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Post subject: Re: Did You Know This?
Posted: Sat Oct 12, 2013 1:29 pm
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CPL wrote:
I know what you mean. They could do what Carvin does and have a list price (which is funny, considering they only sell direct-probably do it for the reason you said) and then "discount" that to the price they are going to sell it for, anyhow. Of course, the whole list price thing is just a sales tactic so the dealer makes a profit (which makes sense, otherwise they couldn't be in business,) while the customer thinks they're getting a big deal. I know for a fact that the dealer's cost is a lot cheaper than that. I used to be in a band and friends with a dude that worked for a music store who was going to sell me stuff at his cost. I'm sure what the dealer pays a mark up too (although they probably get some sort of bulk deal,) so Fender can make money from building them. I'm curious to know what, say a Telecaster, actually costs to make per unit.


If you're a mom/pop, the margins aren't all that high. They can price themselves a tad higher than the big guys (like GC), simply because it's usually a much nicer experience to buy. Big chains get better deals and thus higher margins, which is why they can do things like honor a Fender $100 off and a 15% off coupon at the same time on top of their "discounted" (read: real MSRP) prices.
The regular mom and pop shop can't do that.
But where brick and mortar stores makes money is when you need accessories, and you need them right now. $25 for a patch cable that costs $20 online. $10 for a set of strings that costs $8 online. $4 for a set of picks that should be a dime a piece. And so on.
And I'm all fine with them doing that - they're there for me if I need them, and I pay the premium for that. It's just like old Radio Shack (before it went downhill) - you could count on it having what you needed, but you could also count on it costing a bit more. And that was fine.

So I don't really worry about the real stores. Online stores might take a hit, if Fender starts selling at the same price as them. But unless Fender does it right, I fear that Fender might take a hit.
We'll see. Next one might be a boutique anyhow, because waiting 2+ years for a CS isn't all that attractive when older.


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Post subject: Re: Did You Know This?
Posted: Sat Oct 12, 2013 5:23 pm
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Direct Selling is becoming the the ideal business model for many manufacturers.

The Ma & Pa stores are dying out at an ever-increasing rate. They often end up demo-ing guitars only to lose the customer to an internet sale. Add to this that they have to stock a variety of makes/models, some of which sit on the shelves for extended periods tying up money in inventory. Customer service in these stores, while valued, loses out to price most of the time, especially in a tight, inflationary period we are in - people just won't pay hundreds of dollars more over the internet for the option to Try-B4-U-Buy, or a nice salesperson. Accessory sales, while increasingly important, just can't take the place of instrument sales. Overhead costs are rising, and, the upcoming impact of obamacare may sound the Death Knell for many (as it will for countless small business owners).

The Big Box stores are waning as well because their model only works with multiple locations, regional warehousing, massive advertising and deep discounting. Their overhead costs are rising faster than sales, and their competition is fierce.

Advances in shipping, warehousing, transaction options etc., make it more and more favorable to a manufacturer to market/sell direct. I suspect that Fender will continue to move in this direction, albeit most likely step-by-step.

cheers!

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Last edited by Lightnin MN on Sat Oct 12, 2013 10:32 pm, edited 1 time in total.

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Post subject: Re: Did You Know This?
Posted: Sat Oct 12, 2013 5:34 pm
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This will make the high quality 2008-2012 instruments sought after.


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Post subject: Re: Did You Know This?
Posted: Thu Oct 24, 2013 10:55 am
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Lightnin MN wrote:
Overhead costs are rising, and, the upcoming impact of obamacare may sound the Death Knell for many (as it will for countless small business owners).



Local shop just told staff that they are dropping there health ins. do to cost increase. Told them that if they wish to get ins they will have to do so on the state exchange which is very expensive for less services and very high deductibles.

Our family policy thru employer is going up 10% starting January . When will the madness stop, I read that the state of Florida had 450,000 policy holders dropped because of Affordable Care Act (obamacare) This thing seems to be having the opposite effect then we were told.

People loosing coverage, price up for less, small business cutting jobs or reducing hours.

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Post subject: Re: Did You Know This?
Posted: Fri Oct 25, 2013 9:28 pm
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cvilleira wrote:
Lightnin MN wrote:
Overhead costs are rising, and, the upcoming impact of obamacare may sound the Death Knell for many (as it will for countless small business owners).



Local shop just told staff that they are dropping there health ins. do to cost increase. Told them that if they wish to get ins they will have to do so on the state exchange which is very expensive for less services and very high deductibles.

Our family policy thru employer is going up 10% starting January . When will the madness stop, I read that the state of Florida had 450,000 policy holders dropped because of Affordable Care Act (obamacare) This thing seems to be having the opposite effect then we were told.

People loosing coverage, price up for less, small business cutting jobs or reducing hours.

It's what we voted for. (Not you personally)

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