Want to know the dealer cost on Electronics/Speakers etc? Then check this out.....

I ended up buying my new HDTV from a local guy, but not until I did extensive research on price over the internet. Only then was I able to go in and negotiate a fair deal(aka: beat him up). I did not even want to buy the set from the jerk, but he is an authorized Pioneer Elite dealer in my area. Had I not been concerned with the warranty, I would have bought it from one of the other Elite dealers that was willing to ship out of his area.

Some of these retailers better wake-up and learn that the internet is here to stay and they are going to have to compete with it either by matching price or offering great service.

My $.02

Baimo


P.S. These local guys advertised this set(Elite510) for 5799 plus tax and delivery. I ended up buying it from them for 4900 including tax and delivery. That is a ridiculous difference. They deserve to get beat up.

Quote:
MikeD60,

Being that you are from New Jersey and having to deal with 6th Avenue Electronics, you should understand exactly what I am talking about.

If my set breaks, do you think I would even bother giving them a phone call. No way. I am having the flash/tear problem taken care of by calling Pioneer direct. They deserve as much profit as the service they provide. NONE.

Baimo


P.S. That bit about peoples salaries has nothing to do with this subject, however all business is about $$$$$$.

Hello fellow Audio enthusiasts,


As a European enthusiast I fellt I might be able to bring a slightly different viewpoint to the issue of dealer margins and retail prices.

Quote:
Here Here Mr. O'Brien!! I think one of the problems is that in many cases dealers feel that they are entitled to charge full retail price for a product just because it is in their showroom, therefore they feel they are 'supporting' the product. In too many cases over here it simply isn't true. Unlike in the USA a dealer in the UK doesn't even offer extra services like calibration, set up and installation are no more than drop it onto the equipment stands and plug the right wires into the right holes, and any audio equipment that requires talent to set up like a T/T, or specialist equipment like video calibration, the they just don't want to know. Where I live in the North of England my sources of information for my home theater are the magazines (UK & US), newsgroups, this esteemed forum and a couple of internet mailing lists. In all cases I feel that the information I get from this forum and the mailing lists to be the most prized as the quality of information and the experience of the people on these lists is so vast. I do know more than any of my local dealers, period, and in comaprison with some on these forums I'd still rate myself as little more than an enthusiastic novice. A dealer has to earn his profit, not expect it as a given right!

Quote:
Spot on! Again locally I can't get a demo of an FPTV (for example) or a pair of electrostatic loudspeakers without travelling under 50 miles. For me that kind of support does not justify the 30 -40% which the local dealers charge in mark up. For us in Europe, the situation is even worse than in the USA. For example a piece of audio equipment which sell in the USA RRP for $3200 sells in the UK for $4900, a pair of speakers suffer the same mark up a does most electronics, in short our RRP is much higher than in the US and we still receive very little added value from the dealer. I have no problem with the dealer making a decent mark up if they earn it. For example I purchased a piece of specialised audio equipment from a US dealer who, because he knew this would pretty much be a box shift as he knew I could fully install it and set it up myself, sold it with a 20% margin. After receipt I had a problem of a technical nature, I phoned this dealer who immediately contacted the manufacturer and he faxed me with an answer within 36 hours from the USA. For me this level of support is well worth paying the extra margin as I could probably of obtained a bigger discount with another dealer. Since then this dealer has regularly given me decent discount on equipment which he ships to me, and I'm happy with the discount level as I feel he's earning his margin with the support infrastructure he has in place should I have a problem. I'm still buying with over 40% discount on UK retail and receiving a level of support I'd be lucky to receive at any UK dealer. Until the UK dealers start staffing their shops with knowledgable staff and they embrace the idea of adding value to the box they sell,it will be a long time before I consider buying at UK retail prices again.


I think that the Internet is bringing a painful message home to the audio business in that they can't just stick a ticket on an item and get it with no negotiation or added value. Also territorial agreement and big importer markups are going to go the way of the dinosaur. Any manufacturer who tries to prevent the consumer exercising this freedom of choice will find themselves with a very quick appointment with a liquidation hearing. I'm sure many dealers will go out of business as a result of this new business model and that is regretable. At the end of the day those dealers who actively support the local audio / home theater community with shows, open evenings, special events, out of hours listening sessions etc and who truly try and add value with the aid of skilled, experienced people on the shop floor will still find they are able to ask near to sticker price as people will recognise those skills. Those that resist change or won't change and who do not offer the added value will, sadly, be another statistic.


Regards and best wishes,


David

I understand what your saying but do you think that your industry is any different than the rest?


When you come up against a tough situation (i.e. The internet being a commerce area where companies are selling much cheaper) most companies either have to adapt, invent or become extinct. Look at Olivetti and Smith Corona and the typewriter. Which were once strong manufacturing companies in their industries have gone by the wayside because they didn't change to fit the new economy.


Please understand I think this sucks sometimes too, but look at all the innovation that it causes.


Not disagreeing with you only offering another opinion.


Joseph


BTW I understand your logic about 10/15% off with warranty vs 20% without, but in most cases it more like retail $1400 vs $950 internet. Very differnt numbers.

[This message has been edited by jgenduso (edited April 21, 2000).]


[This message has been edited by jgenduso (edited April 21, 2000).]

Approximately 10 years ago a good friend of mine who is a physician said that he would never be a participant in an HMO. He was a fine doctor, with good ethics that charged a fare fee for his family medicine services. He had no control of the changes that took place over a nine year period, but he was unwilling to adapt. 1 year following 80% penetration of HMO's in the northeast this doctor had lost 80 percent of his practice and was forced to close his doors. This same thing happened to many of his counterparts who took the same stance. Managing a health care facility myself, I adapted. I get less money per visit now then I did 13 years ago. There is more documentation and phone calls then health care.

I abhor the changes that took place in my field, but adapted to survive and take care of my family and the employees that work for me.

I fear that the high-end audio/video dealer is on the cusp of a similar revolution. Not a single individual is telling the dealer to like the change, but like it or not it is coming.


Don O'Brien


P.S. A note to Laurence: I agree that the individual parts and labor to assemble the products frequently does not justify the cost, but the R&D and marketing costs for many of these products (like so many pharmaceuticals) is astronomical.

I've got one word for you, boys and girls - capitalism.


I like money. I like saving money. I will shop for the best deal there is, given specific criteria (all elementary).


I bought my TW40X81 locally for $2350, haggled down from $2599. I could have saved a couple hundred, but I felt more comfortable buying locally. However, the local dealer wanted $400 for the Philips extended warranty (5 years) that I got for $107. He also wanted $500 for a Philips Pronto which I can get for $315. His price for the SD5109 - $799, I paid $475 +shipping.


By the way, I was fortunate that the local dealer knew something of his equipment, but at the same time he was misleading about some things and in one case simply untruthful. Fortunately for me I had spent a great deal of time on HT forums researching, so I knew exactly what the score was. Let's face it, because of increased competition, a local retailer will do just about anything he can to make a sale - for proof, go to Circuit City or Best Buy and spend 30 comical minutes with a salesperson. A perfect case in point was the Dish receiver the person I bought the TV from was trying to sell me (he is a dealer for both, but disliked Dish, and tried to sell me DirecTV). $299 for Dish 500 and 4722 receiver + $150 to install it - he would not even throw in the free installation kit, no mention of a Dish rebate. He said that all prices for Dish Network equipment was regulated by Dish, and I would not be able to find a better deal anywhere. It was the last time I talked to him. He shot himself in the foot bigtime, and greatly reduced my trust in the good-ole local boys.


I also read a report some time ago that Circuit City actually makes more money from the sale of peripheral needs (cables, powerstrips, etc.) than they do in electronics.


I will repeat, I like money - working for it, saving it, spending it, even smelling it http://www.avsforum.com/ubb/smile.gif Anyone who opts for your local retailer (with this drastic a price difference) just to keep them in business needs to have himself committed.


------------------

Nethawk


- New enthusiast of HT (I'm convinced this stands for "Here Tomorrow")


[This message has been edited by Nethawk (edited April 21, 2000).]

I cannot disagree on principle with any of the above, but people's actions seem contradictory. If you're buying for just the cheapest price, why bad mouth a dealer who cannot ( or will not) provide set-up, service, etc.? You get what you pay for. I know of 3-5 dealer in my immediate area that will provide service beyond expectation, but they expect and deserve to be compensated for it. The real tragedy is the full-service, quality dealer having an empty store and decreased sales because customers "know" he's making too much money. You'd gladly pay the difference between the discounted purchased price and full boat when you're TV is down and service is tough to hunt for.


PS- Baimo- Why compalin about not being about to go to Sixth Avenue for service calls? You got what you wanted from them (and what they're known for) a good price. Can't expect them to fall all over you for 10-15 points.

Mr. O'brien's post is right on target. It's called the way of the world.


And for anyone who's been buying or selling in consumer electronics the last few years, the message should not be surprising. Consumer Electronics are the perfect prey for the internet. No one should be surprised that the internet will soon come to drive this market. And, yes, regrettably (for those who've earned a living in the industry prior to the internet) it's going to change the way business is done, and it's going to make it harder to make money the way it used to be made.


Don's message is wake up and smell the coffee. You may not like this to be the truth, but you may not like glaciers either. In both cases, your like or dislike won't change the truth. The glaciers will still be there.


And, truth be told, any regular reader of this board knows as much as or more than 90% of the people working in retail. While the latter may still have superior knowledge regarding capability and hookup of the products they sell, they really don't know much about the products they don't sell. The array of product information needed by the buyer is much greater than any one retailer can provide. That same information is much more efficiently gathered from the internet, as opposed to 50 and 100 mile trips to the stores that carry such products--if they're that close.


That's the business today. It's not going to revert, it's going to more completely transform. People will always spend money in a way that makes more tangible sense to them, and that's what the internet offers, generally, to buyers of consumer electronic products.

Quote:
Mike,

I agree completely. I got exactly what I paid for from sixth avenue. But I would have gladly paid a few hundred more from See-More in Metuchen or a couple other local guys. The difference being that I know I have to call someone else to calibrate the set and that will cost me a $250. And if I have problems with the set I would get quicker responses from a smaller local guy. The problem was two-fold. Either the locals did not carry the Elite line or did not have it available when I needed it.


Baimo

Don's points re adaptability are well taken.


Having had a very good relationship with a dealer in the NYC area for the past several years I have come to appreciate the value, and am willing to pay more for products purchased thru this venue.


The challenge with this model is that the money is being made on the sale of the products. This leads to an untenable situation whereby expertise and experience are being compensated for by margin on product sales.


Over the past several years this model has proven unworkable in all but the several niche maketplaces. The computer industry is a perfect example. Early on, intergrators/ resellers were able to make money via sales of PC's and peripherals as these products carried with them 20%+ margins. Over time (and as margins shrunk to single digits) this business model proved unworkable. Companies (at least those who wanted to stay in business) began to charge for their services as a product and abandoned the margin on product model (or became product resale companies only or went out of business).


The internet is putting intense pressure on the whole industry and is providing a vehicle for product procurement at the lowest possible cost (of course, most of the time you get what you pay for, product and nothing else!).


If my dealer:


Offers me advice as to the interelation between 2 components based on experience.


Knows how they will interact with my current configuration and room setup (because they have taken the time to visit me at home).


Takes care of me when I have a problem or issue with a component (including the fact that it does not perform in my system as I had anticipated).


How does one place a value on this service, and compensate the dealer for it? Right now the dealer will expect to make money when he sells me the product at list price.


As can be seen from this discussion, the internet in general, and this forum in particular, this business model can not continue.


Certain manufacturers have attempted to limit distribution of their products thru restricted dealer channels (and not allow sales via the internet). This model seems somewhat short sighted as the nature of our society pushes capitalism to its exteremes in terms of the market determining the correct price for a product.


Recently, I purchased a screen based on information in this forum and my own research. As it turns out the screen is not well suited for what I am trying to do. However, I am now stuck with it. If I had purchased it thru my dealer, I can guarantee you he would have found a way to make it right.


Unfortuantely, I do not have a good answer to this dilema. If my dealer offered his advice on a fee for service basis would I have a problem with that, I don't know, would you?


I don't know what the answer is, but I know that the current model is doomed.


Off my soap box now.


Steve


[This message has been edited by gages (edited April 23, 2000).]