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Dealer buying consortium - GuitarGuitar/Andertons/PMT

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  • As far as I know, Musicman are still distributed by Strings & Things. S&T do seem to be very thorough in checking stock. I've no idea how far they go in terms of customer returns/faults etc, but I will say that unfortunately the UK pricing on Musicman gear is extremely high right now. I doubt EBMM would jump ship, but if they did to a larger consortium, would prices drop?
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  • guitars4youguitars4you Frets: 14034
    tFB Trader
    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
    sorry Mark but I don't see this pricing (1K for £300) - I agree price should come down on G&L's in the UK

    Big difference between IT and Guitars is the technology itself , with a far bigger price differential as old technology/stock needs to be moved on to finance the next development - The unit cost of manufacture for an ASAT is pretty much set in stone - Plus remember G&L can't undermine a ex-factory pricing that will make the UK cheaper say than Japan or indeed the USA on a like for like basis
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  • guitars4youguitars4you Frets: 14034
    tFB Trader
    As far as I know, Musicman are still distributed by Strings & Things. S&T do seem to be very thorough in checking stock. I've no idea how far they go in terms of customer returns/faults etc, but I will say that unfortunately the UK pricing on Musicman gear is extremely high right now. I doubt EBMM would jump ship, but if they did to a larger consortium, would prices drop?
    Ernie Ball own Musicman so both will go together - I can't see Ernie Ball limiting themselves to 3 dealers in the UK , no matter what size they are - Ernie Ball want to support all stores regardless of size - As it happens S&T are one of the most honest, loyal and supportive accounts in our trade - they might not be the most dynamic but they are profitable and loyal
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  • TA22GTTA22GT Frets: 362
    Maybe it's me that is missing something in response to @digitalscream

    I really have no axe to grind against Andertons as I like the way Lee presents himself both business wise and socially. I can't speak for the other two involved. It just makes the bigger stores more profitable and the smaller stores less profitable.

    I only have experience with a buying group from a smaller retailer point of view. A store that my best friends owned for over 30 years got together to form a buying group to enable them to club together for say, 30 Strats, to enable to buy at a better discount and keep their profit margin against a national store that bought in huge quantities and sold at much lower prices. It kept them alive and allowed them to stock brands that otherwise would have disappeared to them whilst competing against a large chain. That large chain went bust and reappeared as another large chain.

    GAP is the other way around in that it makes them much stronger players which in this day and age is their safety net. I'm still very wary that it will control prices to suit themselves. Of course there is no such thing as price controlling is there.

    I'm old school so this isn't just about buying power for me, it's about the way things are going in retail. We all, myself included, buy on line because of price and usually larger choice. 
    The little stores can't survive on you buying your guitar cheaper online then coming in to your local store to fix it when it needs it or buy strings for it. This isn't like small computer shops or phone shops where everyone has a computer or phone....the music industry is far, far smaller for that model to survive.

    Anyway, I am digressing as this topic isn't about the loss of small businesses which is a whole new can of worms.


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  • digitalscreamdigitalscream Frets: 26458
    edited September 2018
    thebreeze said:
    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. 
    That's your prerogative, but only the first sentence was in response to your post. I thought it was pretty obvious that the rest of it was intended in a more general sense (hence the use of words like "everybody", rather than "you"). Not always easy to indicate that, so I tend to do it by implication.
    <space for hire>
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  • 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
    sorry Mark but I don't see this pricing (1K for £300) - I agree price should come down on G&L's in the UK

    Big difference between IT and Guitars is the technology itself , with a far bigger price differential as old technology/stock needs to be moved on to finance the next development - The unit cost of manufacture for an ASAT is pretty much set in stone - Plus remember G&L can't undermine a ex-factory pricing that will make the UK cheaper say than Japan or indeed the USA on a like for like basis
    IT works surprisingly like guitars actually - the ex factory worldwide price is still massively inflated to allow for R&D etc

    The real price cuts come when a manufacturer wants to invest in a particular market - they may well sell under production cost to get penetration and presence in a weak market - G&L may say “let’s go for £20 under cost per unit to get some market presence in the U.K. if this group can commit to x number of sales”

    In a more restricted market where there are a limited number of big players (In IT actives for instance) this is commonplace - I see no reason why this couldn’t happen in the guitar market - especially as its becoming increasingly tech focused. In fact, I’m surprised this isn’t Yamaha’s Strategy. Or maybe it is.

    I think you are probably coming from it from the traditional model for guitars in the U.K. Interestingly, IT itself isn’t as quick paced as you think - the chipsets and so forth are, but for most manufacturers they use chassis and basic materials technology that’s a good 10-15 years old. 
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  • JezWyndJezWynd Frets: 6021
    thebreeze said:
    thebreeze 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. 
    He's letting his inner 'Richard' out for a play. ;)
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  • What makes a comment “chippy”?
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  • fftcfftc Frets: 559
    What makes a comment “chippy”?
    Salt and vinegar?
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  • What makes a comment “chippy”?
    I read it as "rude, snippy and patronising" - seems to work in the context, and probably describes my entire modus operandi as accurately as any other phrase :D
    <space for hire>
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  • What makes a comment “chippy”?
    I read it as "rude, snippy and patronising" - seems to work in the context, and probably describes my entire modus operandi as accurately as any other phrase :D
    You are being harsh on yourself - I’ve never known you to be snippy..... ;)
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  • impmannimpmann Frets: 12646
    Everyone talking about Andertons...

    But Guitar Guitar and PMT are involved in this too.

    Never Ever Bloody Anything Ever.

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  • impmann said:
    Everyone talking about Andertons...

    But Guitar Guitar and PMT are involved in this too.

    Who dey? ;)
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  • guitars4youguitars4you Frets: 14034
    tFB Trader
    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
    sorry Mark but I don't see this pricing (1K for £300) - I agree price should come down on G&L's in the UK

    Big difference between IT and Guitars is the technology itself , with a far bigger price differential as old technology/stock needs to be moved on to finance the next development - The unit cost of manufacture for an ASAT is pretty much set in stone - Plus remember G&L can't undermine a ex-factory pricing that will make the UK cheaper say than Japan or indeed the USA on a like for like basis
    IT works surprisingly like guitars actually - the ex factory worldwide price is still massively inflated to allow for R&D etc

    The real price cuts come when a manufacturer wants to invest in a particular market - they may well sell under production cost to get penetration and presence in a weak market - G&L may say “let’s go for £20 under cost per unit to get some market presence in the U.K. if this group can commit to x number of sales”

    In a more restricted market where there are a limited number of big players (In IT actives for instance) this is commonplace - I see no reason why this couldn’t happen in the guitar market - especially as its becoming increasingly tech focused. In fact, I’m surprised this isn’t Yamaha’s Strategy. Or maybe it is.

    I think you are probably coming from it from the traditional model for guitars in the U.K. Interestingly, IT itself isn’t as quick paced as you think - the chipsets and so forth are, but for most manufacturers they use chassis and basic materials technology that’s a good 10-15 years old. 
    For years now many small distribution companies in the UK have been unprofessional and under funded - In today's global format then I can see many such distribution companies struggling to match the needs of a professional organisation like GAP, be it the consortium, or themselves as individual outlets - These guys are far more proactive then many 'old style' distributors, certainly with regards to promotional activities - So I can see further changes coming - As with any globalization corporate business it will suit their own needs and less so that of the smaller independents - If this is good or bad, or just the way it is, is another story for another day

    But deals like the R8 the other day, are few and far between these days within the guitar world - Guitar manufactures carry so little excess stock, so far less of a need to 'dump' - I certainly believe that G&L can increase some market share within the UK, after all it is so poor as it stands, but I don't see a new/future pricing policy that will see a 30 or 40% reduction on the shop floor price, based on prices we've seen in the last 12/24 months

    However with G&L I can see more of a reduction on far eastern imports whereby your theory might well come into place - Ref USA models, then they operate more as a Custom Shop with low build runs, with many orders taken from an 'ala carte' style menu with various optional upgrades - Very few are built exactly the same - Such a 'one off' policy  adds to manufacturing cost - I can see GAP acquiring models with less 'optional' upgrades and/or ensuring G&L reduce some of the cost relating to optional upgrades, so more features for less bucks - ie free colour coded bumpers
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  • BridgehouseBridgehouse Frets: 24579
    edited September 2018
    @guitars4you - I kinda assumed (rightly or wrongly) that their distro deal was for the Far East stuff and not necessarily the US made stuff only because that’s where the volume is for a deal to be profitable for them. 

    I reckon you are probably right - it will be the US stuff where the money is made, if that indeed is included in the deal...
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  • Strat54Strat54 Frets: 2331
    I loved those unprofessional distributors of yore (90's). I contacted one pre internet days for some merchandise/clothing swag, from a desirable brand ,the guy said if I sent him £30 then he'd send me some. So I sent off the cheque made payable to him personally(!) and a couple of weeks later I received four t-shirts, three sweatshirts, calendar, key ring, pin badges, catalogues, stickers, bottle opener, strap.....I was gobsmaked. Like Xmas day in a box. Happy days, bring them back :) 
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  • It's probably worth considering that Andertons already have direct-from-the-factory infrastructure in place (with the Chapman Guitars stuff), so that could well be a part of this.
    <space for hire>
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  • guitars4youguitars4you Frets: 14034
    tFB Trader
    @guitars4you - I kinda assumed (rightly or wrongly) that their distro deal was for the Far East stuff and not necessarily the US made stuff only because that’s where the volume is for a deal to be profitable for them. 

    I reckon you are probably right - it will be the US stuff where the money is made, if that indeed is included in the deal...
    yes a different business model - and to be fair, today I see far more of the USA side of it - But when I worked at AOS, some years ago, we started looking at similar arrangements with initial thoughts on far eastern models and yes some factory costs were offered were incredible - But we had to factor in a very decent % to cover poor QC on certain goods, which in turn were scrapped, stripped for spares or sold as seen at lower prices
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  • StefBStefB Frets: 2331
    It's probably worth considering that Andertons already have direct-from-the-factory infrastructure in place (with the Chapman Guitars stuff), so that could well be a part of this.

    I was surprised a few weeks back to discover GuitarGuitar selling new Chapman guitars, couldn't understand why Andertons would allow that, but it all makes perfect sense now.
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  • guitars4youguitars4you Frets: 14034
    tFB Trader
    It's probably worth considering that Andertons already have direct-from-the-factory infrastructure in place (with the Chapman Guitars stuff), so that could well be a part of this.
    I was wondering about this and if it stays exclusive to Andertons or brought into the mix

    Like wise GG have run with Suhr, Tyler before, amongst others, so options again
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