Holy Moly- Costco selling Summits!!!

[Munster]

Agreed Tom, I'd love to see Costco sell the speakers, ML must think

their customers are pretty stupid to believe their line.

 

[sleepysurf]

Not to sound like O*ature, but this begs the question... perhaps the Summits aren't selling like ML had hoped, and this is just another channel to move 'em out. Time will tell, but the longer they stay on Costco.com, the more it seems ML has given their tacit approval.

 

[tsd2005]

I've been working in the wholesale food manufacturing industry for the last 9 years. Both companies I've worked for sell to Costco and I have worked with Costco's IT department extensively. I have a little bit of experience with how they get products into Costco and here's my take on this ML @ Costco deal:

First off, Costco does not purchase products from anyone except directly from the manufacturer. Costco needs proof that the product will sell, the manufacturer has plenty of inventory, the product meets their standards and they have recourse for customer returns. When Costco determines the product is suitable, they formally agree upon a cost that Costco will sell it for. This is a contract for a specific time period. If the Costco stores don't move enough of the product, they'll discontinue the item.

Because these are being sold on Costco's website (Has anyone seen them in the store yet?), I would venture to say that Costco will receive the orders and submit them directly to ML, who will then in turn, ship the units to the Costco customer directly or to a Costco store for customer pickup.

The customer will receive their speakers and there WILL be a Costco packing list, receipt, address label, etc on it so the customer will think it came directly from Costco, even though it may have come directly from ML.

I believe that the story that we got from ML is BULLSH1T - they struck a deal with Costco to sell stuff at a lower price and of course the customers who paid full price are p1ssed, so they are spinning this story to keep the natives from getting to angry, so to speak.

I don't care that ML is selling thru Costco... good price - good return policy and who cares if you can't listen to them first - most of the ML dealers don't have the speakers properly positioned or set up correctly anyway. That's all fine.. what I don't like is this B.S. story that ML has told us about trying to track down some "dealer" somewhere that just happened to have a warehouse full of high end speakers that have only been on the market a short time and convinced Costco to carry them online!


So c'mon Martin Logan Corp... tell us the truth. We won't tell anyone.. we swear it.

I don't mean to call you a liar. However I know of Trans-shippers who sell via Costco. I know one specifically who ships Denon units from his store that are sold by Costco online. That is not direct from the manufacturer.

I've also been told that ML has figured out who the Trans-Shipper is in this case and is about to go after them as hard as they legally can.

A Trans-Shipper for those that don't know is a store that buys product for unauthorized dealers who sell it at unauthorized prices. Customer buys from the online store, online store faxes the dealer, dealer ships unit to the Customer with a packing slip. It looks like it came from the online store, but it didn't.

This is called trans-shipping and ML has ALWAYS been one of the best in the industry to go after Dealers who trans-ship. In fact I know that they won't even talk to known trans-shippers about being a Dealer even if it's the only store in a market.

My store aggressively went after ML to find out about this. We wanted PROOF that it wasn't from ML directly. Because if it was, then we would match the price. ML is prepared to prove to us that it is a Trans-Shipper and not ML.

 

[TomDac]

Not sure why you would post "I don't mean to call you a liar"... Thems fightin' words!

Maybe you should read my post again.. specifically where I state that I have a little experience dealing with Costco and "here's my take on this ML @ Costco deal"

My post was based on my experience dealing with Costco.

Obviously YOUR experience differs from mine and that's totally acceptable. Good thing I posted that and you responded.. now we all can get a better understanding of this whole thing.

 

[bigdog]

Good luck

You lost already! you are trying to proof that ML is not behind it youself and trying to convence youself 'it is ok, I can still safely selling it at 50% markup'. You think ML will tell you? I did to Intel, IBM, and many others and there is no law say that I can not sell what I bought legally from someone, I am not in any agreement with any ML dealer! nor ML to either. My point is that there is no law that can stop ML, but you have to follow your contract with them, read your agreement/contract with ML, did it say that they have to sell it through dealer like you in your area? if the area ever defined? what if they sell it through third company? did your contract say that any sells of ML has to go though you?

Now, watch who bought the ML last Dec.. After all the new products came out in Aug. and this FINIANCE company coming in took over the company(ML website history section), isn't its time the buyer want some result from their purchase? I stick with my guess, ML is trying turning direction and don't be suprised that in Aug when BestBuy start carry mid to high end stuff and ML is one of them! See dealer list in ML site and type in 90292 and you will see Best Buy's Magnolia store is all over it already!

For dealer like you, what is going happen to your business if you drop ML? about 20 to 30k a month on profit(not sales)?! It could mean make or break! Do you have the guts to drop their line? If I run ML I will do it without 2nd thought, all the small guys will not have enough force to hurt them at all as long as you play it right at beginning, before your big chainstore cutomers really kickin!

BTW, If you run a company and you don't know that COSTCO will start to sell your product, then you should close your door and find a day job!

 

[SteveInNC]

My store aggressively went after ML to find out about this. We wanted PROOF that it wasn't from ML directly. Because if it was, then we would match the price. ML is prepared to prove to us that it is a Trans-Shipper and not ML.

You lost already! you are trying to proof that ML is not behind it youself and trying to convence youself 'it is ok, I can still safely selling it at 50% markup'. You think ML will tell you? I did to Intel, IBM, and many others and there is no law say that I can not sell what I bought legally from

I suspect that tsd2005 will know one way or another within a month. If ML hasn't responded positively by then, well...

While I could see ML pushing some of their lower-end stuff through chains like Best Buy and maybe Costco, I have problems thinking that selling Vantage/Summit would work there, even at the highly-discounted prices quoted. You will always get some ego purchasers, but people who look for audio gear in this range aren't going to be satisfied with the level of dealer service that someone like this could provide. Even Best Buy seems to recognize this by having their Magnolia line.

So now someone will argue "well, I'll just demo at my local high-end shop, then buy from Costco..." Sure, except that no dealer will be willing to carry the line if they are competing with Costco, et al. You will be unlikely to find anywhere to audition them in a well-set room, without warehouse annunciators, dozens of random audio and video systems playing, etc. Note, it could still go down this way, but it would definitely convert ML from a respected brand to a higher-end Blose.

In the short-term you may get some crossover sales like that from people who are already considering ML, and have been visiting an existing shop. Face it, I want to support my local dealer, but a 25%/$2500 discount makes it hard to justify that sentiment.

Will diving into that market generate sufficient sales from a business-return perspective? Who knows? Bose has been doing mass-marketing a long time, and thus has name recognition among the masses, along with the big-ees like Sony, JBL, etc. Selling an "exotic" speaker type complicates the potential for this to succeed because of the need to educate the customer. Bose had to push the bass/satellite speaker concept a long time before it caught on. It was initially a niche market sold to people who wanted the audio system out of sight, with less concern for audio quality than with ubiquity - homebuilders embedded them in new homes for full-house sound. Remember that the original Bose bass/sub was designed to be embedded in the floor, with audio coming out of a floor vent like those of the HVAC system.

 

[tsd2005]

Not sure why you would post "I don't mean to call you a liar"... Thems fightin' words!

Maybe you should read my post again.. specifically where I state that I have a little experience dealing with Costco and "here's my take on this ML @ Costco deal"

My post was based on my experience dealing with Costco.

Obviously YOUR experience differs from mine and that's totally acceptable. Good thing I posted that and you responded.. now we all can get a better understanding of this whole thing.

I just wanted to point out what I know about CostCo and their use of trans-shippers. CostCo sells all kinds of equipment thru their website.

The guys I know at ML wouldn't lie to me. Someone might be lying to them, but I just don't think that is the case. Some store decided to get into Trans-Shipping which is what keeps most Trans-Shippers doors open. They don't do a good enough job selling, so by Trans-Shipping 100s of units a month making $200 to $300 off each one they make enough to stay open.

 

[tsd2005]

You lost already! you are trying to proof that ML is not behind it youself and trying to convence youself 'it is ok, I can still safely selling it at 50% markup'. You think ML will tell you? I did to Intel, IBM, and many others and there is no law say that I can not sell what I bought legally from someone, I am not in any agreement with any ML dealer! nor ML to either.

BTW, If you run a company and you don't know that COSTCO will start to sell your product, then you should close your door and find a day job!

Your total lack of knowledge in me, my company, my history with ML, the people that run ML, and how ML does business makes you out to be more foolish than your poor english. One I'm not trying to prove anything. I understand this business far more than you do. I'm aware of the many Trans-Shippers out there. I'm also very close to people at ML. Two you don't even have any idea how ML product is marked up. There is no 50% markup. Third ML will tell me, because we sell ML and we do it well.

ML is a great company and they haven't started treating dealers poorly. We were all told about the Designer Line and how ML was going to be VERY aggressive with getting the Designer Line out to the public. They will be in every Best Buy at some point. They have no plans of doing that with the ESL line. For one they can't manufacture the ESL line in the numbers they would need to sell in Best Buy. So I'm not worried about it at all and that is because I'm EDUCATED on how my business works.

 

[tsd2005]

I suspect that tsd2005 will know one way or another within a month. If ML hasn't responded positively by then, well...

While I could see ML pushing some of their lower-end stuff through chains like Best Buy and maybe Costco, I have problems thinking that selling Vantage/Summit would work there, even at the highly-discounted prices quoted. You will always get some ego purchasers, but people who look for audio gear in this range aren't going to be satisfied with the level of dealer service that someone like this could provide. Even Best Buy seems to recognize this by having their Magnolia line.

ML has their Designer Line outsourced. They have the ability to produce massive ammounts of these lines. Their ESL line on the other hand doesn't have mass production capability. They don't want the ESL line in Best Buy because they don't have the production capabilities for it.

 

[John]

Most typically, sometimes the truth may only be known after a lawsuit is filed and the parties go through extensive legal discovery proceedings. From the discussion so far, I'm left with the impression that there is still a fair chance that none of the parties involved has done anything "wrong". Chances are the middleman entities have carefully and skillfully crafted these deals within legal boundaries. Come on, we're talking about COSTCO being involved here, not some Joe Schmoe or fly-by-night online store. And, of course, this situation does not affect ML/Costco alone.

Pragmatically, I think the current situation will, and should, teminate in the status quo, being a matter of (1) how much the buyer will pay, coupled with (2) what warranty s/he wants to have with that purchase: E.g.-- $7,500 v. $8,500 in relation to the Costco's Awesome Return Policy v. ML's Full Warranty.

It is still like comparing apples to oranges. A buyer is not somehow getting the EXACT deal at a lower price; That is not the case. The buyer must make compromising choices between two distinct alternatives. It seems that no one is really getting shafted here, but only that there is now more options for a buyer. Therefore, dealers and others don't need to be offended by Costco's offerings because they can still simply remind buyers about the benefit of getting full warranty and services to influence a buyer's decision.

I am all for giving consumers more options...This is America, and consumer satisfaction is first priority...right?

 

[Munster]

Sorry TSD, I don't buy your explanation at all. Your saying that some

Trans shipper has sneaked the purchase of 100's ?? of speakers (frescoes

and subs too ) by ML without them knowing their intent to resell them?

The damage to the dealers has already been done. Summitts aren't

gonna move at $10,000. Also the markup has been exposed, and to me

it seems outrageous.

 

[bigdog]

Your total lack of knowledge in me, my company, my history with ML, the people that run ML, and how ML does business makes you out to be more foolish than your poor english.

We shall see! Sorry that my analysis put you in a such defensive position. I don't know anything about you, nor do I know anything about ML and don't want to do anything about my English either! . As in ENGLISH, 'money talk BS walks'. What happening is talking to us by itself. Not what people says that count but what do they do! Do you think that old owner still have enough power to control company's direction? New owner is a FINANCE company!

I am in this forum to find out if Summit is better than Soundlab. So far it looks good, and I am willing to pay extra for the better product. I talked to a local ML dealer in MY COUNTRY, and have no problem when they try to make money of ML. Don't need to chew my head off! Thank you!

As far as this drama goes, I am still very much believe that ML is behind it!

50% markup is not that bad! most of the retail markup 100% on their goods.(Of course its depend on the product they are selling, and you are right again! ) 10k street price with 50% markup, cost of goods for dealer is about 6.5k. If costco has 20% markup(as I learn from their suppliers, their markup USUALLY between 15% to 20%) with 1000 pcs order indirctly from ML, cost is at 6k each so their sell price should be in 7.2k, and middle men take $300, right on $7.5k mark! Once again, I don't know anything about ML and their price, just use a very simple business priceing guess!
If you have better data which says differently, just discard my guess above. Most likely you know better!!!!!

 

[Joey_V]

The damage to the dealers has already been done. Summitts aren't

gonna move at $10,000. Also the markup has been exposed, and to me

it seems outrageous.

The Summits will still move at $10k I think... and most of us knew all along that the markup of anything audio is absurd to say the least.... yet we delve in voluntarily (not just Summits).

I hope ML fixes this situation as it will kill the resale if not remedied.

Joey

 

[tsd2005]

Sorry TSD, I don't buy your explanation at all. Your saying that some

Trans shipper has sneaked the purchase of 100's ?? of speakers (frescoes

and subs too ) by ML without them knowing their intent to resell them?

The damage to the dealers has already been done. Summitts aren't

gonna move at $10,000. Also the markup has been exposed, and to me

it seems outrageous.

CostCo doesn't have hundreds of them. They have 7 pairs according to CostCo. I tried to find out how many could be bought. I was told the most you could buy was 7. They have 7 pairs of Summits. How many did they have at first? I don't know.

 

[tsd2005]

Most typically, sometimes the truth may only be known after a lawsuit is filed and the parties go through extensive legal discovery proceedings. From the discussion so far, I'm left with the impression that there is still a fair chance that none of the parties involved has done anything "wrong". Chances are the middleman entities have carefully and skillfully crafted these deals within legal boundaries. Come on, we're talking about COSTCO being involved here, not some Joe Schmoe or fly-by-night online store. And, of course, this situation does not affect ML/Costco alone.

Pragmatically, I think the current situation will, and should, teminate in the status quo, being a matter of (1) how much the buyer will pay, coupled with (2) what warranty s/he wants to have with that purchase: E.g.-- $7,500 v. $8,500 in relation to the Costco's Awesome Return Policy v. ML's Full Warranty. decision.

I am all for giving consumers more options...This is America, and consumer satisfaction is first priority...right?

No law is being broken. A contract agreement is being broken by the original Dealer, the Trans-Shipper. CostCo has been doing this for a LONG time with other brands. These brands come and go on CostCo. They last as long as the supply lasts. In this case it won't be too long. However they haven't sold a pair in a week from talking to CostCo.

This is just Trans-Shipping but with a real company behind the product: CostCo. Vs Trans-Shipping where they tell you you have a warranty but only if you send it back thru them. Then the original dealer acts like he sold you the product and gets it fixed. Most Trans-Shippers get caught when a faulty item comes up and they contact the manufacturer direct.

 

[tsd2005]

We shall see! Sorry that my analysis put you in a such defensive position. I don't know anything about you, nor do I know anything about ML and don't want to do anything about my English either! . As in ENGLISH, 'money talk BS walks'. What happening is talking to us by itself. Not what people says that count but what do they do! Do you think that old owner still have enough power to control company's direction? New owner is a FINANCE company!

You act as if Dealers are kept in the dark by ML. ML is very close to their Dealers. We know their market strategy because they share it with us. I know all about Best Buy planning to have Magnolia's in every store by 2008. I know that ML Designer Series will be a Magnolia Speaker Line. I know that a lot of people that go into Best Buy and get amazed by the Clarity or its future replacement may just Google Martin Logan. What they will find is that bigger, better speakers exist. If 5% of the people who LOOK seriously at a Clarity at Magnolia end up looking at a pair of Vistas, guess what? I've won. I'm getting a client I never normally would have.

CostCo doesn't have a 20% "Markup." They have for the most part a 20 point line. Which means take 20% off the price they SELL it for to get their price. ML is not a 50 point line, it is in fact a 40 point line. Summits cost a dealer around $6,000. The Trans-Shipper in this case is making between $300 and $500. Leaving the $1,000 to $1,200 all that is left for CostCo. Which falls into the acceptable category for CostCo. So they're willing to carry the line.

It is costing CostCo NOTHING. They haven't bought the speakers from the Dealer. They've agreed to sell them online. When a pair is bought CostCo pays the Dealer. The Dealer ships it out themselves with a billing label.

 

[bigdog]

CostCo doesn't have a 20% "Markup." They have for the most part a 20 point line. Which means take 20% off the price they SELL it for to get their price. ML is not a 50 point line, it is in fact a 40 point line. Summits cost a dealer around $6,000. The Trans-Shipper in this case is making between $300 and $500. Leaving the $1,000 to $1,200 all that is left for CostCo. Which falls into the acceptable category for CostCo. So they're willing to carry the line.

It is costing CostCo NOTHING. They haven't bought the speakers from the Dealer. They've agreed to sell them online. When a pair is bought CostCo pays the Dealer. The Dealer ships it out themselves with a billing label.

My guess on dollar amount is not too much off, hehe. After all business is business, right! You still thinking in the regullar business channel, and thinking in term of regular business! but CostCo selling ML speaker is NOTHING ordinary. Be creative, and you will get the same conclusion!

In your businss, it may be called Trans-Shipper, its called 'broker' most of the time in other business, and anyone can be a broker. A small/big company, an individual, a middleman, or the manufature itself can be a broker that deal with only their own stuff. It could be a one time deal, or manufature may wants to test other channel but don't want to show their intention to others. There is no way that for outsider to tell. The only thing for outsider to see is what is happening and link all the events and time line together then GUESS.(Everything I said here is purely my GUESS, and you must know better than I do!!! ) I totally agree with John that this is sound more likely done by 3rd party. ML management team may or may not willing(Selling summit may said this) do it but they must know every detail of it. The bottom line is COSTCO IS SELLING IT! As far as I know(onec again, you know better), COSTCo will not post your products on their web without proof that you will be able to ship it with quantity in resonable time frame! And a 'dealer agreement' will not cut it! How about a class action suit of false advertisment? Someone directly connect to ML must back the deal!

That been said, what is ML's next move?

 

[11psiGSR]

This makes front page news when everyone thinks ML is guilty.

I wonder if it will make front page news as time goes on and folks find out ML is completely innocent?


All of you have seem to have such passion for ML. It's amazing how quickly people turn based purely on assumptions.

Not every company in the audio industry becomes a sellout.

 

[Reverb2009]

I just checked out MartinLogan.com and this poped up on the main page.

A Warning to All Valued MartinLogan CustomersThe warranty on MartinLogan speakers is NOT VALID if the speakers have been purchased used or from an unauthorized dealer.
MartinLogan sells products through authorized retail channels to insure that consumers obtain quality support and service both before and after their purchase. MartinLogan currently has no authorized dealers that sell our speakers over the internet.
To check if a dealer is authorized please use the USA dealer locator at www.martinlogan.com, call MartinLogan at (785) 749-0133, or e-mail [email protected].

 

[SteveInNC]

This makes front page news when everyone thinks ML is guilty.

I wonder if it will make front page news as time goes on and folks find out ML is completely innocent?


All of you have seem to have such passion for ML. It's amazing how quickly people turn based purely on assumptions.

Not every company in the audio industry becomes a sellout.

I've seen a few people "turn", but for the most part, those with any type of posting history here have taken a wait-and-see approach, and for the most part seem to think that this is a rogue dealer. I personally put more weight behind the opinions of those that have been here long enough for me to develop a feel for their personalities and rationality. Said people have earned my respect, even if we disagree on topics. Those that have just popped into this forum have every right to express an opinion; I just have no basis to know if it is sincere or well-reasoned. We've been afflicted with several trolls as of late.

I fully expect that if ML demonstrates that this is not their doing, we'll all hear about that too. There is no way to bury a follow-up story here as can be done in a newspaper. Any new post lands at the top of the topics list. Something with this much interest to the ML owners community will certainly not simply fade away.