The modern PS Audio—the company that began life in 1997 when Paul McGowan and his wife Terri bought back the company Paul had cofounded—has always sold its products online, and the earlier, pre-Internet version of the company always sold direct. But until now, PS Audio also sold their products through a network of authorized dealers. In 2017—the date of Stereophile's most recent full review of a PS Audio product—the company reported 65 US retailers, almost all the bricks-and-mortar sort.
PS Audio's Bill Leebens told me that dealers were notified about the change some time before the late-August public announcement.
Soon after they were notified, dealers were no longer able to order stock, but they could still place drop-shipment orders through mid-September. They could also, of course, continue to sell their existing stock of PS Audio products until it was gone.
In addition to bricks-and-mortar stores, PS Audio's new direct, online-only sales policy affects online-only retailers such as Music Direct and Underwood HiFi. The Music Direct website showed no obvious response to the news, but on Labor Day weekend—when I am writing this—Underwood's website indicated that they were clearing out their supply of Stellar Gain Cell DAC/preamps for roughly 20% below retail, while supplies last. No other PS Audio products were listed.
In recent years, PS Audio has appeared to be one of the hi-fi industry's success stories—an image reinforced by McGowan's new memoir, reviewed elsewhere in this issue. Why would a successful company alter its operating model so fundamentally?
That late-August press release had little to say about the why, instead stressing the company's ongoing commitment to customer service and some customer-friendly practices that, while not strictly linked to the change in the sales model, are clearly part of the same overarching strategy. The press release promised free same-day shipping on all orders and the option to return unwanted merchandise after an audition period of up to 30 days, with return shipping also paid for by PS Audio. Additionally, if a product under warranty fails or develops a fault, the company will pay for round-trip shipping, with the assurance that repair work will be turned around within 48 hours. Considering how much some of those products weigh—the PS Audio Power Plant 20 is 96lb—that seems like a nice deal.
I asked Leebens why an apparently successful company would want to change course so radically. Part of the answer is that it's not such a radical shift. It comes down, he told me, to simplifying the company's operations. Over time, more and more of the company's sales have gone online, to the point where direct sales and dropshipped dealer orders—orders taken by dealers but fulfilled by PS Audio's warehouse—constitute a very large portion of the company's domestic sales. Changing customer mindsets (among other factors) mean that even many customers who buy through dealers turn to the company—online or over the phone—for product support. Finally, it's much simpler to maintain a single domestic distribution channel than it is to sell direct and through dealers.
(Speculating now: There are some other obvious advantages to a direct-sales–only model that Leebens didn't mention. Direct sales mean you don't have to give dealers a cut. It also ensures that everyone pays the same price—that dealer discounts don't cause headaches.)
In short, PS Audio's course adjustment looks like the latest in an endless list of examples of Internet-facilitated disintermediation. There's a sense of inevitability about it. Downtowns hollowed out as shopping malls thrived. Shopping malls hollowed out when online sales surged. Local travel agents, movie-rental stores, record stores, and other retail venues have become scarce (or gone away completely) as their industries shifted online. In my New York neighborhood, the only remaining retail businesses I can think of are a grocery store, a liquor store, and a stationery store—and I live in Manhattan. (There are still some restaurants here, and plenty of places to get a "blowout"—apparently that's like getting your hair done but with no cutting—or to have your nails done or your eyebrows threaded, whatever that is.) When, recently, I needed a pair of shoelaces, I ventured well beyond my neighborhood but failed to find any and had to order online.
Audio dealers are, of course, already far less plentiful than they used to be. PS Audio's change could thus be viewed as a harbinger of more change or a continuation of a well-established trend. Surely it's both.
Dealers I spoke to acknowledged PS Audio's right to do business any way they choose, but, because they see PS Audio's success as partly a result of their own hard work selling the company's products, they feel betrayed. "It's like being married for 15 years and then going out and sleeping with another woman," one now-former PS Audio dealer, who asked not to be named, told me by telephone.
COMMENTS
The only issue now is that the "audition" is gone from the equation, but there is no telling how many customers auditioned at dealers and then when and bought on line. This has always been a problem about this industry with "tire kickers" coming and going in various retailers who carried the same goods, looking for the best price. Art Dudley talked about this a month or so ago. It is hard to be a retailer these days in anything.
The old brick and mortar retail sales model is deathly ill if not yet in death throes.
Regardless the changes in sales models, interested consumers still need to listen to and compare among a variety of loudspeakers in suitable rooms, and headphones on the individual listener's individual head.
There is a lot of room for improvement in current models of retail sales for these.
Audio shows, and reviews by 'reliable sources' like Stereophile, who perform measurements, in addition to listening, would help ........ In addition, if the manufacturers offer 30 day money back guarantee, that would be very helpful ....... Some direct sales manufacturers are already doing that ....... However, for large size floor standing speakers, we may need to hear them in a dealer show room :-) ..........
Electronics? Sure. But I'm a little surprised they made this decision to burn their bridges with dealers before the speakers have officially launched. I, as a consumer, would never purchase speakers unheard. I certainly would not purchase speakers the size of the new PS Audio speakers that I would need to pack up and ship back to PS Audio if I didn't like them.
I hadn't thought if that. But it is true that even if the return shipping is covered by them it is still a hassle to pack them up and deal with having them picked up just to listen to them.
The cynical part of me thinks maybe they don't want their speakers to be competing side by side with other top brands. Granted they would still be competing with whatever you currently have at home but they wouldn't be going head to head against a half dozen or more other top choices. And walking out of a shop without the speakers is much easier than deciding to repack and deal with getting them sent back. Once they are setup at home it is easier to get used to them and convince yourself that they sound good.
Eliminating distributors and dealers should make for a huge price drop.
It will be interesting to see.
My guess is that they are going to keep the prices the same and just cut out having to share it with the dealers. But I could be wrong, it happens from time to time.
From what I've seen typically the dealers were the ones that would discount the products from time to time.
Also, when you look at higher end audio the price is often what helps add to the exclusivity of an item.
Maybe strategically just in time so the TSS DAC and speakers don't have to debut at a much higher retail price than their existing clientele base are used to... (?)
[[This post has been edited to remove personal attacks.]]
Yes, they have stabbed their dealers in the back and the ones I know are not happy about it. No, they are not lowering prices. And there will be no more 'dealer discounts'. Their gear has crazy high mark-ups so I don't know how this is going to work out for them. [Paul McGowan] needs to retire before he ruins this company. It's a shame, they make some great great gear but it is NOT worth their crazy high retail prices.
Do you think this is the biggest Hi Fi company to go direct-to-the-consumer?
Fascinating thing, which seems like an irreversible decision.
Who is bigger yet sells direct?
SVS demos at many of the Magnolia "stores" out here in California. (I admit to thinking of them as an online retailer, like you mention.)
Emotiva, great call!
KEF is one company I can think of which sells direct ....... but, they also sell via internet dealers and brick and mortar dealers ......... Some companies like McIntosh, Mark Levinson, Pass Labs, Chord and some others sell via internet and brick and mortar retailers ......... Several headphone companies sell direct, internet and brick and mortar retailers ........ Several smart speaker companies like Apple, Google, Sonos and some others sell direct and, via internet and brick and mortar retailers :-) ..........
It will leave more money for trade shows.
Stereophile's review policy has long permitted reviews of products from companies that sell direct. See this AWSI by John Atkinson from 2007.
https://www.stereophile.com/asweseeit/307awsi/index.html
Jim Austin, Editor
Stereophile
That bodes well for on line only sellers.
As a subscriber it is useful to me to better understand your review policy and changes to same.
Paul McGowan seen the massive success of Schitt Audio in such a short time.
But he better have his pricing similar (50% less) now that there's no dealer mark up any more, otherwise he'll fall on his sword, then there's no going back to the dealers, once he's burnt them like this.
Cheers George
I love them!
I have a friend building a scratch preamp and then I'm getting that amp Herb reviewed.
Eventually, I think their turntable will be a great toy, as well.
That has lead them to success.
Paul & Stan have always been anxious to service their products and their Customer Base. I've been one of their Dealers, I know first hand.
PS Audio gets "Word of Mouth" referrals, offers Outstanding Customer Service and presents A+ Recommended Components Sound Quality.
The United States Postal Service does Global Leading, full service shipping, including full tracking.
Buying Direct assures "Fresh" Inventory purchases and useful telephone advice from in-house technical lads.
PS Audio has always maintained the HIGHEST Integrity in ALL things. PS is a no-bull shit, no fooling around supplier of Quality.
I and my old Business Partner Sir George Buckley love Paul McGowan. Geoge still has a early PS integrated Amp powering his early ser.no. Thiel CS3s. George lives back in England.
PS Audio is well equipped to handle Direct Sales.
Retail today is barely holding on.
Now-a-days only Service industries are Internet proof i.e. Pizza, Hair Cuts, Oil Changes, Car Washes, etc...
Of course, PS Audio relies on published opinions of our Leading Authorities ( as do all manufacturers ).
Stereophile's taking closer looks at Schiit is also helpful for the entire Industry.
The Greatest consideration about PS Audio is that they've stayed Loyal to Audiophiles and not wandered-off to do Transportation Industry ( like me ) or Air Industry like Collins did when they abandoned we Ham Radio folks ( I was/am W8FDS ). PS Audio activates Gifted Designers like King & Smith.
PS isn't a KRELL type outfit that presents expensive Packaging as part of the Gears appeal.
PS & Schiit are both Gifts to Everyman Audiophiles.
No dam Chinesium
Tony in Venice
You would be shocked to know how much PS gear is sold every year at retail which is 'just hanging on'.
When my dealer friends told me the dollar amount they've been doing in PS gear I was certainly shocked.
Thanks for writing!
In the early 1980s, as B&K Imports, I and my partner were importing and selling $50,000 per Week in Personal Audio Gear.
I also know Brick & Morter Dealer Numbers because I owned and operated Esoteric Audio in Farmington Hills Mi. ( known locally as Farmington Frills )
I was a Consumer Electronics Industry Insider. My above quoted Sales Numbers weren't enough to sustain my continuing in the industry. Egads, my Transportation Industry Numbers would be 1,000 times greater, it's a no brainer. People still in Consumer Audio are Audio addicts ( like me ).
All the Audio Dealers I ever knew are now rather thin shadows of their previous selves. ( exception being outfits like B&H Photo ).
Stereo Exchange is doing OK ( Dave Wasserman ) but nothing like Starbucks ( which he could've been ).
Bicycle Dealers are surviving a tiny bit better that Home Audio but even they struggle.
The world is changing to Solar and outfits like Apple and Tesla.
If you have a Committed Dealer Friend, I say : good for you, he's a dying breed.
Tony in Venice
Just a reminder that while it's OK to be as critical as you want to of PS Audio's decision or other policies or actions, it is not OK to attack a member of PS Audio's leadership team, or anyone else for that matter. So far I've had to edit one comment that broke that rule.
I'm not against energetic debate--on the contrary. But there's no reason that it has to get personal.
Jim Austin, Editor
Stereophile
... percentage of PS Audio retail (brick and mortar) dealers maintained inventory on hand so that, if you heard a particular piece of equipment demonstrated and decided to buy it, you could take one home the same day?
Dam good and appropriate question.
If I have a Chevy Car Dealer, I'll automatically be shipping him 20 New Cars per month for every Salesman. Audio Manufactures can't do that. they rely on Dealer Phone Orders which may never come.
Yet...
Dealers will claim to have a rather large range of Gear available say'n: "we can get that" but may not have it to demo.
The Gear a Dealer has out on the Sales Floor playing music will eventually be sold as heavily discounted "Demo" Stock.
I suspect that Dealers make their profit by selling 200 Feet of Monster Speaker Cable for $3.00 per foot.
All Dealer Profit comes from Parts & Accessories ( P&A ). I was once Noel Lee of Monster Cable's biggest Dealer ( back in their early Days ).
Tony in Venice
Ok, it is their right to sell their products the way they like, but what about discount now ? Is it going to disappear together with the dealers ?
I was a dealer for 20 years for B&K selling hundreds of products over that time. When they decided to put all their eggs in the Tweeter basket they discontinued all the active dealers. In a few years they were gone. Just saying in some cases it's the people that make the product not vise versa.
Since the company's inception 46 (!!) years ago, PS Audio has always sold direct from the factory. Selling direct is not new; what is new is that US sales are now only from the factory.
The review guidelines for Stereophile have long included provisions for companies that only sell direct---so that's not an issue.
Nor is auditioning gear an issue. PS has long had a 30-day money-back guarantee policy on all direct sales, and we also offer trade-ins.
I hope this clarifies a few sticking points.
Bill Leebens
Director of Communications, PS Audio
So direct buyers now should get them at dealers cost price, like Schiit.??
As now there's no demo's/cup of coffee/nice soft lounge to audition, no comparisons to other brands, easy on the eye receptionist to ogle at, ect ect ect.
Cheers George
so this is I guess the only way to continue the business, by not letting customers try before buy.
Their DAC's are *terrible* not to mention other products.
https://www.audiosciencereview.com/forum/index.php?threads/review-and-me...
https://www.audiosciencereview.com/forum/index.php?threads/review-and-me...
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