit happens. They f-ed me as well. Your bad for not asking in an email
if a new version was due out anytime soon.

When you lose contact with a person to help you with a decision,
you cut out the middleman. That middleman may have been the person 
who would have advised you not to buy at that time.

Live and learn my friend.
Schiit had offered for sale an item they knew was unavailable. 
Schiit strung the OP along with excuses more than once. 

As they had clearly discontinued the old model and had no old stock to sell, what harm to them if they had immediately told the OP that they'd a new model coming.

The issue would not have arose if they had not offered for sale something they knew they wouldn't supply. 
It sounds to me like their inventory management system needs some help, but other than that, no problem. 

Buy their new version, a used piece of Schitt, or something else, and move along instead of getting all spun up over a minor issue.
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I appreciate the varied responses, including those slamming me for posting about the incident. Perhaps it was not worth posting about. Having said that, I believe most customers feel "entitled" to receive advertised items for which they have paid, without being strung along with false promises of mere "shipping" delays. I continue to believe that a seller ought to be straight with a purchaser about circumstances at the time of purchase and up to the point of delivery. Having purchased a good deal of equipment online, I have never had a situation like this one, and I find that the vast majority of sellers - especially dealers that manufacture and sell their own equipment - go above and beyond what is required to provide customer satisfaction. This is the last word I will say on the topic. But Schiit supporters should feel free to continue taking shots at me.
Dear Dan, please don’t take the responses as a personal afront from the Audiogon community. I believe everyone is in the "more the merrier" camp and I hope you remain engaged and post more when you have something you believe needs saying, whether it is the consensus view or not. Agreeing to disagree is not the end of the world and more in our community should renew those vows from time to time.

We can all agree that the absolute best outcome for you would have been for you to receive the new model at the old price. With whom did you speak at Schiit? A personal conversation likely would have yielded fruit...everything I’ve ever read about Schiit leadership leads me to believe they likely would have (and may still if given the opportunity) seen it through your eyes. You then might have posted about how cool Schiit was and everyone would have been applauding all involved.

Upon reflection though, would you really have been happy with the old model at the old price or was it that you wanted the new model at the old price and didn’t ask a decision maker to consider your plight?

I hope you rethink your position and order the Freya + (but you should call them to see if they would review your situation) and get what you wanted for the next phase in your sound system. One thing you will learn is the Audiogon community can be alot like the grandparent you wished your parents wouldn’t leave you alone with. Sure, they let you drink beer at 10 years old and allowed you to watch roller derby but they also were a little too eager with a swat to the backside. Don’t let it get to you and your opinion is just as valid as anyone’s! Your first post is just as important as someone else's 1,000th. All the best.
Wow, this thread.

Schitt does it exactly right.

Morally, ethically business wise they did exactly the right thing.

I’d guess they let a product supply run out..and... as that happens... delay orders for it.

then, when all sales of the older item..are notably in the past, in a set amount of time, introduce the new, with the new price.

If it was otherwise, things would get ugly.

Recently, I bought a $7k bit of manufacturing hardware.

It fails to work as advertised and I have to d a whole whack of work on it at my own expense and it will MAYBE do as advertised.

I waited almost a month for it to arrive.

Just after it arrived, the company announces the availability of a new version that is totally different, and works the way the old one was supposed to. I got junk, new buyers will get a working item. I got burned to the tune of $7k.

~~~~~~~~
Now, what Schiit did, in comparison, is exactly the right thing, and...as stated, done with as perfect a ethical position as humanly possible.

IMO and IME, in any sense of common decent reason...they cannot be faulted for their behaviour.

Never ascribe to malice what can be explained by incompetence.
They obviously do not care about customer service.  They should have called you within 24 hours after placing this order to let you know this product had been discontinued.  You would think they would think they would know everything about their products.  In my opinion, they should have offered you the same price for the new model just out of courtesy for their delayed response.  I probably would have moved on and purchased a comparable product from a different company.
... And the entitlement mentality marches on. 

Frank
I think you complain too much. 
Hey Larry and Mark, I apologize for taking such a scintillating thread off topic, but I see that in your avatars, both of you gents are done up and wearing ties. It looks very cool and you are both to be complimented as usually I can be found in my underwear with a needle in my arm. 

Thanks for elevating the site. It is appreciated.
@dancole  Nothing wrong with your post. Maybe you don't have a lot of experience with direct sales in this crazy  business. Live and learn.
Schiit is a small company run by two partners and they may not be looking at the big picture such as updating their website or keeping track of discontinued models.
You should have been informed, but customer service did the right thing by crediting your account. 

Chalk this up to experience and order the new Freya. Schiit makes a quality product and they offer a trial period.

@jond Has it right. They should have offered you the upgraded unit for the same price. Why? Because, think about the post the OP would have made if Schiit gave him this deal? He would have been letting us all know how awesome Schiit is and we would have all recognized what a cool company they are (at least in theory). I am in sales and I always look for unique opportunities to delight my customers. Because of this, I have a base of very loyal customers. You can delight customers for minimal cost and Schiit should have done this simply for the P.R. Whoever said "entitlement mentality" is off base. This was the cheapest advertising opportunity Schiit would ever find.
Man, my Amazon order of pulled pork jerky better get here on time or I'm gonna post about it.
Viridian:  “usually I can be found in my underwear with a needle in my arm”

Truly shocking!  Anyone on Audiogon should know it is not referred to as a “needle” but rather a “stylus”!
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@falconquest While I agree with you that they missed an opportunity to shine, people are more likely to take the time to write a complaint than praise. Witness the original poster's low post count.  He's a complainer. If he had a good experience he wouldn't have shared it. It's very likely that Schitt  is doing good Schiit on a regular basis and it's going unheralded. 
"It's very likely that Schitt is doing good Schiit on a regular basis and it's going unheralded."

It is as likely that Schiit is doing good on a regular basis as it is that it is not. For now, we have two here who have had bad experiences.

Once upon a time, there was a saying "Customer is hard to get, harder to keep, impossible to get back".

"That meant I had to CHEW.... really annoying."
That comes with age. And poorly-fitting dentures.
Was it Illegal? - definitely not
Was it unethical? -  no
Could they have been more transparent?  Yes, and hopefully they know about this incident and can fix the issues with their customer service process to make sure this type of thing doesn’t happen again. 
Did they miss an opportunity to create a very loyal customer?  - Absolutely!  By giving the customer the new model at the price of the old model, something that is really above and beyond what they have to do, they would have created a very memorable positive experience for the customer. 
If they did nothing wrong, they certainly did nothing right. Delaying shipment of a product they no longer stocked was poor service.
I agree with camb, that's no way to build a reputation for great service.