Klarinet Archive - Posting 001048.txt from 2004/07

From: GrabnerWG@-----.com
Subj: Re: [kl] Feeling like Yamaha is one stupidly run company!
Date: Thu, 29 Jul 2004 14:15:56 -0400

In a message dated 7/29/2004 12:51:47 PM Central Daylight Time,
perickso@-----.net writes:
In summary, I feel that customers like the service and convenience of
having a music store in town and that's what music stores need to become
better at providing. (at least where I live) If the quality and convenience
of service is absent, we will continue to make internet purchases.>>

Christy -

The problem is much more complex than you realize. Let me illustrate.

About a year ago, I was approached by one of the name clarinet manufacturers
to become a dealer for their instrument line.

As I business person (one of my many personas), I took a look at the numbers
to see if it made any sense to become a dealer. I got pricing information
and then did some comparison shopping to find out what at what price other
companies were selling these instruments.

I was shocked to see that several of the "internet/catalog" sales outlets
were selling instruments at a RETAIL price that was LOWER than the cost at
which I could obtain the instruments at WHOLESALE! Even if I were able to
purchase $100,000 worth of clarinets in one order (discounts are tier priced), my
wholesale cost was about the same as the price that the "internet/catalog"
outlet was selling them for.

So, I could make NO money at all if I were to match price and I would still
have advertising, marketing, shipping and order processing costs, plus the
cost of the investment itself. Certainly a prescription for going out of
business.

This is what is known as the "Walmart" effect.

The purchasing power of the outlets is so great that they can negotiate
their own pricing. Their sales power is such that the manufacturer cannot afford
NOT to do business with them. The "low, low" prices attract the buyers, even
though they may deplore the fact that the "Walmart" is driving small business
out of business.

Anyway, that is what is happening. I don't see any way that the trend will
not continue.

Walter Grabner
www.clarinetXpress.com
World-class clarinet mouthpieces

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