High end vs internet

Flex, I realize that most high end stores can not live with a 10%-15% markeup on most of their items.... HOWEVER, there is a big difference between marking up a $3k item 40% and marking up a $30k item 40%. That difference is 10 fold.

My point is that high ends stores whould be a bit more flexible on price on very high ticket items they sell. It would only help move equipment. Requiring a 30-40% markup on a $30k piece of gear is a bit insane when a 10-15% markeup would seal many more sales.

KF

The internet has increased the circulation of equipment to the point where you don't have to go on an adventure to find used gear. Once the domain of dealers who would mark up used gear, the market has turned into the individual seller and buyer and the internet has circulated the information on what's available, effectively elbowing aside the dealers in this market. In addition, and most important IMO, is that the exchange of first-hand information from us grunts in the trenches really has shed a light on audio products that you would never get from a dealer - instead you would have to rely mostly on audio publications, which themselves are problematic (another topic altogether).

Not only that, but new entrants into high end audio, such as Supratek and Teres, have taken advantage of the word-of-mouth power of the internet to suucessfully sell their products at a lower cost by bypassing the dealer network. So, yes, it may be hurting the High End dealerships - but how many of us are willing to forego information or pay more than we have to?

This is a touchy subject, and as a manufacturer very important one to our company. I think the internet and sites like audiogon have increased high end audio. It increases awareness and education in high end audio--both very good for the industry as a whole. It is clear it has changed business and allowed users to find "bargains" be it new or used. If I can stereotype dealers there are really three types (of course one dealer may employ multiple types within their business strategy).

One is the mail order/ internet company that strongly pursues these types of sales. The service is from afar so it not as time consuming as going to someone's house and setting up a system. It also doesn't have the overhead of a first rate showroom. Thus this is less expensive and as a result they can pass the savings on to the customer.

Then there are the traditional brick and morter shops that have high end gear on display, expect people to listen and then buy. Many of these shops have really suffered from the internet. I think largely due to the fact that someone will go to their showroom, listen, decide what they like and then try to cut a better deal through the internet. To me this is really unethical to take a salesperson's time and basically "use" the facility as a testing ground with no intentions of buying from a place that has to sell at margins to support their sales force and building. This has been discussed in previous threads, so I won't beat a dead horse.

The third is what I call the "CEDIA" dealer. These dealers may or may not have a showroom. They are generally small but offer customer and installation services that can make a complex HT and music around the house easy enough for the whole family to use. These may or may not be high end dealers, but more and more often they are. As an example, Madrigal, has made the statement CEDIA is our show--it's no longer CES. That's a pretty strong statement from a high end manufacturer that has hundreds of brick and morter outlets and certainly let's you know what they think the longevity of the traditional brick and morter is.

I believe the traditional brick and morter has to diversify into one of the other two segments in order to remain profitable and stay in business. They either need to set themselves apart with customer service that is exceptional in their area or they need to get into the internet/mail order business. (It's even possible to do both--but I think that's a difficult business model).

Specific to our company is a variety of services and components sold through a dealer network. All of these require the presence of the dealer in the customer's home to either calibrate the device or take acoustical and physical measurements of the customer's listening room. Therefore an internet/mail order type dealer does us little or no good. They do not provide value to us, nor to our customers. We do have a variety of dealers that are the CEDIA type and the brick and morter. A few of our dealers do pursue internet sales, but not with our products and services because it's impossible for them to meet the requirements of installation and acoustical measurement.

I'm sidestepping the question, but just want to say that I have *never* had an all-around completely satisfactory experience in any shop. Some have been tolerable-to-okay, but none excellent. To one degree or another, all assistance I have ever received from even the most otherwise-pleasant shop salespeople and owners has suffered from a combination of ignorance, arrogance, and a placing of higher priority on *telling* the customer whatever their agenda might be, rather than *listening* to what the customer says first. Even with the least offending of them, I have always had to consciously maneuver around their shortcomings as salespeople in these areas in order to get what I want out of the encounter.

Tok20000,I disagree with your logic.For most of those who pay 30k for a piece there is no big difference whether to pay 20k or 30k;in fact,sometimes 30k is even better.Business people know it and make more money.I salute them, but these things do force me to think about the money flow in our society.