Buying kit through a dealer vs. buying manufacturer direct?

[Code Acoustics]

Hi All,

I'm hoping you get your thoughts / expertise on an area that seems to be becoming increasingly relevant in Hifi:

That's whether to buy your Hifi kit through a dealer (the traditional method), or factory direct as a few companies are starting to do (including ourselves). AVI, Tisbury & Amptastic for instance.

The logic makes sense; cut out the middle man and you can save yourself a chunk of money. The negative being that you may not be able to audition before you buy, unless there is some sort of money back guarantee.

The factory direct method seems to have really taken off in other sector; MADE.com being a good example for selling furniture. Do you think HiFi is just behind the curve, or are dealers the route people prefer, even if they have to pay more?

Thanks,

Ceri

[struth]

Think there is always going to be a place for dealers, maybe more top and bottom end though. Buying direct from makers is a good option financially though, and if you get a money back gauge tee too then perhaps the best way. Believe at least 1 maker does this(Nva I think) .. Let's you try in your room with your gear, which is really needed if your to make a proper informed choice, at least for most. Dealers that are prepared to do this too should advertise it as it will be a winner.
eBay and forums like this are also a big test of a dealers resolve to make it. They need to interact better with folk, and not judge a person on his clothes too.

[Macca]

I always try to buy direct or second-hand as:

1) I'm a cheapskate
2) I like to think I know what I'm doing so don't need a dealer.

#2) is probably not true but what the hell.

If you buy mail order you always get 14 days to return by law, unless it is a custom made item, so you can dem in your own home and system and return if not happy. In fairness some retail dealers will let you do this too. Not all, mind. I wouldn't consider buying anything new that was costing over, say, £200 without a home demo. I had a demo in a dealers once, he left me to it and I turned up the volume to the sort of level I like at home. He came back in and turned it down! No sale!

[YNWaN]

The primary problem for the consumer when buying direct is that they will usually be 'buying blind', this is fine for some goods, or those of a moderate value, but a real issue for expensive speaker systems of a complex nature (I.e. Yours). A dealer gives the opportunity to listen before committing, quite possibly a home loan and support relating to other equipment that will be in the system. For the manufacturer the primary difficulty with direct sales is getting people to know you exist. A dealer network effectively markets the products they support to their customers, without them the manufacturer must do all the marketing themselves - a website on its own is tantamount to zero presence in the market.

As Macca writes above, if you are selling mail order you are legally obliged to offer a 14 day returns period and that can be cripplingly expensive for the manufacturer.

To be blunt, I think you are going to struggle to sell a £5K active system mail order - I'm afraid you may have to rethink the aesthetic of the cabinet design too - sorry :(. I realise £5K is actually quite reasonable for the component content of your system but it's still a lot of money in real terms and well above what the majority are prepared to spend on speakers (even speakers and amps).

[Arkless Electronics]

It's a tough one which I wish I had answers for.... You will usually pay at least double by going through a dealer (and often more) for a start but, as Mark says, you get the chance to have a good listen before buying and often even a home demonstration. Does this make the equipment worth twice as much? There's another $64K question...
A problem with allowing customers a trial period with a money back guarantee is what then does a manufacturer do with ones which have been returned? Sell them as second hand? as returns? as shop soiled? or if still perfect and only had 2 weeks use as new? Who pays the postage on all this? "tyre kickers" with no intention of buying a £4K speaker system could soon put you out of business!

[YNWaN]

I don't think it's so much of whether the dealer is worth the markup, it's more that without their facilities the majority will never even try the product -.even if it is a bargain.

If you sell mail order you don't have a choice regarding the trial/ cooling off period - but the restocking problem is a real issue

[struth]

Tyre kickers today. Customers tomorrow

[Marco]

I don't have much time at the moment to contribute to this rather thought-provoking thread, but one thing that immediately comes to mind, in terms of using a dealer or not, is it simply depends on what you're looking for, equipment wise.

If it's anything outside of the mainstream, vintage/specialist in nature, or out with of a specific product range, then a dealer is going to be next to useless. Otherwise, a good dealer has their uses.

Marco.

[Code Acoustics]

Thanks chaps, that's some really useful feedback, and any more very much welcome!

We're contemplating a hybrid solution, that may provide the best of both worlds:

We'd like to have one (small) shop initially in Central London, as that's about the highest concentration of people and the best connected location in the UK. In addition we'd be in attendance at regional and national Hifi shows. Then hopefully some positive press reviews (fingers crossed and we're working on it!).

That way you negate the 'buying blind' aspect.

If you require payment up-front, that should hopefully negate most tyre kickers. Then you would sell any returns with a say 5% reduction, assuming they were in 'as new' condition.

The thinking is still a work in progress, hence your feedback is invaluable!

[hifi_dave]

Not necessarily. A tyre kicker has no intention of buying.

A person who listens and buys something else or somewhere else, isn't a tyre kicker. He just didn't buy from you.

[YNWaN]

I think you would be surprised how little impact magazine reviews have on sales - and how short people's memories are.

[Macca]

I thought magazine reviews were widely regarded as an absolute necessity if you wanted volume sales? Maybe not so important if you are only looking at selling a dozen a year or so.

WRT the tyre kicking - with remote selling the buyer pays up front and sends back if he is not happy. Once you get it back you refund him. So tyre-kickers will not be that keen due to having to front the money and the hassle of returning the item.

Yes, you will still get some returns which you cannot honestly sell on as a brand new item- you need to factor the cost of that into your initial selling price.

[hifi_dave]

Magazines have less of an impact as the years go by. One of the reasons is the low circulations nowadays. For instance, I believe that Hi-Fi World is down to 5K and even
Hi-Fi News is only 7K for worldwide.

As to direct selling, it has been my experience that it is fine for pocket money but to make a living, you need a dealer base.

[danilo]

In MY part of the world Stereo 'shoppes' are all but extinct Only 2 remain.
Magazines? really? Who still buys/reads them. I certainly haven't, for at least 3 decades.
Tellingly the larger magazine outlets: Chapters, Indigo have between 1 and 2 Audio mag titles on their shelves.
As curious contrast there are at least a dozen 'old motorcycle mags.. clearly old guys attentions are elsewhere.
Audio as we grew up with at least...is a sunset industry.
When in school I was told that a large part of advertising is intended/directed at reinforcement of recent purchase decisions.

Notably Schiit and Emotiva are online vendors .. Only.
Their stuff is decent and reputedly sales are good.. substantiated by the fact they are still in business.

[Code Acoustics]

Emotiva is a really good shout. That's probably the most successful manufacturer direct (audio) company I can think off (for 'proper Hifi'), and some of their kit is pretty expensive. To my knowledge, they don't even rely that heavily on reviews.

I bought one of their 5-channel power amps a couple of years ago, and for the money, it really was very good!

[struth]

Ive got one of there phono stages. Superb bit of kit and well made too

[hifinutt]

Magazines have less of an impact as the years go by. One of the reasons is the low circulations nowadays. For instance, I believe that Hi-Fi World is down to 5K and even
Hi-Fi News is only 7K for worldwide.

As to direct selling, it has been my experience that it is fine for pocket money but to make a living, you need a dealer base.

does that figure for circulation include online subs and apps like readily that let you read 1500 mags for 7.99 per month

[YNWaN]

The most expensive speakers Emotiva do seem to be $750.00 with most being significantly less.

[Barry]

I've heard of Schiit but not, until now, of Emotiva. So on-line vending only is not necessarily reaching as wide a market as it could.

[struth]

I've heard of Schiit but not, until now, of Emotiva. So on-line vending only is not necessarily reaching as wide a market as it could.

They do well in America I imported mine via Amazon.com

[Dauntless]

I've heard of Schiit but not, until now, of Emotiva. So on-line vending only is not necessarily reaching as wide a market as it could.

I have an Emotiva Stealth DAC and their latest CDP. Both very well built reliable and very good value for money. As it happens earlier this morning I pulled the trigger on a Schiit Gungnir Multibit Dac. I have just had a 5 day home trial with their dem product from their UK distributor Schiit EU. I have also been buying gear off Amazon UK buying a pair of JBL studio 530's for the princely sum of £370 PLUS Van Damme XLR and phono cables all very reasonably priced. I have speaker cables and interconnects + 75ohm and AES/EBU cables from Audio Visual on line. All great products and reasonably priced. I have also bought gear from Monarchy Audio, Class D Audio Inc and Marchand Audio. All excellent quality at sensible money.
I used to buy high end gear from Dealers but due to the prices I could only afford to have one turntable, one amp, one pair of speakers at one time.
I use to have trouble with breakdowns and my system being out of action for weeks at a time. Now I have plenty of spare gear so if anything goes back I can still listen. I have also had very bad service from some dealers in the past. I once ordered some new spring for a Logic turntable and the guy failed to get them and refused to give me my money back. There have been other bad experiences too. I will be in Norway shortly and I priced some gear up over there. Two brands, Hegel and Larsen Audio. Those products were considerably cheaper over there in spite of their 25% VAT.

[danilo]

I've heard of Schiit but not, until now, of Emotiva. So on-line vending only is not necessarily reaching as wide a market as it could.

:lol: "Storm over the Channel ..Europe cut off"

[CornishPasty]

Some years ago I was interested in buying a pair of speakers direct from the manufacturer. They would supply a list on request of customers who had bought their speakers and were happy to dem in their own homes.

[Reffc]

Some years ago I was interested in buying a pair of speakers direct from the manufacturer. They would supply a list on request of customers who had bought their speakers and were happy to dem in their own homes.

Which is exactly what I do.

[YNWaN]

Well that's a nice idea - a bit chicken and egg though as you need the customers first for them to be able to demonstrate to potential new owners.

[Code Acoustics]

Just had a look at your website Paul, some very nice drive units in your speaker designs, and good to see a slightly different take on a two way passive.

My 5 pence worth is that there are definitely obstacles to overcome with direct / hybrid selling, but that's not a good reason not to do it. The print hifi mag / dealer concept seems to be on the decline, so why not try something new.

The opportunity to provide customers with kit at half the usual price is a concept that has to be explored.

As a side note, in collaboration with HiFi hangar in Hampshire, we're doing an analogue vs. digital (friendly) sound clash at HiFi Hangar next Sat 23rd July. I'll put the details in a separate post. If you're in the area and fancy hearing our system, and a very nice analogue set-up from Steve, it should be a trip worth making.

Perhaps a very small example of how we can bridge the gap between direct and physical selling.

[Haselsh1]

I seriously love the idea of dealing direct with the manufacturer and doing away with dealer's margins. A damn fine pair of loudspeakers with holographic imaging may even tempt me away from my Chinese built KEF's. The problem here though is that good, expensive hi-fi is just that, good and expensive. The last thing I bought was a hand built maple hardwood plinth for my TD160 and this was direct and less than two hundred quid...! Bloody bargain...!! I honestly wish that more crafts people would set themselves up to cut out the dealer margins.

[Reffc]

Just had a look at your website Paul, some very nice drive units in your speaker designs, and good to see a slightly different take on a two way passive.

My 5 pence worth is that there are definitely obstacles to overcome with direct / hybrid selling, but that's not a good reason not to do it. The print hifi mag / dealer concept seems to be on the decline, so why not try something new.

The opportunity to provide customers with kit at half the usual price is a concept that has to be explored.

As a side note, in collaboration with HiFi hangar in Hampshire, we're doing an analogue vs. digital (friendly) sound clash at HiFi Hangar next Sat 23rd July. I'll put the details in a separate post. If you're in the area and fancy hearing our system, and a very nice analogue set-up from Steve, it should be a trip worth making.

Perhaps a very small example of how we can bridge the gap between direct and physical selling.

Thanks Ceri

the website is going to have some major updates later next month as it is a little out of date now. In addition to the speakers shown on there, I specialise in vintage Tannoy and Impulse speakers and also produce a range of new cabinet designs for Tannoys drive units and internal/external crossovers for them. Holding open days and encouraging folk to visit and bring some of their own kit to try or compare is a good idea as it both show-cases what the cottage industry approach is capable of, and many are surprised with the levels of quality, craftsmanship and sophistication that is on offer. Whilst I have done the hifi show trawls to try and get some brand recognition, most direct sales rely on a good website and a good reputation, and it is important I think to go the extra mile for potential customers as well as established customers.

At the end of the day, buying direct can often save 60% or more against equivalent commercial designs where there's no huge marketing budgets to account for, no distributors or dealerships and not all business models need to compete head to head with the sort of profits and turnovers the big boys make. Most people (but not all) are willing to pay skilled craftsmen a reasonable hourly rate and cover materials costs to end up with something which is in many cases superior to buying off the shelf for similar money at a dealership, depending on what it is they're looking to buy.

[YNWaN]

I think Paul is in a different situation to many in that he primarily offers bespoke solutions and this inherently suits direct selling. Yes he bases much of his work around fixed points (like Tannoy or Impulse speakers) but the specific job is tailored to the needs of the owner and no two are necessarily identical.

I do think the idea of socials to get ones name out there are a great concept though :).

[walpurgis]

As a side note, in collaboration with HiFi hangar in Hampshire, we're doing an analogue vs. digital (friendly) sound clash at HiFi Hangar next Sat 23rd July. I'll put the details in a separate post. If you're in the area and fancy hearing our system, and a very nice analogue set-up from Steve, it should be a trip worth making.

That sounds good. Shame I'm not likely to be free for that one. My current Tannoys came from Steve. He has some happy customers here.

[Mr. C]

Otherwise, a good dealer has their uses.

Marco.

One could suggest something along the lines of like contributing to your audio system Marco via the annual subscription :lol:

If one was feeling in such a frivolously delightful moment.

[Yomanze]

It's nice when you can deal direct, there's no doubt about that. Cheaper, and advice 'from the horse's mouth'. However, if designers refuse to deal direct, and you really want their kit, then you have to use dealers and accept the margins, or buy second-hand.

Some of my kit is direct from the designer, like my DAC (thank god, it'd be £6k+ if sold via dealers with a marketed brand), but most is through dealer channels, forum classifieds and eBay.

[Code Acoustics]

I just saw on HiFi Pig that dCS have handed sole distribution to Absolute Sounds. So If you were to buy their kit (£££££££) in the UK, your're paying the dealer, the distributor, the manufacturer, and then HMRC a great chunk on VAT!

Does anyone know how that sort of percentage price breakdown works?

I know a number of UK based companies self distribute, so at least they strip the distributors mark-up from the end price.

[Macca]

I suppose there will be a large variation but if you assume manufacturer wants 4 x cost of parts and build, distributor wants 50% on that, and retailer wants 100% on that; for an item that cost £100 to build that is £400 sale price to the distributor, £600 sale price to the retailer and £1200 plus 20% VAT sale price to the punter. That's not profit since each entity has overhead and tax to come out of their margin.

[Code Acoustics]

Thanks Martin. I should have mentioned for anyone reading who didn't know; that dCS are a UK company based in Cambridge, so It wouldn't be particularly hard to self distribute (at least in the UK), particularly when you're selling with their volumes. But I image the deal with Absolute Sounds is a global one.

[YNWaN]

I don't see how it can be a global one as Absolute Sounds are a UK distributor, not a global one. It always surprises me when UK manufacturers use a distributor for the UK - when they do (most don't) prices rise substantially and usually to the point where they are no longer competitive.

[Code Acoustics]

Good point Mark, Absolute Sounds just distribute through the UK. I could see why you might use them if you are a non-UK based company, but seems a bit surprising for UK based firms.

It doesn't take much effort to visit your UK dealers occasionally and keep them stocked.

[Macca]

There a lots of reasons why a manufacturer might want to go down the distributor-dealer route rather than sell direct. It may be as simple as not wanting to deal directly with customers. To do your own distribution you need to get on the 'phone and call dealers direct and try and sell to them. Then organise your own shipping, and so forth. A lot of hi-fi companies are not big operations even if they give the impression that they are. So it requires a lot of time and manpower to organise distribution, a lot simpler just to have the distributor send a truck in and load it up. After that it is his problem and you go back to designing and making stuff.

If you just want to sell direct on line you have the problem of getting publicity. If you are not an established name getting press reviews will not be straightforward. Internet forums only cover a small percentage of your potential market. You do have the advantage of being able to offer a bargain in comparison to kit sold via dealer-distributor but people can't buy what they have never seen or heard of. Which means you need marketing to reach a wider audience. But advertising is expensive and so there goes your cost advantage.

[hifi_dave]

I suppose there will be a large variation but if you assume manufacturer wants 4 x cost of parts and build, distributor wants 50% on that, and retailer wants 100% on that; for an item that cost £100 to build that is £400 sale price to the distributor, £600 sale price to the retailer and £1200 plus 20% VAT sale price to the punter. That's not profit since each entity has overhead and tax to come out of their margin.

100% to the dealer ??? Where do you get that from ? Maybe with the chains selling WHF 5 star products but nothing like that for the independent. If only.

[Code Acoustics]

My understanding was in the main; manufacturer 50% ex VAT, dealer 50% ex VAT, then obviously 20% VAT to HMRC.

But not sure how it works when you get a distributor in the mix as well.

[Macca]

100% to the dealer ??? Where do you get that from ? Maybe with the chains selling WHF 5 star products but nothing like that for the independent. If only.

I did say 'there will be a wide variation'.

A bloke who worked for one of the larger dealer chains told me that they worked on 100% mark up for separates and 200% for lifestyle and all in one systems. Obviously that is a rule of the thumb and is going to vary from product to product. Being a big chain they no doubt have some additional clout when it comes to cutting deals with distributors, so that extra may well come off the distributor's end. I don't know. Bear in mind they have high street rent to pay and a staff of sales and support people, accounts department, HR and so on. I can see that an independent dealer, possibly operating from home, would not need as much mark up to stay in business.

[Mr. C]

Absolute sounds also distribute in Europe a fair amount to keep the records up to date.