"Awesome" dealer experience....not.

Myles B. Astor said:
Would anyone here want to be a dealer?
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Myles...that's a whole other can of worms that needs its own thread. As you know, one of the main challenges of the high-end audio industry has been the rise of the online dealer gaining market share from bricks and mortar dealers in a shrinking high-end audio market (double whammy) which has caused many a bricks and mortar shop to close, especially in secondary/smaller markets, where the local demand cannot sustain the economic viability of the b&m dealer. This of course represents a conundrum for the high-end audio manufacturers who are seeing their primary sales channel shrink and which has heightened the importance of the audio shows as a result. It has also caused a move up the pricing scale in terms of products produced which are purchased by the ultra well-heeled (aka very well off) who are not price sensitive and simply want the cache of a premium product or the die-hard hobbyist who will pay top dollar for diminishing returns. The logic here is that with shrinking unit sales (from the shrinking of b&m dealers), you need to compensate with higher $/unit product to keep you afloat as a manufacturer. And it becomes a self-fulfilling prophecy because the less b&m dealers, the fewer avenues new customers into the hobby have to get exposed and educated and able to purchase high-end audio product, and hence the shrinkage continues with continued migration up the pricing ladder by the audio manufacurer....

In the last 5 years or so, sales to Asia have been the saving grace for many high-end audio manufacturers as that has become rapidly a market approximating in size (in $ sales) that of the US, but I suspect that sales in Asia are probably decelerating in the current environment given the slowdown in the Chinese economy and the reverberant impact that has on neighboring countries' economies. Europe is also in the dumps right now. So interesting times for the audio manufacturers and sellers!

Keith sorry for the sharp U-turn on your thread here! :D
 
I suspect that some of us that would consider becoming a dealer would do so with the intent of being able to feed our obsession. In reality though it has been shown more times than not to end up being a financial drain to the owner, as well as taking an awful lot of time and effort to run the business and keep happy customers. I'd rather just buy the gear that I can afford and enjoy the results without the additional aggravation. Once it's your business the pleasurable aspects can often be replaced with stress and aggravation, taking away the reason we all love this hobby in the first place.
 
I heard this with regard to wineries, but it also applies to audio dealers.

How to make a small fortune as an audio dealer: Start with a big fortune.

Larry
 
astrotoy said:
I heard this with regard to wineries, but it also applies to audio dealers.

How to make a small fortune as an audio dealer: Start with a big fortune.

Larry
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It's true for many businesses. If I won the lottery for a grand sum of more than I could possibly spend in a lifetime, I would consider opening up a high-end store. There is a store in Indy that is or used to be owned by a doctor. The store was his hobby.

I've often wondered about the gear flippers and their dealer relationships. I assume gear flippers are buying at a big discount from their dealers because otherwise you would have to have very deep pockets to constantly buy new gear and flip it for a big loss. So the dealer sells you gear at a steep discount only to see the gear quickly show up on the used market and now he is competing for sales against his customer(s) that he did a favor for.
 
Myles B. Astor said:
Would anyone here want to be a dealer?
Click to expand...

Nope.

Virtually impossible business model in the internet age with manufacturers holding no one accountable for where they sell to or at what price. I know of more than one dealer who is ready to get out. But if listening across many brands can be best done at shows and purchases can be made at a fraction of msrp, its not clear to me whats best for the audiophile. As said before, this is a good topic for another thread.

Re the OP, it seems like we all have a lot of time on our hands today. :D
 
mep said:
It's true for many businesses. If I won the lottery for a grand sum of more than I could possibly spend in a lifetime, I would consider opening up a high-end store. There is a store in Indy that is or used to be owned by a doctor. The store was his hobby.

I've often wondered about the gear flippers and their dealer relationships. I assume gear flippers are buying at a big discount from their dealers because otherwise you would have to have very deep pockets to constantly buy new gear and flip it for a big loss. So the dealer sells you gear at a steep discount only to see the gear quickly show up on the used market and now he is competing for sales against his customer(s) that he did a favor for.
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the previous model was to take in trade your customers gear within a year crediting them 100% toward other gear on a case by case basis. back in the day a mfr would cut off dealers if, within months, their gear showed up on the street at a deep discount. i had a dealer take back in trade an amp he sold me for fear of loosing the line.

nowadays if you can fog a mirror they'll make you a dealer provided your market is wide open w/o a competing store. My buddy recently contacted a mfr to enquire about a certain model component and they offered to make him a dealer over the phone! - he wasn't even showing interest in being one.
 
puroagave said:
the previous model was to take in trade your customers gear within a year crediting them 100% toward other gear on a case by case basis. back in the day a mfr would cut off dealers if, within months, their gear showed up on the street at a deep discount. i had a dealer take back in trade an amp he sold me for fear of loosing the line.

nowadays if you can fog a mirror they'll make you a dealer provided your market is wide open w/o a competing store. My buddy recently contacted a mfr to enquire about a certain model component and they offered to make him a dealer over the phone! - he wasn't even showing interest in being one.
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Not the better companies. They don't want their company's name sullied by unscrupulous dealers that go out of business in six months. Nor do they want stores that don't pay their bills.
 
audio.bill said:
I suspect that some of us that would consider becoming a dealer would do so with the intent of being able to feed our obsession. In reality though it has been shown more times than not to end up being a financial drain to the owner, as well as taking an awful lot of time and effort to run the business and keep happy customers. I'd rather just buy the gear that I can afford and enjoy the results without the additional aggravation. Once it's your business the pleasurable aspects can often be replaced with stress and aggravation, taking away the reason we all love this hobby in the first place.
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That sounds like the proverbial drug dealer who snorts his profits up his nose.
 
Myles B. Astor said:
Not the better companies. They don't want their company's name sullied by unscrupulous dealers that go out of business in six months. Nor do they want stores that don't pay their bills.
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or the dealer that doesn't keep in stock any items of high value for fear of the dist or mfr going belly up in 6-mos. I've heard the "we wont stock it but i can get it for you if you want it..." more times than i can remember.
 
puroagave said:
or the dealer that doesn't keep in stock any items of high value for fear of the dist or mfr going belly up in 6-mos. I've heard the "we wont stock it but i can get it for you if you want it..." more times than i can remember.
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Yes but I'm referring to those companies in business for 10+ years that aren't in danger of going belly up.
 
Myles B. Astor said:
Yes but I'm referring to those companies in business for 10+ years that aren't in danger of going belly up.
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Outside of the marquis names like ARC, CJ, Wilson, Magico, etc., you may be surprised at other well thought of companies who will let people become 'dealers' out of their house, basement, or garage with no business plan, marketing plan, or minimum levels of inventory they must stock. You are just a phone call and one order away from being a dealer for many brands.
 
mep said:
Outside of the marquis names like ARC, CJ, Wilson, Magico, etc., you may be surprised at other well thought of companies who will let people become 'dealers' out of their house, basement, or garage with no business plan, marketing plan, or minimum levels of inventory they must stock. You are just a phone call and one order away from being a dealer for many brands.
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I don't think dealers keep much in stock anymore--at least since the crash of the late '80s. One way of tightening the belt was reducing overhead.

Remember IIRC the BRB amplifier that HP gave a great review many, many years ago to in the pages of TAS? Turned out after the review, the company changed the circuitry, didn't tell anyone and the unit didn't sound nearly as good. In the meantime, they had stuck every dealer requiring any store that wanted the line to buy a dozen amplifiers. After the TAS followup, the stores were left with boat anchors.
 
Why would you keep stock as a dealer for any high $ items?

1) Cash tied up in inventory is high risk
2) As an order taker and demo provider, your value-add is allowing customers to sample the product, to educate them on it and provide them with advice about how it fits with the rest of your system (or if it doesn't)
3) You maintain sense of anticipation and scarcity value by not stocking
4) Plus, most manufacturers are themselves interested in maintaining low inventories because they themselves don't want a lot of cash tied up in inventory, especially if you are a smaller shop with limited financial resources.
 
cmalak said:
Why would you keep stock as a dealer for any high $ items?

1) Cash tied up in inventory is high risk
2) As an order taker and demo provider, your value-add is allowing customers to sample the product, to educate them on it and provide them with advice about how it fits with the rest of your system (or if it doesn't)
3) You maintain sense of anticipation and scarcity value by not stocking
4) Plus, most manufacturers are themselves interested in maintaining low inventories because they themselves don't want a lot of cash tied up in inventory, especially if you are a smaller shop with limited financial resources.
Click to expand...

You are basically preaching the benefits of Just In Time (JIT) Inventory. Kevin Deal at Upscale Audio does keep a large inventory of the lines he carries so when customers want to buy a product he sells, he can usually ship immediately.
 
mep said:
You are basically preaching the benefits of Just In Time (JIT) Inventory. Kevin Deal at Upscale Audio does keep a large inventory of the lines he carries so when customers want to buy a product he sells, he can usually ship immediately.
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Marc...I am very much aware of what I am preaching. But beyond JIT as a general business practice, I am talking specifically about the predicament of the high-end audio bricks and mortar dealer who's business has been shrinking while his overhead costs have been moderately but steadily rising. As a small business operator, solvency is key if you want to stay in business, therefore any practice that does not tie up a lot of cash is highly sought after. Your whole life is about cash conversion cycles. You want to be cash flowing, otherwise you're dead in the water. Do you know what sunk Andy Singer's b&m shop a few years ago? His lease came up for renewal and he couldn't afford to make the new rent payments (and his business was no slouch). So if you want to pay rent, pay the electricity and insurance bills, make payroll, you have to be thinking about cash conservation measures. The demo inventory itself ties up a lot of cash. Do you want to sink more cash in excess inventory that does not turn over very fast because you want to be able to drop ship an order faster by a week, if it means that you can't make rent or payroll etc...Necessity for most small b&m dealers means you can't do that.

If you are a very successful dealer like Upscale Audio, then you have the financial wherewithal to invest in inventory to provide quicker shipments to your clients but those dealers are relatively few and far between.
 
cmalak said:
Marc...I am very much aware of what I am preaching. But beyond JIT as a general business practice, I am talking specifically about the predicament of the high-end audio bricks and mortar dealer who's business has been shrinking while his overhead costs have been moderately but steadily rising. As a small business operator, solvency is key if you want to stay in business, therefore any practice that does not tie up a lot of cash is highly sought after. Your whole life is about cash conversion cycles. You want to be cash flowing, otherwise you're dead in the water. Do you know what sunk Andy Singer's b&m shop a few years ago? His lease came up for renewal and he couldn't afford to make the new rent payments (and his business was no slouch). So if you want to pay rent, pay the electricity and insurance bills, make payroll, you have to be thinking about cash conservation measures. The demo inventory itself ties up a lot of cash. Do you want to sink more cash in excess inventory that does not turn over very fast because you want to be able to drop ship an order faster by a week, if it means that you can't make rent or payroll etc...Necessity for most small b&m dealers means you can't do that.

If you are a very successful dealer like Upscale Audio, then you have the financial wherewithal to invest in inventory to provide quicker shipments to your clients but those dealers are relatively few and far between.
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Cyril-I agree with everything you said. I only mentioned Kevin Deal because he is one of the few dealers that actually stocks products. You have to have deep pockets to do that.
 
mep said:
Cyril-I agree with everything you said. I only mentioned Kevin Deal because he is one of the few dealers that actually stocks products. You have to have deep pockets to do that.
Click to expand...

Absolutely :thumbsup: It's a tough business.
 
cmalak said:
Why would you keep stock as a dealer for any high $ items?

1) Cash tied up in inventory is high risk
2) As an order taker and demo provider, your value-add is allowing customers to sample the product, to educate them on it and provide them with advice about how it fits with the rest of your system (or if it doesn't)
3) You maintain sense of anticipation and scarcity value by not stocking
4) Plus, most manufacturers are themselves interested in maintaining low inventories because they themselves don't want a lot of cash tied up in inventory, especially if you are a smaller shop with limited financial resources.
Click to expand...

Agree to a certain point.

Top-of-the-line products yes. But others yes.

Also remember, that customer/crazy audiophile walking into the store wants instant gratification. He/she doesn't want to wait and you know how long it can take to get product from some companies. Customers aren't going to wait a month for what they just put money done on.
 
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