High-end audio has a slightly different problem, which is trying to maintain physical dealer presences so that buyers and see and audition products. The margins are supposed to help the dealers stay in business. Do they? Some observations:
Years ago, I knew a high-end salesman in Maryland who did extremely well selling very high-end audio. Sell a few $25,000 amps and $50,000 speakers each month, and you're raking in the money. He had no interest -- like many good salespeople -- in getting into management or ownership; he knew how to sell. I suspect that he's still going and has a good client list -- the DC area is booming, and there are many exotic products with huge margins that only a few dealers have access to. Not my gig, but fair enough, and millionaires can float other people's boats. I wish they were funding low-income housing instead, but, fortunately or unfortunately, no one made me king.
More recently, however, I observe that old-line high-end audio shops are scarce. My beloved Marvin Electronics, in Fort Worth, where I ogled and dreamed impossible dreams as a kid, closed a few years ago -- it was the very epitome of a local high-end shop that also sold things like NAD to introduce people into non-mass-market goods. Now, from my limited observation, it appears that the few remaining hi-fi-shop owners (and their children) run and staff these places on a lean budget and without traditional sales staffs. Cloud-based business software reduces back-office expense considerably. They sell lines that are unusual, or niche, or sold-not-bought (snake-oil-resin cables). In addition, Best Buy sells McIntosh, B&W, and other traditional, high-end lines. Neither of these brick-and-mortar, as far as I can tell, is willing to discount -- how can they with rent to pay and inventory to maintain?
Yet it is equally plain that the interwebs has made it cinch to do direct mfr-to-consumer and dealer-to-websurfer sales, avoiding brick-and-mortar entirely. SVS does a good job; my local sub mfr. Rythmik does too (talk about lean and mean!). Audeze and Benchmark, though I deal in those, also sell direct. I note that SVS recently starting selling through Best Buy, as well. These companies use generous return policies to deal with the -- presumably -- rare return. I have had few returns over the years, but I have a re-stock charge given the pricing structure I have. Good products probably don't get returned that often. I've been tricked by a buyer who claimed that a 200-lb speaker we inspected in its crate was, he later discovered, "scratched," so I insulate myself against all such claims now by requiring a waiver of shipping damage as a precondition to any sale. I guess the message is that companies are adapting to e-commerce in various ways. Change or die. I know there are a lot of small dealerships, like mine, that are side businesses for fun and profit.
I had a local, post-grad student come down to my law office yesterday to audition some Audeze cans. The office is down the street from my house and very quiet on a Saturday. She got all the time she needed, and I saw and did law work while she handled gizmos. My overhead is near zero, she got a good audition, she gets a good price, and I make a little extra money and meet a nice new person. There are worse things to do in this long waiting room called life.
Anyhow, we are extremely fortunate that super-high-performance products are increasingly available at historically-low prices. Let the millionaires sneer; I'm happy.
