GREED: A new route to market for beleaguered and/or greedy audio makers? Part #2 of 3

First published in 2017

It can’t happen here!

Oh really? Well ….. take a look at the Dell computer company. They’ve become vast and have done so with having any retailers whatsoever. PCs and laptops are infinitely more complex that audio equipment.

All an audio maker needs to do is to have the will and the know-how to set up a home-support service and a return-to-base service. Given the increasing reliability of audio equipment, this really isn’t a difficult challenge. And apart from anything else, the set up costs for such a service are probably considerably less that creating, maintaining and motivating a retailer network.

Could it work?

It depends on where the question is directed. For the buyer, I can’t see a down side if sale-or-return is offered.

For the maker, commercially it seems to make sense although they’d have to bite the bullet and simultaneously commercially terminate the entire UK retailer network. This in turn means they’d probably have to do the same with their entire global network simply because the reduced UK prices would incline any non-UK end-user to import from the UK rather than buy from the established retailer network in their country.

It’s not clear how the printed magazines would react.

These magazines would still be the primary way that the target public would be informed of products that could now be bought direct from the makers. Naturally there would be a backlash from the retailers who had lost the franchise.

Rest assured though that the magazines would do the right thing for themselves first and their readers second.

This means the ‘bean-counters’ and advertising managers would take a view regarding the short-term benefits of alienating the retail advertisers or alienating the manufacturer advertisers. Then they’d make a decision. I’ve no idea which way they’d lean.

In contrast, the online audio magazines, because of their culture and their commercial structure don’t encounter this dilemma. (I hope to expand on this in a future posting)

If it happens, who will be the first to break ranks?

There are compelling commercial arguments to suggest a Japanese company will be the first. However against this is the cultural conservatism inherent in Japanese audio makers. They don’t like confrontation, they like stability, they abhor rocking the boat. On the other hand, their network is so comprehensive and the sales so huge that no one retailer or retailer group go exert any commercial influence on the supplier. So the jury is out on this one.

My view is it’ll be a UK maker.

There will come a point where one or possibly a few in collaboration will decide that rising costs, increased competition and flattening if not declining sales, plus aggravation with the retailers themselves to say nothing of occasional complains about retailers from disgruntled end-users might just force the issue.

Some retailers exert far more ‘grip’ over UK suppliers than any Japanese company would allow. Maybe, just maybe one or more of these UK makers will feel that they want fewer eggs in more retailer baskets, or no retailer baskets at all!

My view is that sooner or later, the ‘zero-basket’ option will prevail. After all, I cannot envisage any marketing strategy or bullying of reviewers nor advertising cleverness that will produce the same positive impact on market share as reducing the retail price overnight by the size of the hitherto dealer margin.

Part 3 follows in two days time

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