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COMMENT: Are Hi Fi Manufacturers Destroying Their Own Retail Channel

With the pending arrival of Amazon one would have to draw the conclusion that any manufacturer who is restricting their retail channel from adding click to cart is on a quick trip to the bottom.

No more so than for small sound and AV retailers who are already fighting a battle up against mass retailers.

But this is exactly what’s happening in the specialist audio channel in Australia, where big brand Hi-Fi companies are restricting their retailers from adding a click to cart button on many products advertised on the retailer’s website.

This week we did an audit of over 20 specialist audio retailers sites and what we discovered was thousands of products which while being displayed on a website, had no click to buy button.

It now turns out the retailers who want a click to buy button, are being restricted by brands such as Harmon Kardon, Denon, Marantz, Cambridge Audio, Bowers and Wilkins and a whole lot more from adding a click to buy button on their online SKU.

The retailers are being told that their products need to be demonstrated not sold directly online.

What these distributors must realise is that when Amazon does arrive complete with the ability to purchase many of the goods that local retailers are being restricted from selling online their retail network could quickly disappear for ever, in the USA retailer after retailer is being forced to shut up shop because of Amazon.

This strategy by manufacturers must be one of the most stupid and above all short-sighted strategy that I have ever come across considering that 40% of Australians are now buying goods from overseas websites for the simple reason the products they want are either not being sold in Australia or are cheaper overseas or there is no click to buy button on the products they want to buy.

When we spoke to distributors who are adopting this policy they claimed that their products need to be demonstrated and above all explained, several said it was the policy of the manufacturers whose products they sold in Australia.
It doesn’t matter whose policy it is, it’s a sheer dumb decision.

Today consumer is empowered, they can search, research information and then make an informed buying decision.

Research shows that 67% of shopper’s research online prior to walking into a store 62% of buyers placing orders with mass retailers for products more than 60% are doing so direct from either a smartphone, tablet or notebook.

Back in 2000, Amazon introduced one-click buying to circumvent the typical shopping cart form (name, address and credit card information) and allow people to make purchases with just one click.

Amazon’s patented one-click technology was eventually licensed to other e-commerce retailers, notably Apple, and is today a standard web shopping convenience.

The facts are that If a person has taken the time to research a product online you can bet your bottom dollar that there are in the market to buy a product.

To restrict them from either making a considered or impulse purchase is plain ridiculous.

For example, if a consumer has researched speakers and they have decided to buy a pair of Bowers and Wilkins speakers based on them having read several reviews as well as research comments by owners, why restrict them from clicking a button to buy online, it doesn’t make sense.

What Hi-Fi manufacturers and their distributors are doing is cutting themselves out of the fastest-growing market, millennial’s who have money, love to shop online and above all are impulse buyers.

According to Gallop research 83 percent of millennials have made impulse buys.

Harris Interactive’s data shows that 80 percent of consumers made impulse purchases in the last year.

Much of the e-commerce revolution is fuelled by impulse buys. These purchases often happen via a “buy now” button or some equivalent thereof.

Buy now is explosively powerful because shoppers are highly prone to making impulse purchases. Once you realize that this is common shopping behaviour, you’re ready to ramp up your “buy now” strategy.

What needs to happen is the retailers need to form a Hi-Fi Retailers Association, they need to lobby the manufacturers and they need to form a buying group, if they are to successfully compete in a world where Amazon is making the same products available via a click to buy button.

Very soon Australian Hi-Fi distributors will feel the effect of the Amazon blowtorch and it will be painful.

When it comes to selling products, there are no borders with Amazon. They will cut global deals to sell a product and then deliver it in 16 to 18 countries at the same time and at the same price and I suspect this price will be significantly cheaper than what the same product is being sold for at Australian retailers.

Research shows that Australian consumers will pay up to a 20% difference to shop locally and what must happen immediately is that Hi Fi retailers are given the rights to have click to buy buttons on all their products.

In addition, Hi Fi retailers should be allowed to range on their websites, all the products being sold by a local Hi-Fi distributor, without the need for them to stock the product. These retailers need to build out content rich SKU’s that entice consumers to buy a product from them. Long-term online could become the largest slice a retailer’s business even to the point that he stocks a product the simple purpose of demonstrating the product.

Distributors have also got to rethink their model and they must become the shipper of goods on behalf of the retail channel.

If this does not happen or is not implemented there is the real risk that Amazon will simply swamp both distributors and retailers with the introduction of distribution systems the get products to consumers quickly and efficiently.

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