COMMENT: Bowers & Wilkins Move Heralds New Sound Era, But What Will Happen To Distributors?
The decision by big sound brands such as Bowers & Wilkins, Harman International and Sonos to sell their products direct to retailers, sets out a new agenda for sound brands in Australia, the move is more about marketing and sales than logistics.
The move could be a blessing for retailers selling products made by these Companies as brands selling direct, tend to spend more money on marketing than a distributor who is constantly fighting to hold onto revenue.
And if Sonos and Harman International sales are anything to go by, sales will go up especially if the products being offered to consumers have a brand pedigree.
As we revealed in our exclusive Bowers & Wilkins story the British Sound Company has recently appointed a major British advertising agency to develop a global brand and product campaign a move that will further cement traction around Bowers & Wilkins products in Australia.
During a recent trip to Melbourne I passed several 24 sheet billboards spruiking the new Sonos Playbase.
This is multimillion marketing that not one single distributor in Australia could afford to deliver with support from their product partner.
The fact Bowers & Wilkins is now predominantly owned by a US technology Company is a big plus for the British brand.
Sound in the future is going to be about high res content, networking and devices that deliver a great sound experience and I suspect, that we will shortly see Bowers and Wilkins taking on both Heos by Denon, Bluesound and Sonos in the network market.
They already have a great portable speaker with their Zeppelin and by adding technology from Eva Automation a US Company who acquired Bowers and Wilkins in 2016 there is every possibility that the combination of a pure technology Company and a great sound Company could see the birth of a new generation of Bowers & Wilkins products especially in the speaker market.
I remember when Sonos was first launched several big sound Companies said that they would fail. After starting off in the specialist channel they expand to the mass channel via JB Hi Fi, today they are a household name selling millions of dollars’ worth of sound products a year.
Unlike a sound distributors, brands like Sonos and I suspect Bowers & Wilkins put their marketing dollars up front in a big way.
So, do brands like LG, Samsung and Panasonic, they take risks on the success of their products which for retailers is a big plus because this type of marketing creates curiosity resulting in a consumer often taking to online or visiting a store to see a new product or technology.
What is currently happening is that some distributor who are inexperienced in marketing are coming under serious pressure, they are now asking Australian’s to pay more for a product to shore up falling revenues.
This comes at a time when consumers have more choice online than ever before.
In the sound market, many Australians are turning to Canadian Hi Fi retailers where the Canadian dollar is on parity with the Australian dollar.
All these consumers must do, is have their product shipped to an Australia Post address in the USA. We demonstrated this recently with overpriced products from KEF and Astell and Kean.
Having a great brand and product is one thing, getting retailers to stock it and consumers to buy it is an expensive exercise for a sound distributor today, which is why brands are moving to take control of their own destiny in Australia.
Adding to the problems that distributors are facing is a move to new forms of marketing to attract today’s high spending millennial. Most distributors are still struggling to understand how digital marketing works, they are content to supply a product to a retailer and hope like hell that the retailer has the capability to sell it.
The only problem is that most specialist sound retailers web sites are not up to par as a result today’s web savvy consumers is giving the specialist channel a miss. Some don’t even know where their local specialist dealer is located.
Digital marketing is becoming harder as more consumers than ever before are relying on information to make their purchase decision.
Webcollage research reveals that content in a SKU shown on a retailer’s web site, is read by over 60% of people coming into a retail store.
Brands such as Sonos knows this which is why they invest globally in rich media content.
Most sound distributors in Australia don’t deliver content inside a retailer’s SKU other than a few bits of picture and text and the odd supplier supplied video.
When Sonos started using the Webcollage comparison engine initially at Best Buy and later at JB Hi Fi, to show the difference between their Play 1, Play 3 and Play 5 speakers, sales of the more expensive Play 5 increased significantly for the simple reason that a tick revealed a difference between speakers It was that simple.
The move to sound brands taking control of their own destiny in Australia is in its infancy and over the next few years I suspect that more brands will down this router.
At the same time, these brands will move to a sales model that consists of retail sales, direct online sales and Amazon, the big question is who will do the logistics.
Convoy already has the rights to Harman International reverse logistics, all Bowers & Wilkins products and I am sure that more brands will partner with Companies like Convoy as they move to new sales models in Australia.