Why cables can be expensive

Enough....


BIG RED LINE

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I will try again on the value aspects of this thread and lets see if it draws in more dissing and conflict.

I still say that it is not so much the manufacturers fault, though some have taken advantage and played the game to a quite extreme level, especially some cable sellers. The problem is the established way to market and the number of people who have stuck themselves in the middle and wanting a cut of the slurp. Magazines would go bust on the money *you* pay for them, their survival depends on advertising. Retailers have to advertise in those mags just to bring customers to the door and they expect the magazines to respond with editorial that promotes their products. Manufacturers expect review and editorial cover for their advertising. Reviewers expect their cut for saying the right things and so we get the viscious circle of slurp that *you* pay for as an ever increasing precentage of the price of the end product. Because as the market dies back and decreases so more of a percentage has to be taken in order to keep everyone in it. But it has become more and more difficult, many magazines have closed, many reviewers have moved on to other writing, many retailers have downsized or moved to working from home, many manufacturers have been taken over by the Chinese or are now sitting with so much debt they have to service and such high overheads they will be bust or in the hands of the Chinese if the recession finally bites as it looks like doing.

On the other hand from my point of view the future is bright and the companies with little to no debt, little to no overheads like Avondale and many others including moi will flourish and take up the slack and the industry will go back to what it was in the 50's and early 60's as an enthusiast driven hobby industry, built by enthusiast for enthusiasts, promoted by enthusiast forums, sold through Ebay and websites or even through the forums themselves, BUT mostly it is the second hand market that will flourish as there is going to be so much gear out there from the peak times, so the other great market that will become prominent is the tweakers and bodgers and after market servicers and upgraders. Retailers will die like dinosaurs, magazines will go on-line linked to forums or die, larger manufacturers will be gobbled by the Chinese or die.

Darwin theory in action applied to an industry, and IMO a bloody good thing especially for the end user.

 

Sorry but I just can't get past the need to touch/feel/hear a box first and *know* that there's a physical presence like a building and factory and always working phone number behind the manufacturer that's getting a large number of my dollars.

Silly I know but I just don't trust eStores with anything more than a few of my dollars. (You'd be an exception Richard as you're old school transitioning with twenty years plus presence in the industry)

 

I think I fall somewhere between these 2 stools - I've purchased cables (new) and equipment(second hand) from ebay. Usually I've heard them first - the only exceptions to this were a pair of Richard's LS5 speaker cables (excellent, btw) and a balanced interconnect from Achtung Audio (seems fine, but differences are less with balanced). Oh, and I've purchased from master salesperson (but very nice guy) Russ Andrews.
I do like to listen to items in dealers or chat to salespeople - the seeing/feeling is important to avoid disappointment when a switch/control does not offer the tactile reward I like and a demonstration gives a flavour of the equipment before home dem/decision.

I would hope that Richard's predictions are a little extreme but I do take the point.

 

I agree it wont be an easy transistion and we will be discovering new ways to help it as time goes on. Speakers will be the biggest problem in the new market and manufacturers are going to have to realise they must have dem stock they will have to loan out to create sales, that is the only way around it. With other things shipping costs and shipping risks are reasonable, but speakers are another problem entirely.

But let me give two examples without naming names to show what is changing.
1/ A speaker manufacturer (very small) who started here with a small speaker. According to those that have heard it, very good, my mate Paul Messenger chuffs about them. But they took the traditional way to market so it is priced at about £1500. The dealers have no incentive to sell new product or promote a new company, it will sit on the shelf and eventually be sold in the sales for £800 or the dealers cost. Now if that had gone to market the direct way at £800 to start what an incentive for a good little speaker!! some dem pairs to pass around through this and other forums with reviews generated by members who try them - before you know it you have a bandwagon effect - that is the future.
2/ Linn LP12 subchassis - Linn have created a market by producing a total rip-off upgrade, it may well be brilliant but the price is plain bloody daft. So lots of people think hey I can do as good as this for far less. About three of them went the direct to market route and starting at about £250, one decided to go the dealer route to market and so it will cost about £1200, very few people are stupid, believe it or not, and the ones that are will go to Linn to burn their money because that is where the brainwash and the name is.

The market is still in flux and change, so both routes are legit and possible, but human nature especially in a recession makes the value for money equation extremely important. We will see, I have my opinion obviously, but now the direct route to market is possible, where as ten or twenty years ago the industry would have killed you if you tried it - too many vested interests or as I always called them the slurpers.

 

i still prefer LAT, mind you the question still remains the same, WHY, do not ask to translate , as rob said enough,.

 

Richard

I actually agree with you.

The retail market for hifi is in bad need of change.

I would like to see out of town 'warehouse' style stacked up boxes with a 30 day sale-or-return, and a markup a fraction of the amount that it is now.

My thoughts are that the hifi buyer -

1) will travel to a showroom. Expensive high street locations aren't needed.
2) is price conscious, and will be happy with sale-or-return and no demo facilities - in exchange for a drastically reduced price
3) has the knowledge and ability to put hifi parts together and make a good sound. The magazines are full of articles to make this easy too.


Put this altogether and the low sale / high volume / high street traditional model just doesnt make sense for so many people. I know people who are willing to pay the price premium for this - but sadly there aren't many of these people any more ....

the internet, ebay, the global highway of information and communication... has made much of the role of the traditional hifi store redundant.

If I had a high street hifi store I would completely change my model - using internet, Ebay, cheap out of town stock, ''direct supply'' from manufacturer, and any other model possible to bring fixed costs to an absolute minimum.


The tweed wearing ''old boy '' mentality just doesn't know how to change, or simply doesnt want to........ and hence a slow death....

 

I believe this is where the new marketeers will have the advantage. The driving force is still restricted by the sad state of the economy and I don't think it will change anytime soon. As one of the "old boy" customers I'll let the Early Adopters navigate the eStore minefields for my future well-being. I'm guarding my dollars like everyone else at the moment anyway.

regards,

dave

 

Er. No many times over.

First, the sales volumes aren't high enough to justify a 'warehouse' model. Not even one dirty great warehouse in the centre of a country for the whole place to visit. The cost of renting the warehouse and the relatively low footfall would simply end up with higher prices than you get in freehold bricks and mortar stores.

The drastically reduced price happens anyway. People get 20% discount on RRP online and ask to match in store these days. If the price was discounted 20%, they'd ask for more. This would leave the shop with perhaps a 1-2% profit margin; that's fine if you are selling computers with regular traffic and regular repeat business, but would put an audio retailer out of business in a week.

SOR becomes a big issue with box-shifting. People get buyers remorse, they buy something they couldn't really afford or something they don't understand. They put together hugely mis-matched systems. Products returned in such cases sometimes come back pristine and can be sold on as demo stock. Others come back scratched, scuffed, and almost impossible to do anything with. That also cuts into your profit margin. Out of business you inevitably go.

Essentially, audio faces its own destruction because most other consumer electronic goods moved from low volume, high value to high volume, low value. And audio struggles to do the same. Worse, it has a major problem on its hands. The core audio buyer will only buy from local specialists who they have a decades-long relationship with. When these retailers go out of business (as they invariably do), they look for an immediate like-for-like replacement, but if no such replacement exists, they simply drop off the radar.

Unfortunately, there's no magic bullet. No 'if you build it, they will come' answer. Even the diffusion-brand model that works so well for guitars and clothes wont work for hi-fi, because not enough people know the main brand to know about a diffusion line.

If you got into a conversation with a normal person about hi-fi ten years ago, they'd likely say something like "So, is B&O still the best?" or "I've got friend with a Bose system, that's good isn't it?" Today, all you get is "Do they still make that?" I heard that recently from a friend with a new Jaguar... complete with B&W audio system.

Face it, hi-fi's time has come and gone... and we all are to blame for killing it off. Home cinema, Apple and the impending shut-down of the music business helped kill it off by devaluing music. The magazines helped kill it off by becoming irrelevant. The manufacturers helped kill it off by becoming expensive. The dealers helped kill it off by refusing to change with the times and the forums stuck the final nail in the coffin by driving away anyone remotely interested in the subject.

Thanks guys... one and all.

 

Sorry you are completely wrong, we are going back to our roots, back to an enthusiast driven industry, that will be enthusiasts using low cost base models to produce product or upgrades or just keeping the classic brands second hand gear going. Each forum seems to have it favourite bodgers and the likes of Teddy Pardoe points the way to the future. The only idiots are the new guys who think they can hold onto the old model of the industry, they will have a heavy fall without a doubt.

I will make a prediction OK - so look at this in the future - that some of you or PF or WW or AoS members will become small scale contributors to the new industry, probably as a side line to the day job. The multi-million pound turnover slurpers have had their day, now you can call it the industry dying if you want, I call it the industry being reborn.

 

Funnily enough, I know just the speaker you are referring to and yes Paul loves them

I make a point of staying well clear of the subject as part of ZG admin team but as you've raised the issue I'll comment.

You need to understand the intended market for the product.

The speaker you refer to gets monthly mentions and recommendations in the press, Hi-Fi World in particular but you might be surprised to know that the company has never advertised in any uk magazine. There are advertisements in overseas publications but those are organised by the distributor.

A few clues might help:

- The target market was never forums. Certainly hawking a product around a forum and generating interest or even input into a deign is one way, but not the only way and a bit pointless if that isn't the main market.
- Most sales go to the Far East, following requests for review samples and lots of press interest. For this we have to thank traditional methods - magazine reviews and word of mouth recommendation from the like of Naim's Paul Stephenson and Doug Graham, Peter Comeau, Noel Keywood, Martin Colloms, Paul Messenger, the head of Dynavector Systems UK etc. Much work and time was invested getting these people on board, with personal visits, phone calls, taking rooms as the main hi-fi shows and much pestering of people by Simon. In other words - hard work.
- You cannot easily direct sell to that market, certainly not from a distance, and so a distributor is mandatory.
- if you want a dealer network for demo and support functions you have to pay for it.

The proof as ever is in the pudding and people don't consider the performance worth the price they won't buy them.

A lot of people see forums as a good source of potential sales but this is wrong IMO unless dealing solely with the tweakier 'accessory' side of the business.
Audiophile forums represent a tiny fragment of the potential market, and a good percentage of the membership are lets face it, often rather fashions and fad lead. Fickle is the word I'm looking for

Internationally, things are quite different to the UK.
There remains a strong and vibrant audio market in many parts of the world still wedded to the idea that products arrive via a distributor and go to a dealer.
Direct selling will never completely replace conventional methods for expensive audio products. Walkmans, iPods, DAB radios perhaps - not stuff that you want to touch feel and hear before parting with large sums of money.

I do believe that you can direct sell cables though, but then that's because there is no need to hear them first

 

Im not totally wrong on the cost of out of city warehousing Fnuckle - in fact I am completely right I am afraid to say.

I was in retail for six years, managing stores in Durham, Newcastle and Edinburgh. I know exactly how much premium high street locations cost to rent (having seen the bills on a monthly basis) , and also the cost of out of city warehousing.

Pennies vs pounds I am afraid. I could give you actual figures, but they would back me up completely.

Again I disagree completely on your SOR points. I can call - for example premium location shop ''Walrus'' in London and ask to buy a £5,000 record player on my credit card. If I choose to return it a couple of weeks later there is absolutely nothing they can do to stop me at all, full stop.

This is distance selling regulations and it is already in place. My suggestion of promoting SOR would simply apply to store visits aswell as remote purchasing where it is already every consumers right by law.

Cheers
Chris

 

And you will not be accused of promoting your own product or using the forum will you

We are at the beginning, existing forums including this one may not survive if they don't change as the model changes, don't take the marketing oportunities, not just become part of the slurp, but genuinly contribute to finding the new way. The membership of the forums is probably about 30% of the market potential of enthusiasts and by far the most of them are lurkers.

I am purely talking about UK / and to a degree EU markets, though where the UK and US lead the far eastern markets tend to follow a couple of years behind. There is no reason you cannot supply a central distributor and give him 20 or 30% to direct sell in his market as opposed to selling to retailers, we already see this with the like of Beresford going the other way. It is a volatile situation so many models will evolve, but one thing is for certain the old way *will* die as it is no longer fit for purpose.

 

LOL...reminds me of those two chaps back in the seventies that loaded their creations in their car trunks and toured the countryside proving by dem the differences they claimed;-)

I'm glad things are working out so well for you guys! Hard work and a better mousetrap wins everytime.

 

That's just changing deckchairs on the Titanic. Bodgers will be legislated out of existence before the end of the decade. Probably sooner.

Enthusiast markets need new enthusiasts, otherwise they cease to survive. A common enthusiast project in the 1920s was building your own washing machine. There are not enough washing machine enthusiasts around now to justify an enthusiast market. That's precisely what's happening to hi-fi right now.

You are absolutely right that the multi-million pound companies have had their day. They don't get replaced by a bunch of bodgers... the bodgers and what's left of the big guys made small get to coexist for a while, picking over the bones of what's left of the hi-fi buying market, then they just die off.

The extinction event already happened. It's just a question of time. Game over.

 

Haven't read all this as I listen to enough bickering from the staff and kids at the school where I teach.

One question though......does all this mean I'll not be able to sell my Zanash 5mm/3mm solid silver 5m speaker cables now that I've decided to have a change?

Just wondering!

 

Washing machines don't play music and music will never die.

 

can someone pin point whose fault it was that started the empire to decade and destroy itself from with in?

 

I think you misunderstand me.

I agree that the cost of out-of-town warehousing is cheaper than traditional store locations. It doesn't matter - the returns simply aren't there anymore to run any kind of project of this kind. So, you'd only raise the capital needed to start the store by opening your own wallet, because no bank or VC on the planet would fund you.

The only 'traditional' audio retailers likely to survive are those who own the freehold on their premises. They still have business rates to contend with, but not rental. You can spot these retailers - they are the 'how are they still in business?' places. Like Mac's Cameras between Hammersmith and Chiswick in London. That's absolutely mental retail real estate prices, with a shop selling Super 8 cine cameras and £20 35mm compacts no one wants. The guy who runs it must be in his 80s and the only people visiting the store are estate agents. I figure Walrus must be the same.

SOR from the consumer's side gives you the right to change your mind. SOR from the audio retailer's side gives them expensive stock that they can do nothing with. Wave bye-bye to another month's profit margin!

 

we appear to be on the same page then.

SOR ... I do feel sorry for the retailer here. £5k of ''open box stock'' because it's come back... not nice.

then though, they can sell it for 20% off, and still make 20% on it