Pros and cons of distribution models (dealer vs. internet direct)

Amazon is definitely great, and does get a lot of customers I am sure we would never get otherwise. There are a lot of people who will just get whatever-is-on-Amazon, and if you're not there they'll try to find an alternative. Larger businesses don't do this as much (as they do get terms, special deals, accounting won't allow it etc) but we see so many smaller companies starting to do this, referencing PO's, often using Amazon as a dropship. Amazon Business is trying to extend that, its not particularly enticing yet but if enough vendors sign up it could get interesting. Amazon also acts as a gateway for something to try something, low quantity, prime/free shipping, easy return if they don't like it. I can't count the number of times we've gotten calls from someone who placed a $20 order on Amzon adding a lot of zeroes buying direct - buyers know they can knock a minimum of 8-15% off the price of Amazon if they buy direct (especially in higher quantity.)

As for terms... I guess it depends on industry. Billion dollar companies pay how they want to pay. That means having to deal with their online vendor portals (serious hassle) that often have terms up to 120 days, dealing with P-Cards, whatever. We are on terms with at least 80% of our vendors. We usually still pay with credit cards for points but being on terms means we can look into dubious invoices and call a vendor out on an overcharge before the charge is made.

 

For the longest time, i always somewhat understood what Jason said about dealers getting 50% or more cut, but i never really drank that kool-aid as i have never really experienced it. Mainly because i only buy second hand and rarely visit a hifi store.

Recently however, i've been thinking of getting a MSB Analog, and from audiogon, i got a very attractive offer from the official dealer in Indonesia for a new one, i checked it out and it really was a new one that is to be ordered. Tbf, the economy is indonesia is shit right now, so dealers really want to close the sale.

He offered me 5.5K USD for a stock one with the Quad USB, 7.7k is retail. And im pretty sure hes making about 1k on it considering how quick he was with the discount. Assuming MSB sold it to the dealer for 4.5k. That's almost a 42% cut. As MSB is not exactly selling something that is volume based, im guessing the gross margin, being conservative is 30%. Which should bring its cost of sale to MSB at 3.15k.

For the options like the the power base and additional inputs, he was giving me 50-70% discount, which is insane. I know it doesnt cost MSB more than 500 to make one input but still its pretty shocking.

I guess Jason was right on the margins. Time for schiit to make an R2R dac maybe? A 4k price point will be nice =D

 

MSB is right at the tippy-top of margin mountain I figure, so I could believe those numbers. That is one killer discount though, almost makes it a comparative bargain vs a TotalDAC. Also unless you are referring to a discrete resistor ladder, the Yggdrasil, Gungnir Multibit and Bifrost Multibit are technically R-2R DACs. A cursory check of the AD chip datasheets will tell you as much: http://www.analog.com/media/en/technical-documentation/data-sheets/AD5791.pdf

 

Isnt R2R resistor to resistor?

From what i understand the Yggdrasil, totaldac, msb etc are multibit.

However, those that use resistor ladders are R2R.

 

Look at page 19 of the data sheet to which HitmanFluffy kindly provided a link and one can see the R2R ladder structure embedded in the chip. Unless you are making a distinction between a totally discreet R2R and an embedded chip design, all of the Schiit MB DACs are R2R ladder. R2R refers to the ladder consisting of resistors with values of R and 2R. Not resistor to resistor.

 

Ah my mistake. Thanks for the link!

 

This thread is fantastic. Thanks to all for posting. It is a very enjoyable read. I work in a VERY different industry (law) with extreme barriers to entry (especially in my niche) so my professional experience dealing with the marketplace is very different from many of yours.

Dealer direct really does seem to be the way to go with the headphone field. I wonder how much of that has to do with the fact that gear in this hobby is rarely over 2-3k? Is it the cheaper prices (and the larger market of buyers they bring with) that make dealer direct so viable?

Koloth raises interesting points and his viewpoints somewhat feel like a product of the higher prices of speaker gear. I suspect that new Senn. Orpheus will be sold exclusively through dealers. Then again Tesla seems to be doing fine selling $100,000 cars direct vs. everyone else still using dealers.

Using amazon feels like you are largely paying their margin to outsource some (not much?) of your logistics.

 

But doesn't the chip in the Yggdrasil at least, also have a resistor string section? R-2R is used by many to describe multibit when everyone should just be saying multibit