Macca's Lash Up

[Macca]

I shouldn't have to ask a favour just to avoid paying a middleman for doing nothing except put something in the post to me.

Should point out I have nothing against dealers in principle and in any case a manufacturer who sells direct is a dealer as well. And I don't mind paying extra for some consultancy, if it proves to be valuable, since that is value added and therefore a fair trade. It is paying extra for a stupid business model that adds nothing - as in the Achromat situation - that I dislike.

[Marco]

On that, we are in agreement

Still, it doesn't do any harm to use one's contacts

Marco.

[Oldpinkman]

I shouldn't have to ask a favour just to avoid paying a middleman for doing nothing except put something in the post to me.

Should point out I have nothing against dealers in principle and in any case a manufacturer who sells direct is a dealer as well. And I don't mind paying extra for some consultancy, if it proves to be valuable, since that is value added and therefore a fair trade. It is paying extra for a stupid business model that adds nothing - as in the Achromat situation - that I dislike.

The problem is, you can't easily "stream" distribution. So you can't have one price for the person who wants to buy in the shops, and another for the direct sale. If an Achromat is £60 full retail, but you know you can buy direct for £40, the retailer will not stock or promote the product (or the rest of your range, if they can't get the "high click" accessories), because it is too easy to buy the product elsewhere cheaper. This now applies internationally. I was about to buy my AHB2 from France because their pricing was different from the UK pricing (like nearly £650 cheaper, no duty, VAT paid).

And so UK retail has to be a price which is universal to international retail. This gets complicated. We all know we can buy stuff cheaper in the USA, but by the time EU duty and VAT as well as insured carriage are added, the difference evaporates. And you lose local warranty and distributor backup

(This was a lot of the trouble for Mike New with warped platters - it is really hard to support that sort of product from the other side of the planet. You need a local distributor, who does more than just warehouse and package, but place adverts in the local HiFi press, arranges local language HiFi reviews, provides local product training and support , including warranties, service and repairs - and holds stock of replacements for warranty purposes. )

Again the AHB2 is a good example . $3000 in the USA £3000 in the UK. At todays rates that's say S3200 with insured shipping, £2200 plus 8% duty takes you to £2383 plus 20% VAT takes you to £2860. Nominally you have a US warranty, but in practice that wouldn't be valid for product sold out of territory. The US warranty is 5 years return to base. The UK warranty is 2 years return to base. The grey import warranty is very likely to be nothing at all.

OK - so an Achromat doesn't need a warranty, or advice, set-up and the like (although you wouldn't believe...) but a Safire, or an FX3 does, and you have to have a consistent approach with international distributors and domestic dealers.

Direct sales have their merits - low cost is the advantage. Service support is the challenge. I doubt Nene Valley sells a lot of product in China, or Indonesia, or Russia (maybe they sell in Russia given the missus can help). I have enough problems dealing with technical documentation and queries in France and I am fluent in French. Try offering support for every country, legal system, language, etc.

Different approaches. The full retail is better suited to "normal" products . Maybe there is scope to deal with (say) Technics modifications as a separate direct sale only line. I have suggested that to AK before. I think for the moment his core business is mainstream and international (UK sales are a very small part of total sales) and so Funk pricing is going to stay full retail.

And there is this illusion of retailers as "fat cats". Not a few are struggling and going broke. Retail overheads - rent , rates, staff, are very high - as are stock-holding costs. Those are the costs of offering a service, real product to touch and use and compare. If it's easy money, go off and do it.

[Marco]

No comment on my last post? [#606]

Marco.

[Macca]

So what you are saying is that by paying a dealer margin for my Achromat I am subsidising the cost of him supporting the purchaser of a more complex Funk product?

I am aware of that and that is what I object to. The retailer is going broke? Well that is his problem not mine. How will he react when I get made redundant and go round and tap him for 20 quid?

A better system would be to have the simple stuff sold direct, the complex stuff through the dealer with a margin for the dealer which reflects the cost of the value he adds. So the complex products may cost a little more but at least the punter receiving the extra service is the one paying for it.

I know, the dealers won't wear it because sale and forget accessories are the sweetest plum. But that will change eventually.

[danilo]

internationally. I was about to buy my AHB2 from France because their pricing was different from the UK pricing (like nearly £650 cheaper, no duty, VAT paid).

And so UK retail has to be a price which is universal to international retail. This gets complicated. We all know we can buy stuff cheaper in the USA, but by the time EU duty and VAT as well as insured carriage are added, the difference evaporates. And you lose local warranty and distributor backup

.

Read a study that examined Why Brits were flocking to France to Buy .
The prices were perceived as sooo much less that even the cost of transportation became irrelevant.
Plus I suppose, one got a nice Weekend Hol to boot.
Initial consumer complaints/anger re Usurious UK pricings were focused/directed at the the UK's Taxation levels.
Causing some re-election anxieties amongst career politcals

What wasn't apparent/widely known was that French taxations are Markedly higher.
So much for that myth.

Reality is /was that the UK's middle man distribution structure is both convoluted and unabashedly Greedy.
Every participant strives to Max out his profit margins.
A genuine problem when there are *several* grasping hands in the chain.
A nation of Shopkeeps some (in) famous gentleman once stated.