Dealer buying consortium - GuitarGuitar/Andertons/PMT

interstellar

+1 for Richards Guitars and feeling sorry for them

Parker

interstellar said:

+1 for Richards Guitars and feeling sorry for them

That guy really does have the worst luck! His opinion is like an arsehole. That's the saying, right?

TA22GT

Unfortunately greed comes in to it. The Mesa anology looks great on paper. The middle man is cut out and they can buy much cheaper and sell it for less than before. Until they don't.
Fwiw I buy quite a few things from Andertons and consider them a great company for service. I won't stop but I am wary that this whole business plan is there to help us.

digitalscream

interstellar said:

+1 for Richards Guitars and feeling sorry for them

I must admit, I have a small amount of bias in terms of the messenger - Richard threatened to sue us out of existence because we wouldn't delete everyone else's posts when a couple of people on here disagreed with him (and then went around lying about it on YouTube and Facebook), whereas Lee's always been a total gent every time I've dealt with him, even when some folk on here went way too far about him. That's always going to colour my opinion a little.

However, looking at it totally dispassionately, Richard's always said that he provides bigger and better services than Andertons, and that he always has at least as much business as he can cope with. There's no need to feel sorry for him, because by his own words this will never affect him.

digitalscream

TA22GT said:

Unfortunately greed comes in to it. The Mesa anology looks great on paper. The middle man is cut out and they can buy much cheaper and sell it for less than before. Until they don't.

I'm genuinely curious...is there something I'm missing? The complaint here appears to be that they can undercut all of the folk who have to go through a distributor to get these instruments...if they start raising prices, then all that's happening is they're making a bigger margin and not selling any more of them than the smaller shops. They don't control the brands they're buying (this is literally just a buying group, there's no exclusivity involved).

It seems to me that the problem people have with this is not what they're actually doing, but what they might do in a worst-case scenario...which, by the way, they'd have to be utterly insane to even think about given the existing probe into price-fixing. Whatever else you might think of the guys who run these companies, they're not stupid.

grappagreen

This is a fact of business life. Creating value in the supply chain by capturing more margin..

My experience however is that this seldom leads to price reduction for consumers. It is a business strategy to increase/secure/protect margin.

Si

guitars4you

digitalscream said:

thebreeze said:

digitalscream said:

There's explicitly no agreement in place regarding pricing, 

That's okay, in theory.  But it's usually not good - or certainly requires attention, when the biggest players in a market start getting together and making agreements and arrangements together.  This is why there's an on-going investigation into potential price-fixing at the moment (and rightly so).  If I was a small/boutique/specialist outlet I'd always have my antenna up about this kind of development and as a consumer I do too.

Did you miss the part about there definitely not being any price-fixing or collusion involved here?

let's wait and see when stock arrives and prices posted on relative sites

Anyone want to bet against the same price, for the same guitar with the spec - Of course their will be no 'official pricing policy agreement'  in place as no official supplier, but such a consortium will only work when partners are equal  !!!!!!!!!!!!!!!! - Yet for the end consumer, G&L's will now be available with a more competitive price than in recent years - But don't expect one member of GAP to undercut another regarding advertised prices

richardhomer

TA22GT said:

Unfortunately greed comes in to it. The Mesa anology looks great on paper. The middle man is cut out and they can buy much cheaper and sell it for less than before. Until they don't.
Fwiw I buy quite a few things from Andertons and consider them a great company for service. I won't stop but I am wary that this whole business plan is there to help us.

It - assuming @Digitalscream’s explanation is correct - it will benefit the customer if they are not taking both a distribution and retail margin. The benefit to the companies involved is some exclusivity around the brands they import. Lee Anderton seems a thoroughly decent bloke to me - and clearly a very good business man.

Funnily enough, Mesa was my first thought when I watched the Richard’s Guitars video. The disparity in cost between here and the US is ridiculous - I can’t imagine much of their product sells over here now. This kind of arrangement could work very well.

I often wonder whether the big brands will move into retail themselves. ‘The Fender Store’, owned by the parent company, selling everything from Affinitys to Master Builts in major cities is a concept I could easily see happening. The depth of stock they could carry would make it very difficult for any independent to compete with them. As the big brands already do their own distribution, retail would seem the obvious next step.

Andertons could well be making a very clever move here....

Gassage

digitalscream said:

interstellar said:

+1 for Richards Guitars and feeling sorry for them

However, looking at it totally dispassionately, Richard's always said that he provides bigger and better services than Andertons, and that he always has at least as much business as he can cope with. There's no need to feel sorry for him, because by his own words this will never affect him.

Phew, that’s a relief.

grappagreen

My forecast is that prices come down slightly, marketing efforts go up, brand reputation is enhanced and prices rise again..

I'm a cynical bugger - sorry!

Jalapeno

Andertons are one of the few UK Duesenberg stockists already ....

thebreeze

digitalscream said:

thebreeze said:

digitalscream said:

Here's the thing...this is extremely commonplace in the IT world - with folk like Scan, Ebuyer, CCL etc - and smaller shops haven't gone out of business. Why? Because selling and services are two entirely different propositions. Local shops focus more on customer service and everything that buying online doesn't get you (at least, they should be by this stage in the game), and there's a massive part of the population who value that. There have to be, otherwise you'd never see small one-off computer shops around, or all the millions of "We'll repair your phone!" shops that seem to be stabbing me in the eyes with neon signs everywhere I go.

I spoke to Lee Anderton about it in anticipation of these threads popping up; the focus is on brands which don't have particularly good representation in the UK, for whatever reason (but mostly the distributor markup pricing them out of the market). These are not popular brands - that's the whole point of the exercise: to bring them to the UK under better terms which benefit the consumer as much as the retailers involved.

There's explicitly no agreement in place regarding pricing, so Richard's veiled insinuations about collusion are baseless (note the clumsy attempt at covering himself, with the whole "This might be a load of rubbish, but..." which has never convinced a judge in this history of defamation hearings...). Lee's always been genuine and up-front with me in the past, so I have no reason to doubt him now.

My personal take on it is that Andertons are by far the biggest fish in the UK pond, and they could easily take care of "controlling the supply of certain popular brands" by themselves if they wanted to, but this could be about spreading the risk for them. Besides which...which "popular brands" could be problematic here? Gibson and Fender already have such overbearing terms attached to any purchase agreement that smaller shops are effectively priced out of the market anyway.

Here's a completely hypothetical question of my own making: would you guys think it was as scary/damaging/unfair etc if they started buying Mesa amps, and because of the shortened supply chain brought the prices down to the exchange-rate-equivalent of the US prices?

That's okay, in theory.  But it's usually not good - or certainly requires attention, when the biggest players in a market start getting together and making agreements and arrangements together.  This is why there's an on-going investigation into potential price-fixing at the moment (and rightly so).  If I was a small/boutique/specialist outlet I'd always have my antenna up about this kind of development and as a consumer I do too.

Did you miss the part about there definitely not being any price-fixing or collusion involved here?

It's interesting how, when this sort of thing, everybody's suddenly bothered about the plight of the small shop...because most of the time, folk are pissed-off with the lack of service, poor attitude of sales staff, lack of stock and ludicrous pricing with those one-off shops.

I'd say, generally-speaking, that they have bigger problems than three box-shifters with fancy store-fronts getting hold of cheap deals with a couple of brands that (currently) nobody wants to buy.

Sorry, but I find these comments unnecessarily rude, chippy and patronising. 

guitars4you

The Positives of this for the manufacture is a far more proactive market place in the UK, via GAP - With far better promotional activity via modern media - Also remember the influence GAP have within the appropriate Guitar Mags, so expect many reviews etc and even a 'factory promotional aditorial tour'

The benefit for the end consumer will be a superior selection on line/instore - Prices to be confirmed, but certainly expect a far more competitive pricing than in recent years - Otherwise no point in setting up GAP

I'm sure other similar lines will be added as time goes on

GAP would not be doing this if they don't believe that both a market exists and it will compliment their existing stock profile

The negative will be less secondary lines available to the independent stores and this will get worse as GAP add lines in the future

How successful it will be, then only time will tell - A reservation on my part will be when one part of GAP sells less than the other partners, yet a financial commitment is required for the next pending delivery, so will they wish to continue to support it to the same level ?

guitars4you

Jalapeno said:

Andertons are one of the few UK Duesenberg stockists already ....

there are plenty of independent dealers in the UK who stock Doozies - But it is spasmodic regarding stock levels and could be greatly improved in many areas - IMO Duesenberg is one brand I can see GAP moving for quite quickly if they are looking to expand - Maybe Schecter as well

Bridgehouse

Given the recent R8 gold rush, I’m not sure that this is a particularly big issue at all. 

Having distribution rights can mean a lot of things - it depends on the deal struck. If it’s cash up front for stock (unlikely) then you may see them pushed for a while but if they don’t sell there will be slash and burn sales. If it’s pay on sale then there will be a slow dribble of stock. 

Its most likely that they all wanted another brand in the portfolio and decided to use their collective capacity to warehouse/distribute themselves and cut their cost base.

Cutting your cost base doesn’t mean lower prices - nor does it mean more stock available. 

Musicman20

Mesa prices need to be driven down in the UK.

The old 'middle man' distributor model needs to go, IMO.

Bridgehouse

Just to add - @digitalscream is right - I’ve just helped a company buy £5m of stock from a large IT manufacturer. There are UK distribution channels etc but this was completely outside of that direct from manufacturer. Money talks - you buy enough stuff and you can get whatever deal you want. In this case, discounts of up to 80% *off* RRP.

As distributor I could easily see a £1000 G&L being imported by the group for under £300

grappagreen

Musicman20 said:

Mesa prices need to be driven down in the UK.

The old 'middle man' distributor model needs to go, IMO.

Yes - Value Added Reseller is a phrase that makes me want to scream...

Bridgehouse

grappagreen said:

Musicman20 said:

Mesa prices need to be driven down in the UK.

The old 'middle man' distributor model needs to go, IMO.

Yes - Value Added Reseller is a phrase that makes me want to scream...

Ah but that depends on if you really do see value in the value they are adding...

Jez6345789

A buying Cartel like this is bound to have agreements to protect prices and margins as all partners have a vested interest. 

These things potentially give a good brand like Ernie Ball better presentation in the market.

One of the issues I see as a  distributor (non musical) is a lot of distributors fail to build the brand in their local market and really just act as box shifters or have a product range as a list of SKU's available to dealers in a catalogue. 

Plus these days I also think the bulk or retailers in most markets are simply lazy and perhaps 10 or 15 years ago retailers were still selling things they believed in, these days they are just selling whats popular or available to them. So a lot of retail has become very homogenised there is very little difference in price or choice of goods everybody just wants to sell what people buy rather than making themselves a good market with a new brand. Richards Guitars are bothering to do videos but his whole mantra has become the besieged little guy the peoples champion. I suppose it differentiates him but not sure it's overly productive in terms of sales. 

I don't visit a lot of Guitar shops but I think stores like Coda have done a great job of picking up some of the alternatives but very good brands like Fano and some of the other US boutique builders they are the exception most stores just take the big names they can get.