Back in the day before the internet or smart phones the way retailing worked was a manufacturer would “anoint” a retailer to sell his brand at an agreed upon pricing schedule and the retailer in turn would be awarded some geographical exclusivity and together through various methods and channels drum up demand to increase product turnover and to return a fair profit for the manufacturer and retailer while keeping a tight control on the distribution of the product.
The retail system worked because it used checks and balances and tried and true methods of balancing the supply with the demand with regard to price. What was golden was for the manufacturer to produce a product that the demand easily outstripped the supply so the manufacturer and retailer could charge the retail or in some cases above the listed retail price for that particular item. This system was the model for probably the last 100 years I would venture a guess, but today this is no longer the case…I suppose the Apple iPad/iPod new version roll-outs still enjoy this scenario but not much anyone else.
But here is the rub as I see it. Using this system of distribution it was the manufacturer that set the price and therefore that items “perceived value” to the customer. In other words if, say, an Alpine deck cost $250.00 and every store everywhere sold that particular deck for $250.00, if then, you believed that it’s value to you was $250.00 or greater than you’d paid $250.00 for that Alpine deck. A “savvy” shopper back then would call around and try to find a shop willing to sell that Alpine deck for less than $250.00 and if so ask his local retailer to match it. Depending upon the price and scarcity or demand for that Alpine deck the local retailer would or would not sell at or below that price.
Now the upside to this system is that with a controlled distribution system the customer received an Alpine deck that came with a warranty and was worth $250.00. He felt good, the retailer felt good and so did the manufacturer. It worked for the most part. Sure, like everything else in life nothing is perfect but it was a doable system. But them day’s are long gone and now with the advent of the internet and smart phones the retailing paradigm is being rewritten and reworked every day by every store that is in the business of selling anything people buy.
So why am I talking about this when I should be extolling the virtues of Alpine, Kenwood, JVC, JL Audio, Rockford Fosgate, Boston etc? Well maybe because I would like to throw this out to you. What the internet and smartphones with all the “apps” available has lessened both the actual and perceived value for most any product made and because of this many retailers are caught up in the “race to zero” which is an UN-tenable situation for the retailer. What has happened is that the channels of distribution have been “hacked” and now the hackers are selling these items at 2% – 3% and many times even less than what we pay for certain items which diminishes both the real value and more importantly the perceived value for that particular item.
What is the answer? There isn’t one. What are the problems with the item being sold for 3% over what an authorized dealer pays for that item by an unauthorized on-line web site? Well, from the retailers viewpoint it’s a no-brainer that he loses out on the money he would have made and the profit from that sale but what is I believe even more important is that now the customer sees less value in that brand or that model because he thinks he won because he paid less, in some cases a lot less. And of course when the unit malfunctions than the real fun begins and now the consumer has to rely on that low-ball web site to honor that product’s warranty because no authorized dealer certainly will and now he is pissed at the manufacturer as well as the dealer who won’t “honor” the products warranty.
Now the consumer see’s absolutely no value at all in those companies’ products because he feels he should enjoy all the benefits of those who paid the asking price while he decided to pay less. I have lost count on how many of these warranty “discussions” I have had with those who purchased products through the internet from unauthorized dealers and waltz into the shop expecting us to honor their products manufacturer warranty. Let’s just say some handle it better than others and some can be down right a$$holes. I am not writing this to scare anyone and I realize how hard it is to see something that you want for $300.00 at a shop or authorized dealer on-line than seeing the same damn item for $185.00 at some on-line web site. Hey it’s your call. I just offer consumer tips and shopping advice. But what can go wrong??
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