Wednesday, October 21, 2009

Customers Vs. Retailers: Commentary on a Stereophile Letter

While reading the November 2009 issue of Stereophile, I came across a letter titled "Customers vs. Retailers" in the letters section. It stated the following:

"The behavior that I am referring to is what I call the consumer version of bait and switch. A guy visits a legitimate retailer (or retailers), gets hours of demonstrations, borrows trunkfulls of gear, gleans bookfulls of information, and, when he's made his decision, goes online and buys the item, used or at a significant discount, from and online seller who doesn't provide the types of service that he has stolen from the local store(s)."
First of all, this does exist, and I do agree with the writer of the above statement in part. There are unscrupulous customers, just like there are unscrupulous business people. When the two get together, nobody wins in the long term.

What I take issue to is:

  1. Inferring that anyone who is a high end audio retailer that sells product online "illegitimate". That is an ignorant statement, and that is putting it nicely.
  2. Assuming that customers don't take up my time, borrow trunk-fulls of gear, take all of my advice, then don't go somewhere else or buy used. It happens to me too, and it sucks. Shame on you as a customer if you have done this. It's wrong.

Let me educate the brick and mortar dealer. I spent several years, and thousands of hours building my business just as you. My overhead is slightly lower than yours, am I supposed to feel bad because 1) I wasn't wealthy enough to open a store and stock it will millions of dollars worth of inventory? 2) because I know how to build a web site and market my business? I don't apologize for either. It's a different way of doing business that is not going away. It serves a much needed niche, and can be done with integrity.

I do have a showroom. It is a dedicated room built in the basement of my home. It's not your multimillion dollar, five year lease building in the middle of downtown, but it works. for the most part, I rely on going to my prospect's home, allowing them to audition the gear they are interested in within their own system and listening environment. I think it works better, they do to. They appreciate the non-sales approach, and they can make a more informed decision. It pays off by getting the sale (most of the time) and making a friend that likes music as much as I do.

I as a web retailer am able to support customers who live in areas where their are no high end audio stores, or the brands that they are looking for aren't represented. I send them gear, communicate for hours on the phone, and via email. I give them all the support they ask for, and more. How can you, the local store 300 miles away, support them any differently? You can't.

I represent the brands I carry with the highest integrity. I play by the same rules that they set forth for everyone, brick & motar store AND online retailer. If you are getting undercut by an online retailer, if they aren't adhering to the guidelines for marketing and sales set forth by the manufacturer or distributor, you have every reason to report them and have their dealership revoked. If they are allowed to do this, and the manufacturer doesn't care, find another product line, or have a serious discussion about policy with them.

Manufacturers, take heed. Do not broad-brush all internet retailers as low-ballers and charlatans. Some of us can help you a great deal by offering your product to geographic locations that have no representation. We can do it with integrity, and uphold the brand name you have worked so hard to build. You are missing out in a big way by the "no internet dealers" policy. Trust me, your competition is kicking your ass in those locations, and you won't be competitive (or relevant) for too much longer.

I, like you, get cut out by consumers buying used gear. Often after spending time emailing and talking on the phone advising them. That is the world we live in, and actually I think in the long term it will help high end audio by making the entry level even more affordable. As a business owner you need to select brands that don't have a high turnover of current models on the used market. You need brands that are actively involved in monitoring the internet for rogue dealers. You need brands that innovate and consistently offer new product, and improvements to existing product.

Not to mention you need to cultivate relationships with your good customers. Not everyone who buys from you will be a good customer, but you will find enough of them over time.

Example: I was approached by a manufacturer that has a very well established brand. The problem was that they haven't come out with anything new for at least 3 years. Guess what? Their product was all over Audiogon for sale as used. Why in the world would anyone by their product new when they could get the same thing for less than half the price used? Can you blame a potential customer for buying used at that point? I can't. I also can't carry the manufacturer's product because I know I won't be able to sell it (manufacturers take note please).

You and I are more alike than we are different. We both love music, we both love the reaction of a client who has found what he is looking for in an audio product. We love making friends of our customers.

We both have the same enemy, inscrutable dealers who sell on heavy discounts, damaging brand names and hurting the industry as a whole. The solution is not in blaming customers or each other. The solution lies in manufacturers enforcing their selling and marketing policies, selecting dealers who will represent them with integrity, and making product that isn't flooding the used market. We as dealers need to police activities online, keeping each other honest, and customers need to respect our time and knowledge. If they are seeking a used product, or new at a deep discount, not to waste our time acting like they are interested in buying new product from us.