Why are brand new Gibsons cheap from independent Gibson authorized dealers?

[AlsoRan]

Will someone tell me how an independent dealer can sell a Gibson ES-335 for a price that is 800 to 1000 dollars cheaper than a full-sized guitar or music store can?

Is it just the economics of being small or are they selling B-Stock Gibson Guitars that come from the factory, and were therefore not good enough for the full-sized guitar shops and music stores?

[Patrick2]

Originally Posted by AlsoRan

Will someone tell me how an independent dealer can sell a Gibson ES-335 for a price that is 800 to 1000 dollars cheaper than a full-sized guitar or music store can?

Is it just the economics of being small or are they selling B-Stock Gibson Guitars that come from the factory, and were therefore not good enough for the full-sized guitar shops and music stores?

I'll have a go at answering that question. I could be wrong about this . . . but, here's how I see it; Gibson is forcing their authorized dealers to take more inventory than they can sell in the retail arena of their business environment. If those dealers do not reach certain purchase levels, they will lose their dealership. So, they are taking the inventory and selling their over stock to smaller independents at a very small mark up, just enough to cover their admin costs. Then, these independents, with no overhead at all, sell at modest mark ups and work on volume. This seems especially prevelant with Historic Collection dealers. Just go on to ebay and search R9s or R8s being sold by independent "dealers" . . . some of whom do not even have brick and mortar facilities. They are, however, very ethical and will tell you up front that they are NOT an authorized dealer. . . and that you will be buying a brand new guitar, but with no warranty. It is all perfectly legal and not at all unethical or wrong in any way.

I called one guy who was advertising on ebay. He wanted to meet me in the lobby of a Holiday Inn Crown Plaza with a brand new rock maple 2011 R9. He said I should bring cash so we could finalize the deal on the spot. (yeah . . .right . . not without a Glock 9 strapped on my shoulder). Of course, I never went. But, I did research the guy. He turned out to be legit . . . not a rip off. And, he has some of the nicest R9s and R8s I've ever seen. Anyway, that's my take on it. I'm quite certain I'm correct. I've already bought 3 Historic Reissues like that. It's a win-win situation for everyone. No one is getting hurt. Although, I'm sure that it does adversly affect the sales of some of the larger and more high profile dealers like Wildwood and Marks Guitar Loft, etc.. They need to sell at higher margins due to the value added that they offer during and after the sale.

[AlsoRan]

Originally Posted by Patrick2

I'll have a go at answering that question. I could be wrong about this . . . but, here's how I see it; Gibson is forcing their authorized dealers to take more inventory than they can sell in the retail arena of their business environment. If those dealers do not reach certain purchase levels, they will lose their dealership. So, they are taking the inventory and selling their over stock to smaller independents at a very small mark up, just enough to cover their admin costs. Then, these independents, with no overhead at all, sell at modest mark ups and work on volume. This seems especially prevelant with Historic Collection dealers. Just go on to ebay and search R9s or R8s being sold by independent "dealers" . . . some of whom do not even have brick and mortar facilities. They are, however, very ethical and will tell you up front that they are NOT an authorized dealer. . . and that you will be buying a brand new guitar, but with no warranty. It is all perfectly legal and not at all unethical or wrong in any way.

I called one guy who was advertising on ebay. He wanted to meet me in the lobby of a Holiday Inn Crown Plaza with a brand new rock maple 2011 R9. He said I should bring cash so we could finalize the deal on the spot. (yeah . . .right . . not without a Glock 9 strapped on my shoulder). Of course, I never went. But, I did research the guy. He turned out to be legit . . . not a rip off. And, he has some of the nicest R9s and R8s I've ever seen. Anyway, that's my take on it. I'm quite certain I'm correct. I've already bought 3 Historic Reissues like that. It's a win-win situation for everyone. No one is getting hurt. Although, I'm sure that it does adversly affect the sales of some of the larger and more high profile dealers like Wildwood and Marks Guitar Loft, etc.. They need to sell at higher margins due to the value added that they offer during and after the sale.

Wow! I was blind, but know I see!

[hot ford coupe]

Years ago, I bought a 335 from an independent dealer just as you described. At the time, the list price was $3200 US. I paid $1650 clams with case and all out the door. There was no warrantee but I was lucky and didn't need it. It was a great way to save a lot of cash.

[AlsoRan]

Originally Posted by hot ford coupe

Years ago, I bought a 335 from an independent dealer just as you described. At the time, the list price was $3200 US. I paid $1650 clams with case and all out the door. There was no warrantee but I was lucky and didn't need it. It was a great way to save a lot of cash.

As a side note, I bought my used Gibson ES-175 at a Stop & Go corner store in a small town in Georgia. I paid $1800.00 cash. I counted out the twenties on the top of a stack of budwieser beers that were on sale. In looking back, I noted the poor salesclerk was looking uneasy from across the room.

It was after 10 PM and both the seller and I were growing wary of the folks coming in and getting wide-eyed at the money I was laying out. Most of them fit at least one of the criminal stereotypes we have in the media, including the car full of loud, presumably drunk young men (there were throwing cans of beer into the trash as they gassed up outside, and stayed there a long time). I was a stupid #$%!!#@* that day.

When the guy at the guitar shop checked it out, he found absolutely no problems. If I can get it together, next year I will go for the 335, but not at a corner store.

[hot ford coupe]

I ought to visit my 7-11 more often. Who knows what might show up there.

[stevedenver]

well HFC may be right
but
ill speculate

the difference in price is
large chains have staff and higher overhead

its the sam ashes and guitar centers that the majority of buyers go to-visible, ads, stocked, a familiar style of retail-not some funky little shop-appeals to far more who simply dont know what theyre buying-gives em confidence and comfort

they have a steady flow of customers-
they dont need to bargain as hard and they dont seem to anymore-and this is from my personal experience since 1995 when i started up again with electrics and adding to the herd

also most buyers are ignorant of the market-most dont shop the net thoroughly before they go out-AND -theres the issue of moving the 'anchor point'-which means if say FMV is 2500-the seller marks it at 3200-you have to swim pretty hard to drop something 25% to FMV-(and of course when you retail-there are always issues of custoemr service, returns, credit card charges, wear or damage to the item, etc)

i think that GC's strategy was to drive out smaller competitors and corner the market-

those indies that have survived are hard pressed to let a willing buyer out the door i think

i agree that minimum inventory and finance probably are a factor-but
if i were an excutive at GC-theres no way i would feed competitor with product at OUR most favored nation purchase price-even to move inventory-

it would be better to firesale occasionally and have some return than to let it out the door-i think this is why you now see factory outlet stores run by the makers -whereas ten years or more back-there were third parties fireselling last years styles-now the makers do it themselves-so i think this is likely where GC is at too

while i shop indies regularly-one thing i always bear in mind is that with a mega dealer-no one takes the return policy personally-its policy and they do it no non-sense

with an indie-its a much bigger deal-if you change your mind-or theres a substantive issue-ive seen offers to repair rather than substitute a different product-

here in denver theres an indie that specializes in boutique and high end accoustics-nice stuff-prices are high-and he doesnt budge because someone out there is buying -that was one instance where in buying an f mando- i got a gibson higher end model from the east coast than for the price he would sell a mid grade model-havent been there in a few years-but i wonder if he would still bargain so hard

[AlsoRan]

Originally Posted by stevedenver

well HFC may be right
but
ill speculate

the difference in price is
large chains have staff and higher overhead

its the sam ashes and guitar centers that the majority of buyers go to-visible, ads, stocked, a familiar style of retail-not some funky little shop-appeals to far more who simply dont know what theyre buying-gives em confidence and comfort

they have a steady flow of customers-
they dont need to bargain as hard and they dont seem to anymore-and this is from my personal experience since 1995 when i started up again with electrics and adding to the herd

also most buyers are ignorant of the market-most dont shop the net thoroughly before they go out-AND -theres the issue of moving the 'anchor point'-which means if say FMV is 2500-the seller marks it at 3200-you have to swim pretty hard to drop something 25% to FMV-(and of course when you retail-there are always issues of custoemr service, returns, credit card charges, wear or damage to the item, etc)

i think that GC's strategy was to drive out smaller competitors and corner the market-

those indies that have survived are hard pressed to let a willing buyer out the door i think

i agree that minimum inventory and finance probably are a factor-but
if i were an excutive at GC-theres no way i would feed competitor with product at OUR most favored nation purchase price-even to move inventory-

it would be better to firesale occasionally and have some return than to let it out the door-i think this is why you now see factory outlet stores run by the makers -whereas ten years or more back-there were third parties fireselling last years styles-now the makers do it themselves-so i think this is likely where GC is at too

while i shop indies regularly-one thing i always bear in mind is that with a mega dealer-no one takes the return policy personally-its policy and they do it no non-sense

with an indie-its a much bigger deal-if you change your mind-or theres a substantive issue-ive seen offers to repair rather than substitute a different product-

here in denver theres an indie that specializes in boutique and high end accoustics-nice stuff-prices are high-and he doesnt budge because someone out there is buying -that was one instance where in buying an f mando- i got a gibson higher end model from the east coast than for the price he would sell a mid grade model-havent been there in a few years-but i wonder if he would still bargain so hard

Point taken. You have given yet another scenario that also makes perfect sense.

I can only conclude that it is a case of "Let the Buyer Beware." Whereas Guitar Center takes returns no problem, will that independent guy who met you at the Starbucks and sold you the Les Paul be so cooperative?

[Patrick2]

I agree with most of what stevedenver said. However, I think he misinterpreted where the over stock, which is being fed to the smaller independent and unauthorized players, might be coming from. GC and other large retailers would NEVER employ such a tactic . . . I do agree with that. However, there are many larger independent dealers . . . particulary the Historic Collection dealers who do indeed "wholesale" or re-d guitars. I, for one, think this is a great concept . . . especially for the buyer who needs the additional discount afforded by the smaller, non authorized indie dealer. As I said, it might not be the best practice or concept for those Historic Collection dealers who are not doing it. I'm sure it has cut into their sales. I'm also sure, at some point, that those larger Historic Collection dealers who are not involved, will start to . . (if they haven't already) . . protest to Gibson. I'm sure that Gibson is touting the concept of "selective distribution", when they insist that a Historic Collection dealer MUST take in "X" number of guitars in order to maintain their Historic Collection status. However, the very concept of wholesaling or re-distribution totally negates any benefits of select distribution.

If Gibson wants to stop this practice, they can do so immediately. Guitars can be tracked by serial number, to reveal the dealer they were originally sold to. But, I don't think they reall give a s*** as long as their product keeps moving and no one is complaining to them.

[stevedenver]

i understand-didnt think of others, regionals etc
i would be certain there are contract provisions which would make re-ditribution a breach of contract , jeopradizing the select dealers -i imainge that gibson would have a strong interest beyond moving product to trounce a rouge dealer that tried this-just to show the others (cept for GC and the bigguns cos they cant afford to play tough and lose)

it is /will be interesting

back in about 2003 there was a glut of historic LPs -old stock (2000-2002) had been priced quite high and new stock was lower in price -end result guys like wildwood had a lot of product to move-and still had to buy new stock -deals for guys like me

its a tough issue
dealers need to carry top name products-i dont want to shop at a place with fifteen asian brands and nothing else-no dis-just me and my predjudices

yet these dealers are held to tough terms-sell or perish- in a manner-no different than car dealers, camera dealers, clothing dealers, etc

but the time may be ripe to test that, or to bargain collectively (not bloody likely)

while i believe gibson toyed with opening 'gibson shops' imho theyd need to be nuts to do that in this economy ( like if they ever lost their major sellers)

i would think-like having a rolex or mont blanc shop-maybe a bit of traffic but not a ton at those prices-can you imagine Gibson selling their ware at full retail (like at Opry Mills?!)

so long as they have GC and others, they will play against the smaller independents -but even a harvard dude should know not to put all your les pauls in one basket

i speculate too, that simply from observation, GC (at least here in denver-a second tier store area) GC seesm to get more of the 'lesser' stuff, lesser woods and flash etc -could be coincidental, could be part of the vendor contract terms -'we'll supply, but no returns except for mfg faults'-probably like costco-you must buy x amount to have most favored nation pricing-promos, ad, catalogs etc-

i know that steve at wildwood and others actually go and chose their stock at the factory

fascinating to think about

i own more than a few gibsons, no less guitars, and the only one from GC was an ultra rare LP, that they had mis identified and were offering for a song-bought it on the spot with absolutely having gone in with no intention to buy anything-and a great, alpine blue strat for my once very young son at xmas-had to be 'that' blue-and a d28 that was mis marked (this can be a real plus still at GC of you look hard)

otherwise i tend to go with indies-better stuff, fair prices, and better customer service-all of have been long distance and every guitar has been exactly what i wanted and as described by the seller