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Retail Buying - Reality Check

Like all of you at some point in time, I caught the Audio and HT bug. I started out at the usual places - Hi Fi Buys, Best Buys, etc. and moved on to the niche, locally owned hi end audio and HT boutiques. There I met generally more knowledgeable salesmen (no women yet). I also started doing my homework out on the web and came upon great sites like Audiogon and AVS Forum to name a few.

Your knowledge and experience has been invaluable to me. Unfettered by the product lines you have to sell, you provide a far more level playing field of unbiased opinion.

Here's my dilemma: I am a small business owner myself, and I value local market presence and customer relations. I'm even willing to pay a small premium for this intangible. However, when the quotes came back from 3 different retailers in Atlanta ($65 -80k), they were all for MSRP plus tax plus design install and misc. such as clips and straps ($250-$500 worth!)

Now most of the hi end equipment today has "burn in" periods of several to hundreds of hours before peak operating performance is obtained. So, buying new at full MSRP also meant getting inferior performance for the necessary burn times. So no big benefit (except some warranties) to buy new.

By purchasing from sellers on sites like Audiogon, and purchasing nearly new or sometimes new products, I have saved $16,000 plus $1,000 in sales taxes on approximately $50,000 of my quoted MSRP prices. I'm not done yet. I also have the flexibility of buying the exact product line I want, not just what my store has to offer. There is great pressure in the retail setting to go "one stop shopping" at your store of choice.

I understand these stores need to make a profit. However, 50% markups on items that they don't keep in stock and have to special order, seems out of line to me.

Caveat emptor is certainly a key consideration in on-line purchasing, but to date, through careful checking of prior seller transactions, prudent payment techniques and telephone conversations with the seller to allow me to make some kind of character call, I have had nothing but outstanding, as promised transactions.

I hired a HT acoustical designer and a certified installer and I couldn't be happier, except for one thing. I still feel a little guilty about not buying from the guy with the storefront who spent time with me. I just wish they'd recognize where they do and don't add value and charge accordingly.

Anyway thanks guys, for the great education and advice you've provided me.

What say you?
rogocop

Showing 3 responses by flex

flex
292 posts
 
Judit,
You should continue to buy used or internet only, and stick to advice and information from internet forums. This is your choice. The serious contradiction is when you try to use a dealer's knowledge and facilities for auditioning, then go elsewhere to buy cheaper.
As long as you are fine with the downsides of the internet, go for it; just act ethically relative to dealers. I can't blame any dealer for acting contemptuous after you spend time listening and then go into a bidding game. You are listening to a piece of equipment that the dealer had to purchase; it isn't on consignment from the manufacturer. Usually the MSRP is determined by the manufacturer as the fair value of his time and labor, plus sales costs (i.e. dealer costs).
flex
292 posts
 
High end audio is composed primarily of garage size ventures, plus a few handfuls of medium sized companies.

The typical product made by a high end company sells a few hundred units per year. A runaway success is something that sells over a thousand units a year, worldwide.

Lets say the product price is $8000, 400 units are sold, and the manufacturer gets %40 at wholesale. This means the manufacturer gets $1.2 million, to pay all his materials costs, factory and fabrication, salaries, shipping, and a marketing rep. That leaves $1.92 million at full MSRP to be split among his 20 or so worldwide dealerships, or about $100,000 profit per dealership - again, to pay salaries and overhead.

My figures are undoubtedly wrong in particulars, but where in this tiny, eclectic, highly specialized market do you see room for agressive negotiation and competition? If there is much of it, high end can only be seriously hurt, and the mass market will happily move in.

If independent dealerships were to disappear, I suspect high end audio would die at the same time.
flex
292 posts
 
If there is one thing that we have learned from the past few years on the internet, it is that some things can be sold this way, some cannot. Remember the dot com bubble?

Audio on the internet is a by-product of the established 2-channel dealer-based market, and dealers can use it to their advantage by setting up a good brick-and-mortar based website. However, high end audio *systems* cannot exist on the exclusive basis of internet distribution. Word of mouth is nowhere near good enough to convince an entire new generation of buyers to get into something they've never heard. I would think this is completely self-evident. There is no sensible internet-based business model for high end systems.

Dealerships offer numerous advantages: a place to audition combinations of equipment that you want to hear together ( I have traveled 2000 miles in order to hear specific equipment together in one place), warranty and repair service (often free even beyond the warranty), trade-ins/ups, advice (find the right people and its good), good contact with the manufacturer (often), and increasingly excellent sound rooms for listening, with experience on sound room building and optimization.

You can get pieces of this information, in greater depth, from entrepeneurs and internet forums, and that is good. Education serves everyone's best interests, though much of what is in forums is just opinion.

As far as jacuzzis vs. audio, Judit you're in the wrong forum.
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