Re-Tales #18: Partnering up to go to market

Today's audio distributors have their hands full, now more than ever. As I've discussed previously in this space, COVID-related failures in the global supply chain and related, large increases in the cost of freight have impacted audio just like most other industries.

Now more than ever, companies rely on solid partnerships to carry them through. But which partners should they choose?

How do distributors decide which manufacturers to partner with, and vice versa?

I spoke with several distributors, asking how they connect with international manufacturers. How do they decide if it's a good match? The considerations are many. Some are obvious. Others are less so.

Every major distributor gets approached often by manufacturers seeking representation on this continent. Meanwhile, opportunities for distribution are pretty rare because the market is already saturated.

"The US market is crammed with product," Jay Rein, president of Bluebird Music Inc. of Kenmore, New York, told me in an interview. "If we are going to bring in a new line, it has to offer something truly special. There is no chance of being successful in the US market by bringing in another 'me too' line." Bluebird imports products from Germany, Switzerland, Austria, France, the UK, and China.

Stephen Daniels, president of Arlington, Texas–based The Sound Organisation, which imports and distributes products from the UK, told me that his company gets offered something new every couple of weeks. "Products come and go in the American market," Daniels told me in a Skype conversation. "Some that you thought really should do well, haven't." Even with brands that are established overseas, success isn't guaranteed.

What criteria matter most? Build quality and great sound are assumed, these sources told me, but they're far from the only consideration.

"It's more about the story than the product," Daniels said—and that goes double for newer, less well-known companies. A story, though, isn't just marketing. It's all about what led to the product and what's behind it. Rich Maez, founder and CEO of Monarch Systems Ltd. of Englewood, Colorado, which distributes Alluxity, Chario, Siltech, Ultra Carbon, and Franc, turned that around: Yes, companies need a story, but behind that story there must be substance.

Before Monarch gets behind a company's products, they need to understand what the designer was trying to achieve. And it has to be real, tangible. "We don't want to deal with companies that deal in magic components," he said. "You have to be able to tell a legitimate story that goes beyond the magic, or 'it's a secret.'" For Monarch to get involved, the manufacturer has to have "a legit scientific and engineering background," he said. Aesthetic appeal is another key ingredient. "People shop with their eyes," Maez said. "If it's ugly, we don't really have any interest in it. If it looks like a rock, nobody wants it in their house."

You also need to look at the organization, Daniels told me. "How long has the company been in business? Are they viable?" He looks for coherence, in product lines and pricing. One company he worked with, he told me, offered products that became obsolete before they got to market.

Manufacturers don't need to have a long history to be suitable for US distribution. Representing newer companies, as opposed to well-established brands—even heritage brands—has pluses as well as minuses. Sure, working with newer companies, especially startups, carries risks. But representing established companies does, too. When a distributor takes on an established company, it inherits the company's history, for better or worse. "You're taking on how the product has [performed] in the US market," Daniels said.

With newer companies and startups, it's a fresh playing field, a blank slate. Aided by substance, the image can be created from scratch. On the negative side, the expectations of naãve startups can run high. "People see the US and Canada market and they think 'ching-ching'—gold mine," Daniels said. But building a brand takes time and commitment. "You've got to be in it for the long haul."

Some manufacturers offer a mix of old and new. Daniels mentioned Scottish speaker makers Fyne Audio, a line The Sound Organisation picked up recently. Fyne is a newer brand, but its founders come from Tannoy, so they have, and offer customers, "a wealth of experience."

Determining which manufacturers to work with takes time. Vetting is essential. "The larger and more established the manufacturer is, the more involved the process is," Rein said, describing Bluebird's approach. A manufacturer needs to understand the US market, what it takes to be successful in it, and how Bluebird works to develop business for them, he added.

Old or new, companies must be financially viable. "Who gets left holding the bag if it fails?" Daniels asked, rhetorically. Maez offered this: "We want to be contributing to their stability rather than being responsible for it."

Perhaps what's needed most is trust. As with any relationship, mutual trust is the foundation for a long-term partnership. That's why, Daniels added, The Sound Organisation has an open-book policy with some partners. Rein expressed a similar view. "They need to believe in our approach and trust us to do the work we say we will do," he said. He seeks partnerships with manufacturers to deliver lasting value.

"It's a weird mixture of who you get into bed with," Daniels says. Representing a company as distributor is "a massive undertaking." If The Sound Organization takes on a new company and then decides that company isn't a good fit, he'll try to help them find a new distributor. "The worst thing [you can do] is to drop a product and leave customers high and dry."

Ultimately the goals of distributors, manufacturers—and also dealers—are the same: to deliver high-quality hi-fi products to customers and provide them with the service they expect. This remains true even when the chips are down—and even when the chips, like DAC chips, are in short supply.