Pro Audio (cars) dealers , distributors & co.

[SIXTYNINER]

Hi all,

some week ago a friend  called one of the most popular european pro audio dealer (used & new)
for sell  some piece of its setup ,  rarely used because double triple in the setup ,
and buy some different other piece to use more often ,
( never leave  the "kids" powered off for long time !  ; )  )

after the conversation with also images view of the pieces to sell ,

for some piece the offer of the dealer was  50% of the selling price of an identical one (used) 
it had available in stock ,
even if in slightly worse conditions   

and if the new different piece had been purchased ,

among other things in the description of the piece available at the dealer  stock ,
was highlighted as a piece to have absolutely,
a must for any serious setup , etc…

(….. advertising never enough..  ?  )

what a "super" offer   
(...absolutely not to be missed.. )

it would be partially understandable if the pieces to be given in partial payment for the purchase of new ones
were not in good condition, or in need of some repairs ,
but he bought them new , and rarely used …..

and it was not a mixing console that require a deep inspection before set a correct price,

… it sound like the same old used cars dealers  "song"  ,
the used car  that you have to sell :
is old , not more current , it is not very requested ,
too little electronic equipment , as required by young customers….
( …. smartphone video games connection is more important than a reliable engine… ,
… useless chinese cheap electronics that leaves you suddenly on foot…)

and 1 second after you leave the car dealership
your car incomprehensibly it is transformed in a :

Super Opportunity , not to be missed ,
in very very very super nice condition ,
few kilometers (….. too often pulled back..)
fortunately with little useless cheap electronics that leaves you suddenly on foot…
etc….

available right now !!!
(...for triple or more than you have been recognized in the negotiation…)



And what about pro audio distributors gain ,  only moving pallets ?
(..many of which also sell (not much "correctly"…) directly to the users-customers )

 

[pucho812]

the trick to selling gear is to use ebay or reverb. If you go with a dealer who does  you will get a very low offer. I had a crown amp that I no longer needed. being how it is "just an old studio series II" the dealer wanted  a very little money for it.  I did some homework and looked online seeing the same amp go on ebay and reverb for much more money.  So I decided to sell it there. Sure enough when it sold I made a  nice amount vs what the dealer wanted to give me.  If you ask me, you really do not need a dealer to sell something unless you need someone to help physically move it. You can get away with selling things online for less hassle and more money.

 

[SIXTYNINER]

the trick to selling gear is to use ebay or reverb. If you go with a dealer who does  you will get a very low offer. I had a crown amp that I no longer needed. being how it is "just an old studio series II" the dealer wanted  a very little money for it.  I did some homework and looked online seeing the same amp go on ebay and reverb for much more money.  So I decided to sell it there. Sure enough when it sold I made a  nice amount vs what the dealer wanted to give me.  If you ask me, you really do not need a dealer to sell something unless you need someone to help physically move it. You can get away with selling things online for less hassle and more money.

thanks for post pucho

ebay and reverb can be a good "self" solution ,

but that dealer and related  really think that  way of sell can be  called serious  ?
and that all pro audio customers are stupid  ?  ( more or less )

how much less would cost the pro audio devices with less gain for distributors ?
(that only move pallets)  15% , 20% , 25% , 30% , 35% , 40%  ?


             

 

[iampoor1]

thanks for post pucho

ebay and reverb can be a good "self" solution ,

but that dealer and related  really think that  way of sell can be  called serious  ?
and that all pro audio customers are stupid  ?  ( more or less )

how much less would cost the pro audio devices with less gain for distributors ?
(that only move pallets)  15% , 20% , 25% , 30% , 35% , 40%  ?


           

You act surprised. It's very normal to get an offer for half of the used selling price, ESPECIALLY if the dealer already has one and is not planning on moving it. Expect to be offered a 1/4 of the new value. This has nothing to do with the dealer being "serious", it's just a normal business margin. If you are personally offended by it, then try your hand at becoming a dealer and it will quickly become apparent why they offer so little, certainly in a niche market.

 

[bluebird]

Lol, relax, the dealer is only trying to survive like everyone else. Moving pallets is a valuable service. Its your choice to sell to someone else. Your friend is not a victim of anything here, look around, he is lucky to have something to sell.

 

[pucho812]

while I do understand why a dealer has to offer what he does, it does not mean I have to take it. 

 

 

[john12ax7]

What is the margin on higher end gear,  maybe 30%?

So if dealer sells new unit for $1k they buy wholesale fior $700,

On the used market the same item sells for $650, so dealer could offer $350 to make the same $300 of selling a new unit.

 

[ruairioflaherty]

A couple of things to remember

- When a dealer sells a new product the manufacturer warranties it, with used the dealer has to offer a warranty or suffer the blowback if the item fails soon after sale.

- Dealers get credit when they but stock from manufacturer, buying used from an individual means fronting cash.

- New items have demand in the market place, buyers who want Product X come to you.  Used items have to be sold outward meaning the dealer has to find the buyer - harder, slower and more expensive.


The last piece of gear I sold to a dealer was a Lexicon PCM96 a few years back. He gave me $1,000.  The going rate for used at the time was about $1,400 and the dealer sold it with warranty for $1,600.  I could have netted a little more by selling into the used market but it would have taken time I didn't have and effort I didn't want to expend.  I considered it a good deal.

There is lots to be upset about in the audio world, dealers buying used gear does not make that list IMO.

 

[JohnRoberts]

What is the margin on higher end gear,  maybe 30%?

I don't know what the markup is for low volume high end studio poop, but back when I was in the trenches for the mass market sound reinforcement business the typical margin (for us) was an "A" mark or dealer cost at 50% of retail. Smaller companies operated at more like a "B" mark (closer to your 70%).

Some accessory items (like funny speaker wire or magical line cords) could be "A+" marks or more than 100% markup. That's why dealers love to sell you strings and patch cords.  8)

So if dealer sells new unit for $1k they buy wholesale fior $700,

On the used market the same item sells for $650, so dealer could offer $350 to make the same $300 of selling a new unit.

As has been shared already the dealers are trying to operate a business with enough profit to remain in business. Getting harder and harder these days with web sales operating with razor thin margins.

It would always be funny at trade shows like NAMM when consumers would get in with dealer credentials and come into the booth asking what dealer cost was on some new SKU. Their eyes would glaze over when we tell them it was an "A" or "B" mark, because they had no friggin idea what that meant.  :

JR

PS: FWIW the SCOTUS is considering a sales tax case that would force out of state web merchants to collect local taxes, even if they don't have a physical presence in every state.  This could be messy for a small business like me with some 2000 different local sales tax jurisdictions to keep track of. A ruling like this would just make Amazon even stronger because they already collect sales tax. They will probably offer that as a service on their website for small merchants there, giving Amazon another slice of the small merchant's revenue.

 

[SIXTYNINER]

JR

PS: FWIW the SCOTUS is considering a sales tax case……………………..
like this would just make Amazon even stronger because they already collect sales tax. They will probably offer that as a service on their website for small merchants there, giving Amazon another slice of the small merchant's revenue.

Amazon : (170 billions revenue , …  growing..)  -  > tax heaven  ( fast expansion main reason )
check wall street quote about ….

like Ikea , Ebay, Paypal, Apple , Google , insurances & Banks , oil , weapons , …... and all the rest of some millions companies
and  corporations (a.k.a. the "1%")
that use Cayman , Delaware , Panama , Jersey island ,Luxenbourg , Macao ,
and other various countries too
for not pay taxes ,
or pay very low rate like 2-4 % only…. or just a bit more in some other case..
( and where they open new branches very often they obtain non-repayable loans / state subsidies ,
discounts on workers salary contributions (paid by the government with citizen moneys) ,
full or partial free ground for establish the branch building ,
discounts on energy, water , etc.. services , etc…..  )

reason why all the "common" peoples , little stores , little companies , and related
have to pay hi taxes rate , (or die)
(thanks to who do not…. , but "suck" so much…)

putting  the welfare  to the gas barrel..
(expensive health cares , expensive water service , expensive energy services ,
expensive or bad public transport , bad schools or hi cost for…  , corrupt politicians apart.. )

coming  back to pro audio
… and used cars dealers  ,

what about distributors that also sell directly to end users ?
taking also the gain % of the dealer
it is correct ?

cheers

 

[JohnRoberts]

Amazon : (170 billions revenue , …  growing..)  -  > tax heaven  ( fast expansion main reason )
check wall street quote about ….

like Ikea , Ebay, Paypal, Apple , Google , insurances & Banks , oil , weapons , …... and all the rest of some millions companies
and  corporations (a.k.a. the "1%")
that use Cayman , Delaware , Panama , Jersey island ,Luxenbourg , Macao ,
and other various countries too
for not pay taxes ,
or pay very low rate like 2-4 % only…. or just a bit more in some other case..
( and where they open new branches very often they obtain non-repayable loans / state subsidies ,
discounts on workers salary contributions (paid by the government with citizen moneys) ,
full or partial free ground for establish the branch building ,
discounts on energy, water , etc.. services , etc…..  )

I am no fan of the death star (amazon) but they surely pay more than 4% while nowhere near the nominal 35%. No credible business that size does. I've seen estimates around 9% before the recent tax law change that drove large shifts.

reason why all the "common" peoples , little stores , little companies , and related
have to pay hi taxes rate , (or die)
(thanks to who do not…. , but "suck" so much…)

Yes I have long been an advocate of supporting (very ) small business, perhaps because I are one (self interest).

putting  the welfare  to the gas barrel..
(expensive health cares , expensive water service , expensive energy services ,
expensive or bad public transport , bad schools or hi cost for…  , corrupt politicians apart.. )

sorry I can't follow your stream of consciousness.

coming  back to pro audio
… and used cars dealers  ,

what about distributors that also sell directly to end users ?
taking also the gain % of the dealer
it is correct ?

cheers

Yes, more manufacturers are considering direct sales. (I only sell my drum tuners direct to end users. ). I don't need no stinkin dealers.  :-*

The natural progression for mature markets is to squeeze waste and inefficiency out of distribution channels. Some dealers clearly resemble that waste and inefficiency (my apologies to any dealers reading this).

JR

 

[SIXTYNINER]

I am no fan of the death star (amazon) but they surely pay more than 4% while nowhere near the nominal 35%. No credible business that size does. I've seen estimates around 9% before the recent tax law change that drove large shifts.

Try check taxes % rates of Luxenbourg …
(where all Amazon (and all others taxes "fugitives"... ) european sales payments go …)
and about put an eye here :
https://www.theguardian.com/technology/2017/aug/10/amazon-uk-halves-its-corporation-tax-to-74m-as-sales-soar-to-7bn

the web tax should change something about…
like who manages the payment (credit card , paypal , bank transfer and related)
have to take the taxes amount when payment is processed and send it to the tax department at the same time,
as advance , for next periodic balance ,
if you buy from uk or german etc… taxes have to go to the respective state ,

but probably they change to be only a "display" like ebay and similar , without bid option ,
where external independent dealers sell through Amazon website , because no web design and absurd maintenance is required ,
(as just also they do in parallel to theirs direct sale)

because at the moment the related law (unless otherwise) seem that do not include specific "limitations" about ,
if the company and website servers are located inside the tax heaven and as ebay and other type of services ,
give only a dedicated "display" service with a fixed fee and a % on the sales , + advertising spaces,

in this way probably they will avoid further fiscal issues….
because who sell the products and have to pay the related taxes
are the independent sellers that use Amazon website to sell ,

if nobody will put hand on……
(or already are doing it)

but the same considered the dimension of the gain also only supply the "shop-host" rent service
with very low tax rate ,
it can be considered fair ? acceptable ?
towards those who receive hundreds bucks sanction for some tens of cents coffee receipt ,

poverty and envy bring war...

Yes, more manufacturers are considering direct sales. (I only sell my drum tuners direct to end users. ). I don't need no stinkin dealers.  :-*

The natural progression for mature markets is to squeeze waste and inefficiency out of distribution channels. Some dealers clearly resemble that waste and inefficiency (my apologies to any dealers reading this).

JR

i agree a little about ,
because little manufacturers and "artisans" that make good devices / products , 
and for various reasons can not find a "suitable" distributor ,
have all reasons to sell directly to end user ,

different thing is for dealers that also spend their own money to advertise products ,
and everyday dedicate precious time to show them at the store to the interested ,
that go to the store for check products , because near where they live ,

and after they buy ( for price..) from the distributor
that sell directly without have a store (and related management costs..)

it is not a mockery ?

 

[ruairioflaherty]

it is not a mockery ?

Dealers who abuse their distributor or manufacturers trust will lose that product line.

Manufacturers and distributors who abuse the trust of the dealer will lose that dealer.

I've seen it go both ways and have owned a music store (records and instruments) too.  There is a lot of grey area, it is not anywhere as simple as you are making out.

 

[SIXTYNINER]

Manufacturers and distributors who abuse the trust of the dealer will lose that dealer.

I think that the  Manufacturers can not be compared to the distributors ,
and the gain they get , semi empty boxes apart , is almost always deserved ,
overall  because they are the origin of true economy source (not add on, like insurances,shipping,services,etc..)
seen that
the manufacturers have to do :
products research and development , that require time and money
and related  unpleasant issues , that most members of this forum know so well ,
have to invest money amount in the production  of products quantity ,
that not always go well , and require modifications , corrections , on products made ,
and sometime in the worst case when modifications can not solve the issues ,
the products lot have to be completely redone ,
then when products are ready , tested , in the box , (and paid)
certification of conformity have to be passed , (and paid)
owner manual  have to be written and printed , (and paid)
warranty terms and support have to be planned ,
advertising have to be planned and made , (and paid)
though with today web way relatively less expensive and easy,
some fair and related cost have to be done (and paid),
an adequate products stock (space and quantity) have to be prepared and managed,
and total money amount apart , don't forget the, time , brain energy , cost to manage what above ,

i forgot something ?

distributors only move pallets from stock to shipping company vehicles
and frequently the products stock is given in management to external appropriate companies ,
for avoid building stock purchase / rent and maintenance , insurances (theft and fire) ,
forklift , workers , lights energy , costs etc..
then almost all the management can be done from an office ,

I've seen it go both ways and have owned a music store (records and instruments) too.  There is a lot of grey area, it is not anywhere as simple as you are making out.

i agree , too many grey areas ,
but all can change (like the universe),
cheers

 

[ruairioflaherty]

distributors only move pallets from stock to shipping company vehicles
and frequently the products stock is given in management to external appropriate companies ,
for avoid building stock purchase / rent and maintenance , insurances (theft and fire) ,
forklift , workers , lights energy , costs etc..
then almost all the management can be done from an office ,

Sixtyniner,

The whole thrust of your argument seems to be that someone somewhere is making money for doing nothing or somehow taking advantage of the consumer. I've done a lot of work with pallet moving audio distributors and it's a brutally competitive business.  I'm also very connected with a whole host of pro audio manufacturers and it too is a difficult game.

If you've had a bad experience at the hands of one or the other I'm sorry but it is simplistic to paint the whole industry because of it. 

 

[JohnRoberts]

Sixtyniner,

The whole thrust of your argument seems to be that someone somewhere is making money for doing nothing or somehow taking advantage of the consumer. I've done a lot of work with pallet moving audio distributors and it's a brutally competitive business.  I'm also very connected with a whole host of pro audio manufacturers and it too is a difficult game.

If you've had a bad experience at the hands of one or the other I'm sorry but it is simplistic to paint the whole industry because of it.

+1

As industry segments mature, competition squeezes waste and inefficiency out of the distribution chain. Dealers and distributors must add value to the customer or they will disappear and over recent decades I have seen many disappear. 

The other guy's job always looks easier, and manufacturers are envious of the relatively easier margin in retail. In fact there is a trend of very large Chinese contract manufacturers buying domestic brands to harvest more profit margin (contract manufacturing is a low margin business). Of course then they learn it isn't quite that easy, but you might be surprised by who owns some classic Hifi brands now.

JR

 

[john12ax7]

In the past dealers would carry stock and have a physical store presence for customers to visit.  Lots of cost associated with this. These days it seems a lot more just being a middle man, a website and office, where the product is drop shipped from the manufacturer.

So would it be a legitimate criticism that they shouldn't receive previous traditional margins since they are now doing less work and taking on less risk?

 

[JohnRoberts]

In the past dealers would carry stock and have a physical store presence for customers to visit.  Lots of cost associated with this. These days it seems a lot more just being a middle man, a website and office, where the product is drop shipped from the manufacturer.

So would it be a legitimate criticism that they shouldn't receive previous traditional margins since they are now doing less work and taking on less risk?

It isn't about how much profit they deserve to make. In a free market, competition will pursue any part of the chain that isn't adding value. (most) Customers don't like paying more than they have too... of course there are new phools with too much money around every corner to buy those phunny line cords. 

JR

PS: An interesting trend going one right now is a deflation of brand name value... I have long wondered why people are so willing to pay more for the same poop as generics. Well it looks like the mass market is finally catching up. Anybody still want to pay way too much for razor blades? PG wants you... :

 

[john12ax7]

It isn't about how much profit they deserve to make. In a free market, competition will pursue any part of the chain that isn't adding value. (most) Customers don't like paying more than they have too... of course there are new phools with too much money around every corner to buy those phunny line cords. 

JR

Yes,  but it's not actually a free market.  These days lots of prices are fixed with MAP agreements. Competition to potentially correct market inefficiencies is virtually non-existent. Such is the case in many markets, not just audio.

 

[SIXTYNINER]

probably if the distributors  do only distributors  would  be better ? (with "different" gain %..)
and respect who stay in the forefront and do the  dealer with professionalism and correctness ,
( used cars dealers apart )

if they want also sell direct as dealer they could do it by opening another company
totally separate (building and management) from what for products distribution
and pay all related costs

…..  "cutting"  here and there ,
at the end it could end with the diy assembly box
from manufacturer to final user ( if tech experts , with time available to do it )
but for not tech experts or who only want use the device and have fun ?
how to do with intercontinental shipping cost ?  only with some stock for any continent ?
and who manage the stock ? a staff paid by the manufacturer (building maintenance costs included) ?
or stock management by contracted logistics company ?  (that manage other brands stock)
and if the device breaks ?  local authorized  service repairs ?
then :
1- product  purchase -> on the manufacturer website , payment by paypal,credit card,bank transfer etc..
2-product delivery -> manufacturer send the delivery order to logistics company that send it to customer
3-for tech repairs with warranty or not -> to local authorized repair lab company (as normally)

then
no cash payment option ,
no direct conversation possible with a tech attendant ,
or only typewritten chat with same indian low cost call center

if wrong device is delivered ? who pay send back ?
who pay for delay or lost work if the device have to be used at once ?
how can be done a few hours fast replacement ?

other more ?
cheers

ps:
when the train ticket were sold by by a human
good or bad …. You certainly took the train

with ticket robot machine frequently broken
you do not take the train
with all related troubles ….

… robots don't buy  what they produce .