Jump to content
Gibson Brands Forums

Gibson's online sales policies


j45nick

Recommended Posts

I had an interesting email discussion over the last few days with a Gibson dealer who shall remain unnamed. Although this dealer claims to be one of the country's largest "independent" Gibson dealers, he cannot post his Gibson stock online on his website, and says he has been trying for a long time to be able to do so, with no success.

 

I notice that the MF/GC behemoth posts their Gibson stock on their websites, including their standard discounted prices. Clearly, GC/MF are in a class by themselves, in that GC has brick and mortar stores everywhere, and I suspect that MF does a massive online business.

 

Is GC/MF so powerful that they can dictate advertsing and sales policy to Gibson vis-a-vis what other dealers are allowed to do, or is this a Gibson marketing policy that tries to split online sales away from brick and mortar dealers in some way? Or am I totally misreading this?

Link to comment
Share on other sites

  • Replies 78
  • Created
  • Last Reply

That sounds nuts. If they cannot list their Gibson stock online how are they going to sell them. I think the vast majority of people do their initial research online before visiting a store to see the goods in the flesh. Na!! Something odd there.

 

Bob

Link to comment
Share on other sites

The medium or longer term answer may be 'not for much longer' with several hundred million of pure debt, over a billion of financial gross mismanagement and figures are still spiralling.

 

 

PM, could you elaborate on that a bit, and perhaps point us to articles outlining the situation?

Link to comment
Share on other sites

.

This topic has been discussed before and several of the members, including myself aren't happy that Fuller's falls into this Gibson ban on internet advertising. I don't recall that we ever got a definitive answer on certain dealers being banned from net advertising, but this all came about two or three years ago. At that time Fuller's and others were posting their Gibson stock online and all of a sudden they were not allowed as a term of there Gibson agreement. These dealers can sell their Gibson stock via email/phone, but they can't display it online. Gibson's rules about stock numbers and such caused a lot of small dealers to drop Gibson. It wouldn't surprise me if Gibson sets up limited territories in which retailers can ship their sales. Gibson can really dig in its heels on some of these issues - like the Elderly/Gibson debacle over a frickin' banjo or mandolin a few years ago. Now Elderly no longer stocks new Gibsons, but still stocks used ones.

 

 

.

Link to comment
Share on other sites

PM, could you elaborate on that a bit, and perhaps point us to articles outlining the situation?

 

It's been the chit-chat on forums for a while now.... obviously I can't point you to documents held by financial houses for obvious reasons, however if you google it you'll find a lot about it... latest claims are totals debts of 1.56Billion on turnover of 200 million, 2011 saw 7% losses as claimed below.

 

http://onlinedigeditions.com/display_article.php?id=922342

 

If you have an account to view moody's ratings you can see more structured data that is viewable to the outside world. Needless to say, it doesn't look awfully pretty nor very arousing reading for the money minded.

Link to comment
Share on other sites

It's been the chit-chat on forums for a while now.... obviously I can't point you to documents held by financial houses for obvious reasons, however if you google it you'll find a lot about it... latest claims are totals debts of 1.56Billion on turnover of 200 million, 2011 saw 7% losses as claimed below.

 

http://onlinedigeditions.com/display_article.php?id=922342

 

If you have an account to view moody's ratings you can see more structured data that is viewable to the outside world. Needless to say, it doesn't look awfully pretty nor very arousing reading for the money minded.

 

 

Thanks, I remember this discussion recently, but it came more sharply into focus in my exchanges with this dealer, who clearly felt his business to be seriously constrained by Gibson's policies. It's very difficult to reconcile some of these things with hogeye's recent report of Gibson trying to ramp up acoustic production by 50% by adding another shift. Now that GC is public again, it might be worth looking at the prospectus to get their own take on the financials. Of course, auditors never make mistakes, do they......?

 

It isn't clear to me that it makes much sense for Gibson to put most of its eggs in one basket when it comes to retail marketing, particularly online.

 

We had a similar issue in the marine industry a few years ago, when the dominant retail/online player (West Marine) got caught in the classic "delusions of grandeur" expansion spree which saw the company opening a ridiculous number of brick and mortar stores over the space of a couple of years. When the recession hit and the discretionary spending bubble burst, their stock price took a massive hit: they had gone public during the gold-rush years just prior. They have been crawling out of that hole ever since.

 

Since Gibson isn't publicly-held, we won't now how things are really going there until it's too late, if history repeats itself.

Link to comment
Share on other sites

Of course, auditors never make mistakes, do they......?

 

Not unless there's enough money in it and a plausible "there are lessons to be learned" styled excuse that can be offered in the aftermath. Lest we forget companies are open to many many avenues that individuals are not when it comes to operating finances and the repair of bad financial relationships. To me and you the colossal figures can be staggering, to a half-decent set of bean counters it's the difference of pursuing a CVA to start afresh or liquidation and blame-mongering,

 

It isn't clear to me that it makes much sense for Gibson to put most of its eggs in one basket when it comes to retail marketing, particularly online.

 

The big boys carve up deals to ensure exclusivity, a better tailored deal for them that often treads a thin line of anti-competitive trading, the return for making such deals for Gibson is they can be sure of a years production in advance given the agreed numbers, the old bird-in-the-hand style of business.... it may cross the border of taste for some, it certainly isn't fair competition towards the small operations but each outfit has to tend to their own flock, their own success and their own longevity first and foremost.

Link to comment
Share on other sites

.

... I don't recall that we ever got a definitive answer on certain dealers being banned from net advertising, but this all came about two or three years ago. At that time Fuller's and others were posting their Gibson stock online and all of a sudden they were not allowed as a term of there Gibson agreement. ...

.

 

We did discuss this quite a bit, but I guess it's time to do it again. I'll try to keep this reasonably short, because it's not really all that complicated.

 

First, the motivation -- because, if you understand the motivation, the policy will make sense to you. (You may not like it any better, but it will make sense.)

 

The two basic facts to keep in mind are:

 

(1) Gibson wants you to buy from your local dealer, not over the internet. (Because they want you to be able to hold the very guitar that you are deciding whether to buy in you hands and try it out prior to making a decision. Like many of us here, they believe this is the "right" way to buy a guitar.)

 

(2) They recognize that not everyone has a well-stocked local Gibson dealer, so they want to provide you with buying over the internet as an emergency back-up option.

 

So, how to make this happen? Their idea is to allow few -- only a few -- "Internet Authorized" dealers to advertise their stock on their website, and to force them to keep their advertised prices high enough that any local dealer who wants to can meet or beat them on price. (That's why MAP is a larger percentage of MSRP than a few years ago -- it gives local dealers a chance to improve their ROI while still beating internet offers of MAP. Of course, most of the Internet Authorized dealers will offer you a substantially better price if you call and ask, but there's not anything Gibson can legally do about that.) Gibson explained all this publicly at the time the system was implemented. It's probably still on the website somewhere.

 

The original handful of Internet Authorized dealers were large independents. Musician's Friend, et al., were added later. (Three guesses why, and the first two don't count. Hint: The words "800 pound gorilla" are likely to occur in a correct answer.) Some of the originals were dropped, some additional dealers were added, and some who were dropped were later re-added. (I don't think anyone has been dropped twice yet. Apparently getting dropped the first time gets the message across.) In most cases, I have a guess as to why dealers were dropped. I don't know for sure how good all those guesses are, but, if they are close, then Gibson has some reasonably good reasons for the list being what it is. (In particular, it doesn't seem to me to be much of a mystery why Fuller's got dropped, but I don't care to say why: it would be pure speculation on my part.) You could certainly argue that there are dealers out there, not on the list, who are as deserving as others who are on. But the process started out with a maximum list length -- which I think was their guess at the minimum number that would guarantee enough competition to force prices down to MAP -- and they've been pretty good about sticking to it, even though it means that some deserving dealers are not authorized.

 

Anyway, the bottom line is the policy is completely incomprehensible if you assume that Bozeman's goal is to sell as many guitars next quarter (or this year, or some other short span of time) as possible. But that's not the goal. Selling as many of the limited number of guitars they build through brick-and-mortar dealers who are "good business partners" -- which basically means maintaining a good stock (so customers can try out "the full range" of Gibsons when they visit an authorized dealer) and turning it over -- is a goal. Giving people who can't buy from a local dealer, for one reason or another, a shot at getting the [model of] guitar they want is a goal Those goals are what the policy is designed to ensure.

 

-- Bob R

Link to comment
Share on other sites

We did discuss this quite a bit, but I guess it's time to do it again. I'll try to keep this reasonably short, because it's not really all that complicated.

 

First, the motivation -- because, if you understand the motivation, the policy will make sense to you. (You may not like it any better, but it will make sense.)

 

The two basic facts to keep in mind are:

 

(1) Gibson wants you to buy from your local dealer, not over the internet. (Because they want you to be able to hold the very guitar that you are deciding whether to buy in you hands and try it out prior to making a decision. Like many of us here, they believe this is the "right" way to buy a guitar.)

 

(2) They recognize that not everyone has a well-stocked local Gibson dealer, so they want to provide you with buying over the internet as an emergency back-up option.

 

So, how to make this happen? Their idea is to allow few -- only a few -- "Internet Authorized" dealers to advertise their stock on their website, and to force them to keep their advertised prices high enough that any local dealer who wants to can meet or beat them on price. (That's why MAP is a larger percentage of MSRP than a few years ago -- it gives local dealers a chance to improve their ROI while still beating internet offers of MAP. Of course, most of the Internet Authorized dealers will offer you a substantially better price if you call and ask, but there's not anything Gibson can legally do about that.) Gibson explained all this publicly at the time the system was implemented. It's probably still on the website somewhere.

 

The original handful of Internet Authorized dealers were large independents. Musician's Friend, et al., were added later. (Three guesses why, and the first two don't count. Hint: The words "800 pound gorilla" are likely to occur in a correct answer.) Some of the originals were dropped, some additional dealers were added, and some who were dropped were later re-added. (I don't think anyone has been dropped twice yet. Apparently getting dropped the first time gets the message across.) In most cases, I have a guess as to why dealers were dropped. I don't know for sure how good all those guesses are, but, if they are close, then Gibson has some reasonably good reasons for the list being what it is. (In particular, it doesn't seem to me to be much of a mystery why Fuller's got dropped, but I don't care to say why: it would be pure speculation on my part.) You could certainly argue that there are dealers out there, not on the list, who are as deserving as others who are on. But the process started out with a maximum list length -- which I think was their guess at the minimum number that would guarantee enough competition to force prices down to MAP -- and they've been pretty good about sticking to it, even though it means that some deserving dealers are not authorized.

 

Anyway, the bottom line is the policy is completely incomprehensible if you assume that Bozeman's goal is to sell as many guitars next quarter (or this year, or some other short span of time) as possible. But that's not the goal. Selling as many of the limited number of guitars they build through brick-and-mortar dealers who are "good business partners" -- which basically means maintaining a good stock (so customers can try out "the full range" of Gibsons when they visit an authorized dealer) and turning it over -- is a goal. Giving people who can't buy from a local dealer, for one reason or another, a shot at getting the [model of] guitar they want is a goal Those goals are what the policy is designed to ensure.

 

-- Bob R

 

Remarkably self contradictory.

Link to comment
Share on other sites

We did discuss this quite a bit, but I guess it's time to do it again. I'll try to keep this reasonably short, because it's not really all that complicated.

 

-- Bob R

 

 

Sorry, but this makes absolutely no sense to me as a marketing plan. I can't believe that Gibsons motivation is to get as many people as possible into the stores for a "hands-on" Gibson experience. That requires a willing suspension of disbelief. Rather, Gibson wants to sell as many guitars as possible, to as many people as possible.

 

Certainly there are those with limited exposure to Gibson that may be willing to drive 100 miles or more to see what Gibson is all about, and to A-B them against other brands. But a massive amount of retail selling today is conducted over the internet, and that is increasing every day. The whole concept of doing A-B comparisons as the best way to sell Gibson is destroyed when you listen to the complaints here about Gibsons at major retailers like GC being poorly presented with old strings and other shortcomings.

 

The reference as to why Fuller's is not on the internet sales list intrigues me, and no, it is not obvious to me--and probably not to many others here--why this should be the case. If you are going to throw presumably "inside" stories like this out there, you owe it to the rest of us to be more explicit.

Link to comment
Share on other sites

We did discuss this quite a bit, but I guess it's time to do it again. I'll try to keep this reasonably short, because it's not really all that complicated.

 

First, the motivation -- because, if you understand the motivation, the policy will make sense to you. (You may not like it any better, but it will make sense.)

 

The two basic facts to keep in mind are:

 

(1) Gibson wants you to buy from your local dealer, not over the internet. (Because they want you to be able to hold the very guitar that you are deciding whether to buy in you hands and try it out prior to making a decision. Like many of us here, they believe this is the "right" way to buy a guitar.)

 

(2) They recognize that not everyone has a well-stocked local Gibson dealer, so they want to provide you with buying over the internet as an emergency back-up option.

 

So, how to make this happen? Their idea is to allow few -- only a few -- "Internet Authorized" dealers to advertise their stock on their website, and to force them to keep their advertised prices high enough that any local dealer who wants to can meet or beat them on price. (That's why MAP is a larger percentage of MSRP than a few years ago -- it gives local dealers a chance to improve their ROI while still beating internet offers of MAP. Of course, most of the Internet Authorized dealers will offer you a substantially better price if you call and ask, but there's not anything Gibson can legally do about that.) Gibson explained all this publicly at the time the system was implemented. It's probably still on the website somewhere.

 

The original handful of Internet Authorized dealers were large independents. Musician's Friend, et al., were added later. (Three guesses why, and the first two don't count. Hint: The words "800 pound gorilla" are likely to occur in a correct answer.) Some of the originals were dropped, some additional dealers were added, and some who were dropped were later re-added. (I don't think anyone has been dropped twice yet. Apparently getting dropped the first time gets the message across.) In most cases, I have a guess as to why dealers were dropped. I don't know for sure how good all those guesses are, but, if they are close, then Gibson has some reasonably good reasons for the list being what it is. (In particular, it doesn't seem to me to be much of a mystery why Fuller's got dropped, but I don't care to say why: it would be pure speculation on my part.) You could certainly argue that there are dealers out there, not on the list, who are as deserving as others who are on. But the process started out with a maximum list length -- which I think was their guess at the minimum number that would guarantee enough competition to force prices down to MAP -- and they've been pretty good about sticking to it, even though it means that some deserving dealers are not authorized.

 

Anyway, the bottom line is the policy is completely incomprehensible if you assume that Bozeman's goal is to sell as many guitars next quarter (or this year, or some other short span of time) as possible. But that's not the goal. Selling as many of the limited number of guitars they build through brick-and-mortar dealers who are "good business partners" -- which basically means maintaining a good stock (so customers can try out "the full range" of Gibsons when they visit an authorized dealer) and turning it over -- is a goal. Giving people who can't buy from a local dealer, for one reason or another, a shot at getting the [model of] guitar they want is a goal Those goals are what the policy is designed to ensure.

 

-- Bob R

 

 

 

Wow you saved me a lot of typing. This post should get a sticky. THE definitive answer. I couldn't have said it better myself!

Link to comment
Share on other sites

On his short-lived Gibson CEO Forum, Henry said that he saw a distinction between traditional dealers that could pack and ship guitars at a customer's request, and those dealers who developed a purpose-built capability to provide an online customer an exceptional, trouble-free purchasing experience. The latter is who the company deemed an Authorized Online Dealer.

 

I'm sure that means the dealer would have to have a high-quality website, inventory breadth and depth, be able to support quick and consistent pack-up and delivery, and have other needed infrastructure to support such an endeavor. As he explained it, he didn't want online customers to be disappointed or have problems with a dealer that was not able to provide the level of service or have the capability and resources online specialty retailers typically had (including a high percentage of the full Gibson line in-stock). He felt that dealers without those capabilities could better serve customers in person.

 

Red 333

Link to comment
Share on other sites

Well said RAR. Makes perfect sense to me.

 

I would add two things:

 

1) Internet dealers are NOT good for the musical instrument industry from a customers stand, for guitars even more. The vast majority of poeple who have found QC issues or are unhappy with the guitars they buy are from internet sales. Given a choice, a consumer is much more likely to be happy with the purchase AND find a guitar that they like choosing them in person. For Gibson AND the stores that sell them, it means a much higher percentage of customer satisfaction.

 

In addition to that, poeple are more likely to buy guitars, and more of them, if they are exposed to them. For the same reason a car dealer will try and get you to take a test drive.

 

For this reason, Gibson has an interest in supporting shops in favor of internet dealers. Any manufacturer has great interest in supporting and protecting dealerships. It's smart business if everyone involved wins, and can keep winning. Favoring a trend that if it takes hold that would result in less sales down the road is something to avoid.

 

2) selling as much as you can as fast as you can is not always the ideal. The ideal is to sell every one you make and be ABLE to do it next year. If one year you sell 500 units of something does not mean you gear up and make 1000 the next year, because you may have 500 units left on the shelves and you have just worked your factory out of a lob.

 

STEADY growth is far better than rapid growth or maximum sales. If you are building slightly under demand, you have assured your company of the next year's sales, where if you try and capitalize on demand, and you over-build takes AWAY from next years demand. If you have laid off your work force and demand hits again for more, you have just missed the boat.

 

I think the two of these go together and effect each other. If brick and morter stores go out, demand will go down at least somewhat, enough to matter and make it worthwhile to keep them going IF you can.

Link to comment
Share on other sites

Don't forget that any dealer whose Gibson inventory you see listed on the internet is required, and has agreed, to purchase a very high dollar amount of Gibson inventory annually, starting with a substantial upfront purchase. The minimum requirement for the "internet-advertising level" of Gibson dealership is sufficiently high to eliminate all but the "most seriously committed" and credit-worthy, and with Gibson's ongoing annual purchase level requirements, continued participation means that Gibson dealers who get to advertise on the web have to maintain a sales volume of Gibson products that would simply be beyond the capability of most operations.

 

Jack6849

Link to comment
Share on other sites

... Rather, Gibson wants to sell as many guitars as possible, to as many people as possible. ...

That's where you're wrong. Demand far exceeds supply, and so they can afford to be picky about who they sell to and on what terms.

 

The reference as to why Fuller's is not on the internet sales list intrigues me, and no, it is not obvious to me--and probably not to many others here--why this should be the case. If you are going to throw presumably "inside" stories like this out there, you owe it to the rest of us to be more explicit.

Not that I owe you anything, but ... .

My guess on what happened with Fuller's is based entirely on information posted to this forum, and is supported by not infrequent checks of eBay sales of Gibspns. That should be enough of a clue for you to do a search that will find the relevant threads.

 

--Bob R

Link to comment
Share on other sites

Archived

This topic is now archived and is closed to further replies.


×
×
  • Create New...