Will Cary's New Sales Model Work?

In modern retail sales, a common paradigm of how products are sold has been mostly consistent - manufacturers produce product, a distributor or dealer purchases that product and subsequently resells it to the end consumer. While not true among every product made and sold, it is a very common practice. One, as it happens, that has been the common practice for high end audio since the hobby first began in the 1950's. While not true for 100% of high end companies, it's true for most.

AR-Cary-Direct.jpgFor those who may not have noticed, Cary Audio, located in Raleigh, NC, and a scant 2.5 hours from my home in Charlotte, recently announced they were adopting a "hybrid" sales model where the end consumer will now purchase direct from the Cary web site.

Called "Cary Direct," the model basically eliminates dealers in the traditional sense. A "Cary Rep" will have some measure of demo equipment on their floor and a "Cary Broker" will not. In neither case is a "rep" or "broker" required to have any inventory. When a customer buys something from the web site, Cary will issue a rebate to the "rep" or "broker," based on what they are. Because a rep has demo product, their rebates will be higher than a broker who does not. The traditional business model of manufacturer / dealer will no longer exist because purchases will only be allowed directly to Cary Audio.

This looks like the audio version of "eliminating the middle man." It also looks like the ability of the dealer's selling capabilities are being called into question.

AR-Buy-Direct.jpgOn the surface, this may seem like a good thing. Dealers are dwindling in number anyway so why not buy direct? It saves time, makes the buying process more streamlined, gives the consumer access to the manufacturer on a direct basis, what can be wrong? Well, maybe a lot.

When you look at this from a global perspective any number of problems manifest themselves. First and foremost, expecting or even hoping for some measure of a discount on your purchase is eliminated. Completely. Totally. You buy directly from the manufacturer on their own web site, fine - you pay full retail. Maybe not so problematic for some, but others, I suspect that won't be well received.

From the dealer's perspective it basically takes them out of the loop. If a consumer is buying direct, for instance, will the dealer even know a potential sale is pending? Or will they just be surprised to see a rebate check one day? Dealers all rely on additional sales beyond a single purchase. So the customer buying a pair of speakers will hopefully discuss, and ultimately purchase, a new set of speaker cables. Or a cartridge with a turntable. Sure, such additional sales don't always happen but they will probably never happen with a manufacturer direct model.

AR-Cut-Out-Middle-Man.jpgAnother problem is the actual demo process. Suppose I live in a rural area in the Western part of the US and don't have a local dealer. It's one thing to maybe drive a few hours to a dealer a couple of hundred miles away, but should I really be expected to fly across the country to demo something at a manufacturer's place of business?

OK, so you say there's free shipping and a 30-day full refund on all purchases, right? That protects the customer and gives them the ability to actually hear the product in their own system for a couple of weeks before having to return the product if they don't like it. That is, maybe you say, even better than the process is now. What happens, for instance if your return shipment is lost or damaged? Who pays for the five figure component you've been demoing for two weeks? Who pays the return shipping? If the manufacturer has your money before they ship you anything, how much difficulty will there be in obtaining a refund if the shipping company makes a mistake? Realistically, that won't happen too often but I'd sure hate to be the poor slob who has it happen to them.

Suppose I don't want to pay for my demo product, in full, up front, before I even know if I want to keep it? If a competitive product is sold by a local dealer who allows me to take the demo home, I can try it for a few days and bring it back. Is that a better option than paying for something up front, not knowing if I even want to keep it, and taking a chance that the return is damaged in shipment - or worse yet being told that something happened and I won't be receiving my purchase cost?

AR-Buy-Used.jpgNone of any of this eliminates the possibility of taking the thirty day in home trial, returning the component, getting the refund, and simply waiting until one comes up on the used market and then make the purchase. Hmm, what happens to all the used demo equipment returned back to the manufacturer?

Some manufacturers exclusively sell direct and seem to be doing so successfully. There have been rumors of other manufacturers eliminating the dealer network and selling direct. These rumors occasionally arise, spread like weeds and typically have little credence. But is the new method for doing business with Cary a harbinger of things to come? Will high end audio develop into a business model where the dealer is eliminated and consumers purchase directly from the manufacturer?

Eliminating the middle man can have distinct advantages. Buying directly from a manufacturer will work for some, for still others it will be a nightmare. If it works for more than it does not, we may see a seismic shift in the manner in which high end products are made and sold. If not, maybe the whole notion of a direct sales model will die a quiet death. Funny thing is, the success or failure of this new sales methodology is ultimately up to the end consumer. How they react remains to be seen.

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