|Post 15 made on Saturday January 20, 2018 at 13:50|
My $.02 worth as a former brick and mortar shop who's now an independent..
It wasn't the "internet" sales that chased the manufacturers into this situation, it was themselves...
Back in the day, we were Pioneer Elite, Integra, Parasound, Runco, B&W, etc.... and we HAD to have a showroom and commit to xx$$ per year and so on... Then the Reps, became "distributor-Reps" and started opening all sort of "Installation only" dealers around us. Note, that we did custom all along, and the install-only guys were garage operations. While they got an increase in sales in our territory, it was offset due to us shrinking our total dollars. Probably a short term net gain, but it opened pandora's box.... In my market, during the 90's and early 00's there were 13 shops in town doing home, car, and custom (that's counting B&M, big box, and trunk slammers...) and after the purge (2008) there's now 4.... The manufactures had every ability to stay protected (ala APPLE) and let the short term $$ go away in favor of keeping dealer in place. But no, they went for short term growth, opened EVERYBODY, and turned the other cheek when their products started showing up on Amazon and other places (as long as their warehouses were empty, they were happy). This lead to the mass move to online where most operators were happy with 5% (or less) to move boxes, and then it was down hill from there.. So much so, that it killed their retail base, and all they had left as an option to empty their warehouses were online retailers or trunk slammers. The retail shops were gone..
Think about it, you can find Apple online, but not discounted, unless obvious knock off or gray market, and then there's the whole Auto industry- Try to buy a NEW Ford, GM, BMW, VW, Kia..... online or discounted.
I'm also involved in the bicycle industry right now and they are dealing with the same issues..... There are online (they call it consumer direct) brands who assume that by cutting out the middle man (shops) they can sell for less, but forget to calculate the inherent and holding costs. Where the big guys can offload their warehouses to dealers who then deal with the end users (sizing, selling , mechanical support, etc...), then repeat. these direct guys are holding their inventory until sold (warehouse $$), dealing with EVERY customer instead of just the dealer base (Call center and personal $$) and their returns are topping 50% ($$$$). Meanwhile the big guys are seeing $$'s and are spending big money to build website back ends to sell online, deliver to the dealer and have the dealer in the loop (dealers maintain a % of the margin for online sales). This sounds good, but in reality, people shop online for price (and thus no margin). So far NONE of the big guys who are attempting to sell online (at retail) are showing any positive ROI, and the direct guys are trying to raise their prices to overcome their basic business flaw.
It's interesting to see yet another industry go through this, although this time, post 2008.... and meanwhile Amazon is looking into Brick and Mortar.....
Chinese proverb "may you be cursed to live in interesting times..."