Sonic Responds to Al & Ed’s Proposal

share on:

Sonic Electronix founder, CEO and president Nathaniel Victor responds here to the proposal by Al & Ed’s Autosound that retailers call their suppliers to complain about online discounters. (Yes, we are aware that Al & Ed’s has a new price matching service).

Al & Ed’s is one of the top retailer/distributors and Sonic says it ranks number 3 in online traffic in car electronics. We’re presenting their statements as evidence of a problem that has taken on new urgency as competition in car electronics heats up. The opinion missing so far is one of a supplier and we don’t think we’ll get one that addresses the issue head on. We’ll hear about the actions being taken against transshippers, but not about the temptation to turn a blind eye when a key account moves goods sideways.

Like drugs in professional sports; transshipping and selling below MAP (Minimum Advertised Price) are hard to stamp out because they produce instant results. As always, it’s the small, honest specialist that gets hurt the most. Our only advice is that which we promote here day in and day out—get tech savvy and be the shop that can help anyone who walks in the door with a smartphone, iPod, or widget to link it to his radio. At least that’s expertise that is hard to sell online. (A new Ford TV ad claims, “The Ford Fusion is like a smartphone on wheels.” )

Here’s Nathaniel’s statement verbatim:
It is with great pride that I can state to you that over the past decade, Sonic Electronix has been established as a well-known destination for purchasing car electronics and researching industry-leading information. As mentioned, we currently do over $30 million in sales and our traffic ranks in the top 3 of our industry; however, our growth with brands and delivering their product message is what we are most fond of. We are authorized and directly representing over 70 brands. As par for the course, we follow MAP pricing and deliver specific brand messages for all of our direct lines. Additionally, we are diligently working to establish relationships with the few remaining brands that we are yet to be direct with.
As it so often does, it seems our success in building a recognizable name has bred its share of contempt. It may come as no surprise that according to quantcast.com, our website generates 50 (fifty) times the amount of website traffic as compared to Al and Eds website; whose owner just so happens to be the voice of the previous article. Ironically, he is also the creator of “lowestpricecarstereo.com” which devalues brands with an automatic lowest price on their own Al and Eds website. Devaluing brands is something we are strongly against. Our main focus is to legitimize the industry and revolutionize the way car audio is purchased online, which will involve retail stores across the USA. No amount of mudslinging will dissuade us from devoting our time to caring for the brands and customers we proudly represent.
We are quite confident that manufacturers who invest resources to establish a partnership with our company will see that what we excel at marketing their brand and promoting their products in an honest and forthright manner. I look forward to leading our company and the industry into the next decade with growth and success for all who partner with us. Feel free to reach out by phone (661.295.3626) or email (nvictor[a]sonicelectronix.com) to discuss this matter further. As always, we have an open door policy for discussions pertaining to manufacturer relationships.

Sincerely,
Nathaniel Victor
CEO, President
Sonic Electronix, Inc.

UPDATE. Some of the comments on this story have been removed because they were personal in nature.
Photo: Nathaniel Victor of Sonic Electronix

share on:

26 Comments

  1. You can whine all day, the glory days of the 80’s are gone.
    Bottom line is:
    -Almost everyone including manufacturers, distributors, and retailers talks out of both sides of their mouths to make a $1.
    -There is always someone else out there who will sell product X for $1 less than you.
    -It takes a salesman to make a sale, it takes a clerk to move a box with a name on it.
    -The bigger the manufacturer, the bigger the name, the less money you can expect to make on the product.
    -Customers don’t build loyalty to a price, they build loyalty to positive human relationships.

    What does this mean to the independent B&M shop?
    -Find smaller value added brands which will provide you with margin, or compete for the 5% margin with the guy who doesn’t have to pay rent on a store or for a sales staff.
    -Differentiate yourself further by offering expert and professional installation to match an expert sales staff.

    The beauty of any industry, including mobile electronics, is that manufacturers rise and fall, and the only real vote or voice anyone has as a retailer is what and who you purchase from.

    If you’re sick and tired and you don’t want to take it anymore, drop the lines that don’t hold your best interests in mind, and let them know why you have dropped them, but be prepared to face the consequences. If you want to keep your top line brands, don’t cry when every other guy out there is willing to undercut you, and your margins erode to the single digits.

    I still find it amusing that large retailers both internet and B&M can conduct business profitably while respecting MAP, and so few people try to follow their models. Why look at the cheap bottom feeders, when you can look at someone like Crutchfield and follow that model?

  2. Wow, you are all so completely out of the loop! I am shocked to read that so many of you brick and mortar shops are so in the dark about why Nate is able to sell at 10 to 15 dollars over dealer cost. Dealer cost ha, might as well be MSRP. I am a wholesaler. I deal with many brands, including Alpine, JL Audio, Rockford Fosgate, Kicker, Boston Acoustics, Infinity, Pioneer, Kenwood etc.. Even brands like Morel, Zapco, Hertz, Audison, etc.. are not hard for me to source. I always sell at or below dealer cost and offer warranty. I get prices so low that I can resell product to guys who sell on ebay, amazon, craigslist etc. I don’t have a humongous warehouse or make ANY KIND OF factory DIRECT deals, but I do SELL many High End name brands 10-50% below dealer Cost, offer excellent service, and have a great selection. How do you ask? Give me a call and I’ll tell you.
    The B&M’s out of the loop, I’m sorry but just aren’t seeing the big picture and apparently never will. I don’t see the logic in wanting to become an AUTHORIZED **** dealer if all you are going to do is sell and install in a retail shop that brings in what, 100 – 500 customers a day? Do you have any idea how many people see the words SONICELECTRONIX.com a day? I do business with so many very successful B&M’s that aren’t authorized anything but do offer expertise, custom work, tech support and all the things that make B&M great. They could care less what Sonicelectronix is doing because it doesn’t affect their business. What makes them profitable (aside from doing business with me he he)? They know how to buy correctly and know the truth about this business. Get a clue guys or step aside. Apparently the business climate is a little to hot for you.

    PENNY FLEX
    [email protected]

  3. I think we should stick to MAP, I mean, collusion is what this COUNTRY was built on, we need to monopolize the industry. But let’s not stop at MAP–we should get congress to write some legislation that will bring back payphones, ban cell phones, and most importantly pull the plug on this ol’ left wing invention of the INTERNET, the downfall of us all! Goddammitall I don’t like change

  4. The big box stores are another issue and are not near as bad as you online guys.
    Dealers need to unite against this online mess.
    Manfacturers and reps need to control these guys by making them stick to MAP’s.
    the jammer

  5. To All. Here is my response:

    http://dealnews.com/Amazon-50-off-200-or-more-on-car-audio-and-video/370983.html

    Enough said. If you think WE are the problem then you have another thing coming. We are actually WORKING on integrating dealers nationwide to form a strategy against BIG BOX retailers. Unfortunately you think that we do not face competition online or that we are a big discounter. We are a discounter at times, sure, but we are not the only ones. We are quite reactive in the industry and I am sure we have caused lost sales, but we have also opened the door to a lot of folks who cannot afford to buy a $1000 in-dash video system at this point in the economy. Of course you think that by putting us up on a pedestal to be crucified and vilified will help your businesses. It will not, but what will is working together (something we are trying to do). The only way for us to get to that point though is for us to be opened up direct. Once that happens OUR technology can actually help the industry. Of course a lot of you do not want to trust or believe me, but you didn’t want to do that either when I said people did in fact want to buy stuff online 10 years ago.

  6. Retailers, Reps, Distributors and Manufacturers,

    I noted with some sense of “surprise” that Amy has not yet heard from a manufacturer. Therefore, while I am a small but vertical manufacturer I will open that door. I have worked with small and larger size manufacturers over the years and indeed was and currently am responsible for the brand positioning, sales and distribution policies.

    We all know where we are regarding the state of the distribution practices of the manufacturers in our industry. Perhaps summed up best in this chain of comments by Pete above. Apparently Pete is a rep who represents 10 brands and trusts only 3. I perceive it to be a challenging endeavor to successfully plan ahead with only 30% trust in your forecasts.

    The Internet ain’t going away. The Internet is not an evil thing. The real evil in business is surprise. Therefore I submit that the way we manage the Internet guys (and the brick & mortar guys) is the problem, not the Internet guys themselves.

    I have known and done business with both Al & Ed’s and Sonic Electronix over the years. Both have been quite frank with me in explanation of their methods and strategies. There was a time when Al & Ed’s sought to develop relations with the more popular brands and they took one approach to develop those relationships. Now is a time when Sonic Electronix is attempting to build relationships with popular brands. They have taken another kind of approach. Of course now is another kind of time.

    Having said that I am informed that it is best if one knows his enemy. The reason for this principle according to Sun Tsu in his book “Art Of War” and I paraphrase is: One who knows his enemy can successfully predict his enemy’s actions. One who can successfully predict his enemy’s actions can easily defend against those actions and is likely to prevail when engaged in contest with the enemy.

    It follows then that if those who engaged in unpredictable actions to get where they are, will indeed hold their position, it makes sense to bring them into the family of the “predictable enemy”. In short I perceive that we should focus our collective energy on managing the methods of delivering products and services to market (traditional method: brick & mortar — new norm method: Internet) instead of pretending that we can’t do anything about this new suppoosedly “uncontrollable wild west” Internet method. Many Internet retailers are managable. Many are not. By the way I perceive the same is true and has been true about brick & mortar retailers. Many Internet retailers realize that profit is as important as top line sales and marketshare.

    Manufacturers have a responsibility to identify the retailers (B&M and Internet)who will help the manufacturer achieve his goals and then work closely with those retailers to get it done. Retailers, B&M and Internet, have a responsibiluity to identify which manufacturers will help the retailers achieve their goals and then work closely with them to get it done.

    The problem arrises when we as retailers “pretend” that we have correctly identified the right mix of manufacturers that will help propel our retail brand forward. The problem arrises when we as suppliers pretend that we have selected the right group of retailers who will propel our supplier’s brand forward.

    The EVIL ocurs when either of us mislead (unintentionally or otherwise) our customers or suppliers about how we will help each other respectively achieve goals.

    Now for the tough question… Who among the readers of this chain of comments perceives that they have been mislead (unintentionally or otherwise)? Of course you are not required to answer that question for me. On the other hand ALL of us; retailers, suppliers, reps or distributors ARE REQUIRED to ask ourselves and answer that question for ourselves. Then we are required to take action to resolve the issue. If we do not ask ourselves the question and we do not answer the question for olurselves and then take action to begin resolving the problem; we have no standing upon which to whine about it.

    Ray Windsor
    German Maestro
    President

  7. Manufactures are having problems in the current economy same as are the brick and morter retail stores. The manufactures tell us the “brick and morter” stores, how they support us and back us, but when in reality they are doing what ever it takes to stay in business using internet companies to push numbers.

    This all started when manufactures let big box companies like Best Buy and Circuit City dictate map pricing. Independants are supposed to only make $10 when they sell an entry level radio from Sony or Pioneer. Now you have Sonix who is able to push products for the manufactures, and the manufactures don’t care because they have a number to reach. Independants make more money out off the pop machine in front of there store.

    My personal solution to the problem is not to play the price game. I don’t support the manufactures. If they want to do business with me they need to give me pricing to be competitive. If sonix sells there product I don’t. If sonix closes the entire market then I will not sell the market.

    Like someone said above, if the entire car audio independants got together and quit selling the manufactures that are not honest to us maybe something will change.

    We have moved on from Car Audio to focus on vehicle customization and accessories. Our store is our brand, we sell our brand, advertise our brand and we don’t support any manufactures, because they definitely got away from supporting the independant.

  8. part 2:

    Certainly this an epidemic, all retailers need to have push line(profit line), and get away from being brain washed from clerk brands and always bitch about profits. Retailers need brands that focus on the independant specialist, out of ten lines in home and car that I rep, I only have 3 that I can honestly say they havent made a deal with the devil.

    Guess what 3 I have the most confidence in ?

    I linked all my manufactures to this thread so they see the effects, it is a big problem, and its not going to go away, I dont believe there is any one answer but to choose your partners profitably, and go old school and be SALESMEN!

    Yes Amy, this needs focus on a higher level, please continue.

  9. Do we realize any part of the entire scope of the car electronics business other than our own, small retail shops? The day you can step foot in the shoes of the manufacturers (including their commitments to China/facilities, etc) then you will soon realize that economic growth includes other parts besides your 2000 sq ft location. If a manufacturer like Kicker or JL Audio wants to spend money on marketing to drive AWARENESS to your location that car audio upgrades even exists instead of a 16 year old buying an iPod with their extra money, then they have to have the revenue and profits to show for it. You think Kicker can do all their motocross advertisements off small retail sales? You think they don’t need Best Buy/Circuit City type or online retailers? It is 2010…not 1980. Things change. Wake up.

  10. Why do we all continue to let our manufacturers get away with this? We need to organize a movement, nationwide, that will put the pressure on the manufacturers to cease doing business this way before they is no business to cease. We, the specialists, are the ones who give them jobs and who created this industry. They seem to always forget that when it comes down to the choice between money or loyalty. We didn’t get to where we are by forgeting where we came from.

  11. Gentlemen,

    The problem is all around us and everyone has made those points. My point is stop whining if you will not support the smaller brands such as Morel,Zapco,Diamond Audio,Cerwin Vega Mobile and etc. that build great product and support the B&M store. Why is it that you don’t support brands because you actually have to be able to sell and not clerk the products in your store. Now I don’t want to pick on everyone, some of you guys that have wrote in are selling and not clerking and you know who you are. If you are one of the other guys that need the popular brand to clerk then you either need to put your time and money where your mouth is or stop the whining. If you feel as though your B&M store cant survive without having a big clerk line like Rockford, JL Audio, Kicker and etc. then you have totally missed the whole premise of being a specialist. The only brand you should be worried about selling is the one on the sign in front of your store. The rest of the brands in your store should be brands that actually support you by protecting your profitability with thier distribution practices. When you are the expert that takes care of the customers needs and installs product correctly as well as back it up when problems do arise you will not need to worry about what brands you sell. The customers will buy what you show them they need after all you are the expert right? Once you decide to make this kind of impression in your store an amazing thing will happen. The manufacturer will no longer have any control in your ability to make money or continue to tell you how much product you need to by this year, quarter or month. Control your own destiny or STOP WHINING!!!!!!

  12. Amen to the comments above. Furthermore, what kind of deals are these guys getting to sell at the prices they offer. They don’t sell at their cost. The manufacturers hook these guys with deals we would never get. Then they talk out the other side like they care. B.S.

  13. I agree with all those who suggest that the manufacturers are primarily to blame for the hurt that Sonic has put on our industry. Admittedly one bright young individual (Nathaniel) saw a path to take and went for the jugular. The sad part is that the manufacturers were hurting for business, saw this opportunity, and blindly jumped on the bandwagon with both feet, feeding his frenzy. In my opinion they are analagous to a drug dealer feeding the drug addict as much as he can possibly consume. Let’s all use a drop of logic here. How is it possible for a company to do $30 million in business (that’s probably around $25 to $27 million at his cost and absurdly low margins) without being able to purchase that product directly (or indirectly – but with manufacturer approval)from the manufacturers? Impossible!!! Unfortunately, if the major manufacturers made Sonic an approved dealer, he would find out quickly how much volume he loses by pricing product at MAP and would instantly be compelled to start up other illegal web sites (like a number of our “illustrious” colleagues have done) and feed those sites with his “legally” purchased merchandise. And so the vicious circle would continue. Manufacturers, you are the only entity that can put an end to this vicious circle and help strengthen the industry that you all are purportedly so fond of! Shame on you if you don’t.

  14. I have enjoyed everyone’s comments and they’ve further shaped my own. As I all ready said a few up, the blame goes on the manufacturers. They have more to do with shaping this lousy commerce-landscape we’re all complaining about then do the mass retailer most-wanted crew. They condone it. They want it. They perpetuate it. Problem is, now there’s a ‘Nathaniel’ positioned in all of these manufacturer’s top tier management teams – or more than one. ‘He’s’ working for them! They are duplicitous and completely insensitive to what all of us have been discussing today. God help us. M-

  15. Does’t price fixing open the doors for the GOD BE DAMNED LAYERS??

    Post useful information on how to “ENFORCE” MAP w/o the risk of lawsuits….

    Funny how the B&M’s talk about how they’ll suppport product not offered on the iternet but at the same time they hammer mfg’s about cost of quality product vs. crap and then go elsewhere when prices can’t be matched against crap. And the mfg. they buy from (and they are out there)offer no technical support! Everyone wants a steak for the price of a hamburger. If it’s offered then B&M’s do the same thing consumers do. They purchase on price not service. This is a shame on all levels. Beat up the mfg’s enough and well….. Guess some of them will do what they “think” they need to do. I’ve never seen anything so damaged b4!!

    Lets get back to enforcing MAP’s……..

    Price fixing is an agreement between participants on the same side in a market to buy or sell a product, service, or commodity only at a fixed price, or maintain the market conditions such that the price is maintained at a given level by controlling supply and demand. The group of market makers involved in price fixing is sometimes referred to as a cartel.

    Price fixing may be intended to push the price of a product as high as possible, leading to profits for all sellers, but it may also have the goal to fix, peg, discount, or stabilize prices. The defining characteristic of price fixing is any agreement regarding price, whether expressed or implied.

    Price fixing requires a conspiracy between two or more sellers or buyers; the purpose is to coordinate pricing for mutual benefit of the traders. Sellers might agree to sell at a common target price; set a common minimum price; buy the product from a supplier at a specified maximum price; adhere to a price book or list price; engage in cooperative price advertising; standardize financial credit terms offered to purchasers; use uniform trade-in allowances; limit discounts; discontinue a free service or fix the price of one component of an overall service; adhere uniformly to previously-announced prices and terms of sale; establish uniform costs and markups; impose mandatory surcharges; purposefully reduce output or sales in order to charge higher prices; or purposefully share or pool markets, territories, or customers.

    Price fixing is permitted in some markets but not others; where allowed it is often known as resale price maintenance or retail price maintenance.

  16. Name me one brand the internet has built???

    Brick & Mortars build brands, the internet explores the hard work of the independents. Being a rep, I see so many manufactures and rep firms sling product in every hole they can, its promoted by GREED, this is why nice (honest)guys finish last…..and the days of hard work and SELLING on the sales floor doesnt happen anymore. Clerk, Clerk, Clerk, the consumer gets educated by brick and mortars, and Sonic Electronix (and several others) gets the CLERK, CLERK, CLERK sale.

  17. Then why don’t B&M stores support manufactures that refuse to sell their products to 3rd party online stores? You blame the factories but you still enable them by purchasing more RF, JL, Polk, Kicker products!!! If you do not show them their sales outlets are wrong by boycotting them then don’t expect them to ever change. Everyone is at fault. I often see that manufactures that are not sold everywhere online are looked at like small time when all they are trying to do listen to the request of B&M stores. Seems to fall on deaf ears if you are not JL or Kicker. A catch 22 I would say-

  18. Why is everything the fault of the manufacturer here? If everyone dropped their loyalty to the top-tier brands who have built the industry in an effort to curb internet sales…all that would be left is a bunch of sourced Chinese product. How much healthier would our industry be then? Are you looking to Boss Audio to stream Pandora, or Power Acoustik for Garmin Navigation? The reason that top-tier brands are being kicked around on the net is simple…there is a high consumer demand for their product.

  19. Every time we get a rep who wants us to pick up their we 1st look on the internet to see how & where it’s sold. It if clean, we’ll look into it. If not, the rep gets the message and hopefully he delivers it to the manufacturers.

    If all the dealers in the country picked their lines the same way, the manufacturers would be forced to choose sides, support online or support brick and mortar and everything would take care of itself. Unless and until the brick and mortar dealer base pushes the manufacturers to make a choice, they will continue to take sales any way they can. Wouldn’t you??!

  20. Matt you hit the nail right on the head! Duplicitous is being kind. How about hypocritical?

  21. The truth is, in this day and age the internet has become the most powerful marketing and sales tool in history. Sonic is one of the first companies to take advantage of this. That is not a crime. Maybe they have their own interests first, but who doesn’t??? I give my customers something sonic will never be able to. I sell and install systems with a foundation of knowledge and experience that simply and obviously sound better. There are no shortcuts.
    I have found a handful of brands that are the parts I use to do this. I can sell any brand if I can prove the performance. I am my brand.
    I have competed with unethical car audio stores, pawn shops and would be tycoons for over twenty years. They can and will not offer what I do because they will not invest in their knowledge. They probably make a good living slinging product, but they are not contributing to the betterment of their society. They are more like parasites, feeding on the greed, ignorance and bravado of the 18-25 lower income person. The sad fact is, these are the people least able to buy a product that is inadequate, wrongly spec’d and with no warranty.
    I don’t like the players, but I do love the game of car audio.

  22. …I can hear the manufacturers snickering in the corner!!! Its not the mass retailers – ITS THE MANUFACTURERS!!! They allow it, they turn the blind eye, they issue paltry measures to appease the small – THEY ALLOW IT. They are duplicitous to say the least.

  23. How does Bose do it? Maybe we should have our 12volt initiatives on the “mountain” in Framingham, MA….
    Maybe this industry can learn something…

  24. MAP & MSRP are fossils in the ground! Today, MSRP is an insult to a prospective buyer…an insult! Cost, or there abouts, is retail for all intents and purposes. It is pathetic. As a result, service has become irrelevant and price is king to the consumer. Mr. Victor’s plea to bolster your business’ technical know-how & service are good points – and my business excels in those areas. But, that is not enough – we need a bigger, better tool to fight this onslaught with…and only the manufacturers can provide such a tool. I doubt they will…they like moving boxes any which way they can.

  25. I beleive that selling below map pricing deminishes the value of the product in the consumers eye, and makes hard working brick and mortar shops look like theives when all we are doing is attempting to make ends meet so that people truly have the ability to hear, feel and touch the products.

Comments are closed.