Friday, August 20, 2004

 

You should always go to other people's funerals; otherwise, they won't come to yours.

Gibson guitars has ordered its dealers to cut off Internet sales. They're already well aware of the brewing firestorm from their customers. The note to dealers says:

Recently you received a letter from Gibson regarding significant changes in the company's web policy. Gibson's intent is to drive more customers into your store, thus making your store a destination location. It has always been Gibson's desire to have sales of their instruments be done on a personal level, not on a "point and click" shopping cart level. It is only when the end consumer interacts with your sales staff can the "Gibson story" be told, and an instrument be truly matched to that individual consumer's personal needs. Pursuant to that goal, and effective immediately, all authorized Gibson & Epiphone dealers are expected to comply with the following: Internet sales of all new Gibson Brand instruments and products, including Gibson USA, Gibson Montana, Gibson Memphis, Gibson OAI, Slingerland, Tobias, Gibson Custom/Historic, Epiphone, Valley Arts, Gibson Strings and Accessories are to cease immediately. All authorized GMI dealers will be allowed to advertise that they are an "AUTHORIZED GIBSON DEALER" and link to the Gibson website, http://www.gibson.com/. Photos of "in-stock" instruments currently in dealer's inventory will not be allowed to be published on dealer's website. Consumers are to be encouraged to actually visit the store to purchase instruments, or contact the store regarding a purchase via phone or email. Authorized GMI dealers will be allowed to email consumers photos of specific guitars in dealer's inventory. Specific artwork and advertising templates for authorized ealers will be made available for dealer's use on their websites. These materials will be made available for download on Gibson's internet press site, www.gibson.com/press. Advertising outside of dealer's immediate market area as specified in the Gibson Dealer Agreement will not be allowed. This includes (but not limited to) any printed materials such as catalogs, flyers, etc. If there is a question as to your specific market area, please contact XXXXXXXXXXX at Gibson, XXXXXXXXXXX, XXXX. Sales of new Gibson brand instruments at guitar shows, music events, concerts, music festivals, etc. outside of dealer's approved market area are not allowed


Oh brother.

The bottle's been uncorked with Internet sales for how long, and Gibson thinks it can turn the clock back to the 1970s?. Let's looks at the ways this will ultimately hurt Gibson.

Gibson, like any manufacturer, can set a Minimum Advertised Price and hold its dealers to that, but frankly, I think that a MAP is anti-competitive. One would assume that becoming a Gibson dealer entails meeting certain requirements as to financials, inventory commitment, and customer service, and if real value is being added by the dealer a premium price can be justified. To be blunt about it, the most value-add you receive from any dealer is a set-up and perhaps a few picks and sets of strings. Ultimately, guitars are commodities, perhaps not analogous to soap, but certainly an analogy can be made to cars. If there are four Ford dealers within a 20 mile radius you're going to choose on price, availability and service. Any dealer is obligated to perform warranty service (in the general case, there are of course cases in the music industry where you have to go to specific dealers to obtain warranty service). Gibson's reputation has been checkered for a long time, Carlos Santana once saying they're like McDonald's, just throwing a burger at you (this was in a Guitar Player interview over 20 years ago).

One thing Gibson can ill-afford to forget is that if you're just looking for a high-end guitar, there are plenty of other choices out there. Paul Reed Smith for example. They also pull some nonsense with not allowing prices to be posted on the Internet, but a simple e-mail or phone call will usually get you the selling price (and that's another bugaboo. I really don't have time to schlep to some Historic Dealer or most high-end shops, and for the most part I prefer to order things like this over the Internet or the phone. The personal touch isn't that important in a sale, because frankly, most salespeople in music stores are not knowledgable enough; been in Guitar Center lately, or hear some 22 year old in a dirtwater store make fun of the Beatles? "Neal Peart is awesome, dude". The dealers who do get it for the most part are few and far between, just like the aforementioned Fullers in Texas, Dave's in Wisconsin, Ed Roman in Las Vegas, and many others. My local dealer is a relatively cool shop, but when their Gibson specialist just can't get what I want, I simply have to look elsewhere. Making me spend an inordinate amount of time doing so is going to make me more likely to look at used instruments or at other manufacturers.

The only value that a local dealer really offers is the ability to actually sit and try the thing out, but in the case of a lot of dealers, the attitude problem has reached the point where I simply won't walk in. Certain dealers on 48th Street in Manhattan treat everyone who walks in as a potential shoplifter (same as GC), even when they're on the wrong side of 40 and wearing a suit. I especially dislike the nasty sneers about belt buckles (sorry guys, I wear a pager and a cell phone, so I have to wear a belt, and I'm a big enough boy to know to give something back in the same condition I received it in). For the most part, Internet dealers recognize you're buying something sight-unseen and are fairly reasonable in return and exchange policies, so you're covered in the event you're totally unhappy.

I was in the market for a Goldtop, but I'm seriously reconsidering it now. If I do buy one it'll be used. This is an anti-competitive, anti-consumer move on Gibson's part. Obviously they are out of touch with what goes on in most retail music stores, and don't know how bad the situation is. Funny, other music instrument manufactures have really gotten with the program and are really in touch with what their consumers want. Take Gretsch for example. Not only does Dinah Gretsch regularly interact with players, but they've listened to what people want. They set up the distribution deal with Fender, and since enough people were asking for an exact 1962 Country Gentleman reissue (the "King George" as it's affectionately known), they responded, built it, and got it out there. John Hall of Rickenbacker has always interacted with his customers, and his presence on many forums is always appreciated.

I wonder if this quote from the FTC website has any applicability: "....the antitrust laws make it unlawful to maintain or attempt to create a monopoly through tactics that either unreasonably exclude firms from the market or significantly impair their ability to compete. A single firm may commit a violation through its unilateral actions, or a violation may result if a group of firms work together to monopolize a market."

Just to make sure everyone understands here, I have no problem with any Gibson dealer, and would gladly give them all an equal chance to compete for my business. I intensely dislike this business about dedicated territories and artificial price support for a product. What this does is take away our opportunity to easily comparison shop. I don't always have a lot of time during business hours to spend on the phone with a dozen different dealers, and it's not terribly cost-effective for the dealers to spend several minutes answering each routine price inquiry. Give everyone the chance to maximize their time efficiency, and if someone needs extra hand-holding then a dealer can provide such value-added service to them at whatever price the market will bear.



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