The Changing Face of Wholesale

by Christian Wissmuller • in
  • Roundtable
• Created: August 2, 2013

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It’s not “breaking news” to point out the absurdly fast pace of technological developments and the impact of such innovation on how products are made, distributed, purchased, and consumed. Nonetheless, the role of the MI wholesaler has undergone exponentially more change than many in the past decade or so. Retailers order product via different channels than in the ‘80s or ‘90s, while musical instrument end-users themselves often bypass traditional consumer routes in pursuit of their gear of choice.

One of the significant facets of the evolution of MI wholesale in recent years has been the stepped-up presence and reach of certain major players who are typically associated with a different line: print music publishers. MMR recently spoke with key figures from Hal Leonard and Alfred Music about the companies’ expanded activity in the realm of wholesale trade and what it means for the future. Additionally, Kathy Donahoe of American Way Marketing offered her insight into this ever-changing field…

MMR: The past 10 or so years have seen a lot of changes in the market – can you talk about the evolution and changing nature of what it means to be a wholesaler today?

Brad Smith: Hal Leonard Corporation [HLC] has distributed many book and DVD lines for decades, but we recently expanded our categories to include hardware, software, and accessories. The timing of this has been good because in the last few years we’ve seen a shift by many top technology and accessory manufacturers to concentrate on doing what they do best – create outstanding products.

 Because HLC reaches so many retailers of music-related items, that is a substantial opportunity for us. The mechanics of pure wholesaling – pick, pack, and ship – have to be top notch, but in the last 10 years the need to market products to our accounts has never been more important. Our role as a “wholesaler” has really turned into a true partnership where we are involved with marketing plans, coordinated in-store promotions, and even product development discussions. Our role to the dealer base has developed into the lifeline to all the aspects of the manufacturer. We relish this role. At our core, HLC is a sales and marketing company, so this service expectation fits the trends of what our accounts need from a value-added wholesaler.

Andrew Surmani: The biggest change I have seen in recent history is the ability for the customer to get information instantly. A simple Google search can provide comparative product and pricing information in minutes or even seconds.

Customers want the best products, at the most affordable prices and they want them now! And if you can’t provide that, they can easily find other options elsewhere. Today, one of your most important salespersons is your data: comprehensive information on your products, with product images, media files, customer reviews, and links to purchase your products (which MUST be in stock) immediately. If your data is not accurate and complete, you are losing sales, no question about it.

Kathy Donahoe: As in any business, flexibility and forward thinking are necessary to adapt to changes in your own marketplace. We strive to provide dealers with a wide selection of quality products at competitive prices. Dealers have become savvy at keeping their stock on hand to a workable minimum and rely on us to be their warehouse and to ship products timely as their market demands.

Honoring our business relationships is important to us. Business is all about people. Our team provides prompt and effective service to both our customers and suppliers. An actual person with experience and knowledge answers our phones during the business day, which is appreciated by all who contact us. Today, we are all about going that extra distance to service our dealers as demanded because of their changing needs.


MMR: How are you adapting to the ever-expanding online environment?

AS: We are constantly working on cleaning up our data and improving our website to make the browsing experience better for the customer. Then, when we blast out the information on all our social media outlets and drive the customer to our site, they can easily find the information they are looking for. When you have good data and a great website you can do a lot of digital marketing to drive traffic to your site and also have wonderful analytic tools at your fingertips to see exactly where your customers are coming from and how they are interacting with your site.

KD: All of our efforts in the last 10 years have been directed towards achieving a “level playing field” pricing policy that does not fall prey to offers of “large volume.” The ever-expanding dealer option program we offer to private label and/or customize to meet a dealer’s competitive requirements depends on maintaining the integrity of our pricing structure as well as that of our vendors.

We have dropped vendors who have succumbed to “large volume” online retailers who sell to those online operations at distributor prices. Instead, we have second and third-sourced those same products with other vendors, as well as duplicated many of those products. We have found no shortage of vendors in the U.S. and Europe willing to work with legitimate distributors whose goal is to support the network of school music dealers responsible for building music programs.

BS: If you are referring to online retailing, we support those that support our products either online or on the street and have discount structures set to fairly compensate them. Now more than ever, brick and mortar retailers need to take advantage of their in-store “experiential” offerings to draw in and keep customers. Some online retailers offer valuable videos and subjective reviews that show they really care about the consumer buying the right product.

Regarding the way musicians use online content and mobile devices, we’ve embraced it with offering cool new accessories and devices that help the consumer have a more quality recording or learning experience. We try to make sure the products we offer are well explained and reliable. We don’t have to look too far in the past to know cool tools are what drives business and helps develop a new generation of players. The key is keeping that customer. MI retailers can be the place to experience and find out about how digital technology can help realize your passions.


MMR: What product categories are doing best for you? What price points are moving well?

BS: We carry tech products related to recording, live sound, and the guitar. Hot categories are mobile device interfaces and holders, all digital audio workstations (DAWs), and entry-level interfaces bundled with software. The entry-level bundle is the most competitive and active. Bundles at $299 seem to be max for most beginning players.

AS: Our instrument packs have been hugely popular. We’ve sold thousands of

Teach Yourself Ukulele packs, which are priced affordably at $49.99 and

include a ukulele, book, CD, and DVD. Other best selling packs are Alfred’s Kid Ukulele Pack ($49.99), the Complete Idiot’s Guide Acoustic Guitar Pack ($149.99), Alfred’s Teach Yourself to Play Guitar Complete Electric Pack ($199.99), Alfred’s Teach Yourself to Play Guitar Complete Acoustic Pack ($149.99), and several Daisy Rock Girl Guitar packs. We also have three new keyboard packs coming out in September: Teach Yourself Piano, Kid’s Piano, and Music for Little Mozarts Piano, all with electronic keyboards, books, CDs, and some with kits, stuffed animals, and DVDs.

KD: We continue to expand our proprietary product offerings under the brand names of Superslick, FAXX, and 1st Lesson, which allows us to provide dealers with both standard, customized, and private labeled quality products for presentation in their stores. The customization and private labeling options we offer help prevent direct price comparisons with large online retailers and help dealers address the specific needs of individual teachers or school system requirements.


MMR: Any parting thoughts?

BS: We understand all retailers want more discount. In fact, we’ve recently reduced our tiered costs to give dealers a few more points. But I want to highlight that discount is not the only part of the profit equation from a wholesaler. HLC offers extra discount for fast payments and offers freight savings with shipment consolidation. And the costs of inventory go down as your turns go up. To help speed up your turn rate, we help with merchandising and demo products for the staff. Faster turns are usually achieved by brand name products and we make sure our accounts know to take advantage of the sizzle that legacy products carry. All combined, we feel we give our accounts a lot of options to be as profitable as possible and help keep their customers coming back for more.

AS: Stay relevant. Today with technology, it is now a level playing field and it is easy for small businesses to capture market share quickly. It still comes down to providing the best possible customer experience. It’s not just about price. If you can provide the best possible customer experience, you will develop and keep loyal customers.

KD: The school band and orchestral business is a fun, rewarding, and honorable industry. Our team at AWM enjoys providing quality custom and stock products, as well as outstanding customer service to our dealers. We like what we do!

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