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General Asylum General audio topics that don't fit into specific categories. |
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General Asylum General audio topics that don't fit into specific categories. |
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In Reply to: RE: I think the picture is much bigger than that posted by AbeCollins on October 1, 2017 at 07:16:37:
> > Your comments on dealer margins kind of confirms why I was seeing huge discounts on certain brands. < <
Exactly. Twenty years ago there were at least two good dealers in every large city - one would sell Levinson and the other Krell (for solid-state) while one would sell Audio Research and the other Conrad-Johnson (for tubes). There were at least 100 qualified dealers across the country. Now there are less than half of that number.
When McIntosh was "pumping" their numbers and offering huge margins (55%), nearly all of the dealers jumped on board and McIntosh became over-distributed, often with two dealers in the same city. Then the dealers would start competing on price and offering large discounts to win the sale from the neighboring dealer. This situation is unsustainable but they were able to boost sales by at least 50% for long enough to increase the "value" of the company for it to be acquired at a higher price.
Cary appears to be direct-only at this point. I did a search on their website for dealers and could only find one. It was in the Chinatown section of Manhattan and the store website clearly catered to the Chinese customers. The main thing being sold were home appliances, and Cary was not even mentioned on the website - just "We are experts in home theater" or something similar.
I was curious about PS Audio and how they handled the inherent conflict between direct sales and dealer sales. I spoke to one dealer and his answer was "Not very well." I was left with the impression that most of their sales are direct, but have no idea if that is true or not.
I don't seem to see Pass Labs as a very big player in the market these days. Nelson only designs power amps, and his partner Wayne Colburn designs the preamps. They haven't had a source component for many years, and it has become harder and harder for dealers to sell mix-n-match setups. Therefore Pass simply cannot be the "focus" line for any dealer. Most dealers need to average about 35 to 38 points overall margin to stay in business. That means if the product line is 40 points it will mostly be sold at list price, with small discounts given for purchasing whole systems or for repeat customers.
That is why the cables with a 70 point margin became so popular - it was easy to offer a big discount when the customer was buying cables along with the component and still maintain a reasonable overall margin.
Hope this helps,
Charles Hansen
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Follow Ups
- RE: I think the picture is much bigger than that - Charles Hansen 10/1/1719:09:46 10/1/17 (0)
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