E-Commerce & Specialty Audio Retailing Letters part 2

Ethics & e-commerce

Editor: The issue of dealers vs the Internet is one of profound importance. In principle, I support Sam Tellig's position: that dealers are essential to high-end audio's survival. But the survival of dealers themselves should not be predicated on the industry notion that high-end consumers should feel a sense of moral obligation to buy from their local dealers.

This notion is partially founded on a valid principle—ethics. The ethics argument involves the practice of customers using dealer knowledge, advice, and products to learn about and audition products, use that valuable experience to make buying decisions, and then purchase over the Internet. Many of us in this wonderful hobby could not morally do this. For whatever reasons, I have found that the vast majority of people associated with the High End, from customers to dealers to manufacturers to the high-end media, are incredibly honest and really nice people! Next to my love of music, this is one of the main reasons why I have found this hobby so gratifying.

But, unfortunately, there are some who will take advantage of this strategy, and, because of the relatively high price of high-end products, the Internet offers the only affordable inroad for many, a great number of whom are from the younger generation of newly inducted audiophiles, and who also happen to be very savvy users of PCs. The industry certainly needs to capture this audience, and comments such as those made by Kathy Gornik are not going to win their support.

However, I believe that the manufacturers and bricks-and-mortar dealers can adopt strategies that would offer a tremendous advantage for themselves against the Internet. Some of the strategies are already, I believe, being formulated. One of the objectives for this manufacturer-dealer relationship must certainly be steady and repeated sales from existing customers. Another objective should also include the induction of new, young, and (initially) less affluent customers.

These first two objectives could be realized by developing a well-defined upgrade strategy that could be provided only by bricks-and-mortar dealers. Manufacturers should develop different levels in quality and affordability by defining specific tiers, from entry-level to reference quality, but within each tier an upgrade path would still exist. This provides the customer the opportunity to trade up to the next level once he has completed his upgrade path, which in turn makes another quality used product available to a potential new customer at an affordable entry-level price.

Two additional advantages to dealers could be in a secondary market of used-equipment manufacturer warranties and trade-up privileges. These two items provide a blanket of security for the newly inducted audiophile and lay the groundwork for future repeat business. And let's not forget authorized dealer repair. If one understands the automobile dealer business, you realize that a significant portion of its income comes from dealer repairs and service. The audio business has nothing to compare with this, but it certainly could.

I am sure that some dealers are already practicing some of these ideas with great success. I know of one, Holm Audio in Illinois, which, by offering an attractive trade-up policy, has been very effective at bringing back repeat customers. They also offer a very liberal audition policy. I should also acknowledge having had wonderful personal service from ProMusica and UltraFidelis. These are the kinds of things that would make a bricks-and-mortar dealer, working constructively with manufacturers, an enterprise that could not be matched or threatened by the Internet. But who will light their fire and get them going? Hopefully, by printing this letter and using its powers of influence, Stereophile will be the catalyst.—Jerry Slavata, Brookfield, WI, audiojerry@yahoomail.com

E-commerce...

Editor: In the May issue's "Letters" (pp.7-8), Jason Dorazio attempted to denounce e-commerce with respect to hi-fi gear. As Mr. Dorazio is a bricks'n'mortar audio dealer, it shouldn't be necessary to comment on his obvious conflict of interest. He was quick to commend the "specialty audio store" and its inherent benefits to the consumer, like "human interaction," something that cannot be replicated via the Internet. Well, the last two times I walked into my local "specialty audio stores" outfitted in blue jeans and a T-shirt, I was treated like a leper with hepatitis.

When I think of my local hi-fi stores, human ostracism, not human interaction, comes to mind. But when I call various hi-fi places on the Internet, I am judged not by the brand of shoelaces I have on but by what comes out of my mouth. When I have questions, I am not talked down to like a child, but am engaged in a polite and often, for both parties, educational conversation. I have developed a good relationship with two salesmen at one of the Internet hi-fi stores I shop at. I can call them and ask questions about certain items with the understanding that I will not be buying something just then, but am researching for future considerations, and the salesman has no problem at all with this. Whenever I set foot in my local store, if I don't walk out the store with something in my arms, well, they don't exactly make me look forward to my next visit.

Furthermore, I am exposed to and given the opportunity to purchase a wider variety of products over the Internet. I am not just left with the ones that have been hand-selected by my dealer. Nor would my local dealer consider a 30-day trial period, unlike most e-businesses. Through e-mail, I am able to correspond with the actual engineer of the unit I am contemplating buying, enabling me to get a straight answer about a product.

It's obvious that Mr. Dorazio must have been hit hard by the e-commerce revolution. His referring to me, and millions of others, as an "e-idiot" only serves to expose him and the majority of his industry's ultimate downfall. This is the attitude that has helped put him in this quandary in the first place. If we were happy with the results we were getting before, then e-businesses would have had no vacuum to fill.—David "e-diot" Soriano, dsoriano30@hotmail.com

...and E-diots

Editor: Jason Dorazio's letter in the March 2000 Stereophile illustrates why bricks'n'mortar dealers are becoming obsolete. The "foundation" of this "community of like-minded enthusiasts" is the music lover, not the dealer. He needs to come to a rather common business epiphany: If you are not essential and competitive, you are irrelevant. Are specialty audio dealers essential or competitive?

Mr. Dorazio states that the Internet is a "tool for unlimited information gathering," and he's right. Everything from specs to amateur/professional reviews is available on the Internet. Dealers are no longer essential for giving out information about high-end products. Nor are they essential for trying out components. Home use is the necessary and critical part of the auditioning process, not a dealer audition. Online dealers with a liberal return policy satisfy this requirement more than adequately, and wipe out the trip to the store. Again, the dealer is not essential.

Furthermore, there are no snotty salesmen on the Internet to deal with. Perhaps Mr. Dorazio should take the remarks made about snotty, snobby salesman seriously, given his remarks about "this kind of person," or "e-diot," who would buy Kenwood or Symphonic. I suppose Mr. Dorazio popped out of the womb with an all-Krell system wrapped up in his umbilical cord. Most of us are not so lucky.

In short, Mr. Dorazio offers no reason why a person should use their local dealer, other than some idea of loyalty and human interaction. The interaction at the dealer is usually with humans, but it is a business relationship based in mutual advantage, not some knightly code of conduct. I will not use a dealer's services if I don't intend to buy something there if it turns out I like it. But I'm ethical. Some people are not, and that's part of the game. If I can get a better value elsewhere, I'll use that service. I'll not pour my dollars into a black hole because of loyalty to a person I don't know, and who is more often than not snotty to me because I choose to dress in jeans and flannel.

The manufacturers that refuse to deal on the Internet will shrink, and they deserve to pay the consequences of their poor decisions just as their opposites deserve to reap the benefits of theirs. The dealers that work to make themselves essential and competitive will survive, and will likely do so as intermediaries specializing in value-added packages exclusively, such as installation and any point-of-sale possibilities that come with that role.

The dealers that continue to cling to an outdated and unsustainable economic position, especially the ones like Mr. Dorazio, and who do so while being flippant and denigrating to potential customers, will find themselves deservedly unemployed.—Richard H. Araujo, Port Jefferson Station, NY, raraujo@suffolk.lib.ny.us

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