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High End Manufacturer's New Take on Direct Sales

Discussion in 'audio' started by vln, Nov 23, 2017.

  1. vln

    vln Shuns mooks. And MQA.

    I found this article pretty interesting, not because of the brand in question which seems to be some high end 'audiophile' company I have never seen, let alone heard of, but how they deal with the changing circumstances for selling these types of products and what the effect of it is:

    http://www.theaudiobeat.com/news/neodio.htm

    "French manufacturer Neodio has announced its intention to dispense with the traditional distribution model and the high prices that result from its three-tier structure." (With three tier I assume they mean manufacturer - importer/distributer - dealer)

    "[...] the electronics will be sold through dealers (domestic and international, with whom Neodio will deal directly) or through two showrooms [...] Despite a reduced margin, Stéphane Even says that no dealer in France has so far opted to close their account. All of which is interesting, in an academic, changing-face-of-the-business sort of way, until you stop to consider how it impacts end users -- and that’s biggest news here. The Neodio Origine S2, a player that used to sell in France for €35,000, will henceforth cost €15,000 within the Euro zone, including sales tax, and €13,750 plus tax outside. Same machine, same stellar performance, but less than half the price."

    Just goes to show how much of the money spent is due to an antiquated business model, and not due to the advanced high tech inside these products.

    Thinking about it, why not sidestep the dealers as well, since you would want to demo any component in that price range in your own four walls anyway, before making any decisions?
     
  2. Arkless Electronics

    Arkless Electronics Trade: Amp design and repairs.

    Some of us have been doing it like this all along!
     
  3. misterdog

    misterdog Not the canine kind

    Collect from the factory and save on the delivery charges.
     
  4. mmckernie

    mmckernie pfm Member

    Is this not what companies like Linn and Naim already do i.e. supply direct to the dealer from the factory.
     
  5. vln

    vln Shuns mooks. And MQA.

    Good point, however for the country I live in naim definitely have a distributor, not sure about Linn.
     
  6. uncl_nigel

    uncl_nigel pfm Member

    I would be feeling very upset if i had recently paid the full €35,000! Suddenly new becomes cheaper than 2nd hand...
     
  7. Hipper

    Hipper pfm Member

    There's another advantage in dealing more directly with customers and that is you get to know them and their requirements. That is good for any business.
     
  8. 2112

    2112 pfm Member

    As the market gets smaller I can see more and more manufactures selling directly, similar to NVA, with a return option if the purchaser is not satisfied. It makes perfect sense to substantially lower prices by cutting out distributor and dealer margins.
     
  9. littleaudioco

    littleaudioco Trade: the little audio company

    It all depends if the manufacturer has the infrastructure to deal direct with their customers. It’s probably not too bad if they don’t sell much product, but if they sell a certain number of products on a regular basis, they’ll need to take on staff to deal with sales/packing/shipping/returns/support etc. This is one of the reasons why manufacturers have dealers!

    That example in the first post seems a bit fishy to me - was the distributor taking €20k on each unit?! Sounds like an excessive profit margin to begin with.
     
  10. Purité Audio

    Purité Audio Trade: Purite Audio

    I fully expect this is the future,direct sales for any item that can be couriered.

    Keith
     
    Last edited: Nov 24, 2017
  11. jy3

    jy3 pfm Member

    NVA have been shouting from the rooftops direct selling is the way to go, they even have 30% off today only as a Black Friday sale.
     
  12. uncl_nigel

    uncl_nigel pfm Member

    That is probably why no one seems to stock Neodio here in Lyon while they do stock brands such as dcs and Aesthetix...
     
  13. G T Audio

    G T Audio Trade: Distributor and Manufacturer

    I have been adopting this policy for some of my products for several years now. In fact I have designed a few products specifically for direct selling to the end user. As a manufacturer, one also has to factor in the lack of expertise and experience of some distributors/dealers who end up making more profit out of a sale than the manufacturer who has to design and produce the item.
    I am also lucky in that I have found a few good reliable distributors who do know what they are doing and hence we've been working together for some time.
     
  14. Yomanze

    Yomanze pfm Member

    100% margins on HiFi gear (manufacturer price vs. dealer price) is pretty commonplace, so if more manufacturers move to this then 50% savings are expected. :)
     
  15. YNWOAN

    YNWOAN 100% Analogue

    In the UK then yes, in other countries both companies use distributors.
     
  16. teddy_pardo

    teddy_pardo Trade: Teddy Pardo

    Our business is built from day one on direct sell, which allows us to sell at a much lower price, sometimes 1/4 of the price of equivalent products, but...

    We have started with power supplies, which was relatively easy, as it is perceived as accessory and people felt more confident. Then we added DACs and amplifiers, which was more difficult. DACs and amplifiers are perceived as the core of the system so people feel less confident to buy online without listening first. In the beginning most of our sales were to people who had one or more of our power supplies, which they considered as great bargain and wanted to reproduce this concept on the rest of their system. It took 2-3 years to build a solid reputation and only than we started to see new customers buying based on forum feedback etc. With speakers it is even more difficult, most people would not buy speakers without listening first, no matter how good they are and what people say about them.

    I'm not sure that direct sell is "the future", I believe that most people would prefer to buy from a dealer, even if it costs 2-3 times more (or you get much less for your budget) but listen before buy. In order to be able to sell directly you need to have excellent reputation and excellent offering so that people can't resist the temptation...
     
  17. jy3

    jy3 pfm Member

    Manufacturers confident in their product and offering a no quibble returns policy when selling direct can surely be successful. This would put pressure on manufacturers still selling through dealers, at double the cost for equivalent product, to ensure their offerings are at least as good.
     
  18. teddy_pardo

    teddy_pardo Trade: Teddy Pardo

    They can't, they don't have margins. The distribution channel eats 50-70%. They bring value but they don't work for free.
     
  19. Tony L

    Tony L Administrator

    The problem with direct selling is the lack of any real comparison aside from your own existing system. You have the same financial hit of buying from a dealer (i.e. the thing is inevitably worth 20-30% less as soon as you’ve bought it as that is what you’d lose moving it on) but with no comparable new products at hand to contrast and compare against. In most cases it makes a lot of sense, I buy huge amounts of stuff online, but for something as subjective as audio if I was a new buyer (I’m not, I buy second hand to avoid the depreciation) I think I’d want to hear how it stacked up against competition at its price point.

    Back in the distant past when I did buy new I usually visited quite a few dealers to hear what was on offer from the different brands. I quite enjoyed that part of the purchasing process and kind of miss it now I’ve migrated into the vintage audio collector market. I’m also far from convnced by the “savings” of a lot of online-only kit and I’ve very seldom noticed any real correlation between price and performance. I can think of a fair bit (which I won’t name) which seems decidedly expensive compared to some of the big names when one looks at build quality, facilities and component costs. Ok, a lot of major UK brand kit is made in China these days (Quad, Audiolab etc), but even so that is the market the little direct seller guy has to compete against. Not an easy market at present so there is certainly plenty of room for different approaches though.
     
  20. 2112

    2112 pfm Member

    The sale seems to be going very well.
     

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