Behringer leaving Guitar Center
- Thread starter Daniel Levi
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Re: Behringer leaving Guitar Center
She didn't dump me, I broke up with her...
It will be hard for both sides involved to declare a resounding victory. More like a lose-lose with debate over who lost more.
Time will tell if GC recovers and there may have been some hard ball inside baseball going on behind the scenes. Behringer appears to have the stronger hand looking at this from the outside.
In general bricks and mortar are in decline vs, on-line sales but I suspect GC has a significant presence in both channels.
Interesting times.
JR
She didn't dump me, I broke up with her...
It will be hard for both sides involved to declare a resounding victory. More like a lose-lose with debate over who lost more.
Time will tell if GC recovers and there may have been some hard ball inside baseball going on behind the scenes. Behringer appears to have the stronger hand looking at this from the outside.
In general bricks and mortar are in decline vs, on-line sales but I suspect GC has a significant presence in both channels.
Interesting times.
JR
Re: Behringer leaving Guitar Center
Here's the related press release from MUSIC Group: https://soundforums.net/content/2560-MUSIC-Group-and-Guitar-Center-Part-Ways
Here's the related press release from MUSIC Group: https://soundforums.net/content/2560-MUSIC-Group-and-Guitar-Center-Part-Ways
Re: Behringer leaving Guitar Center
It's a shame to see a bitter divorce between two of our favorite companies...
Is this what it sounds like when doves cry?
It's a shame to see a bitter divorce between two of our favorite companies...
Is this what it sounds like when doves cry?
Re: Behringer leaving Guitar Center
I see it as this, which company has been really successful recently and has plenty of dosh swimming around in their bank account and which one has been the complete opposite? Behringer will be fine without GC but GC? Behringer could only be the tip of the iceberg and seeing that one of the biggest MI companies has been pulled/forced out will other manufacturers follow?
But hey, Behringer have many other dealers so I doubt they're worried. esp. when just their main European dealer has 5Mil+ customers
I see it as this, which company has been really successful recently and has plenty of dosh swimming around in their bank account and which one has been the complete opposite? Behringer will be fine without GC but GC? Behringer could only be the tip of the iceberg and seeing that one of the biggest MI companies has been pulled/forced out will other manufacturers follow?
But hey, Behringer have many other dealers so I doubt they're worried. esp. when just their main European dealer has 5Mil+ customers
Re: Behringer leaving Guitar Center
Enjoying rapid sales growth does not automatically translate to huge cash reserves. While the paper profit is there, you have to first buy the parts, then assemble them into sellable products, then ship the SKUs, then get paid. Cash flow is probably better for the manufacturer than distributors though. Containers full of product generally are pre-paid at time of shipment with letters of credit, so the manufacturer doesn't have to worry about dealers pushing out invoices 60-90 days or longer. Uli has expressed admiration for the old Dell business model where you could get paid in advance to build products to order, but even that business model has run it's course, and no musical equipment manufacturer AFAIK enjoys self-funding sales growth..
An interesting dynamic here is the relative value of distribution. When selling generic, me-too products the distribution is extremely important. The consumer will not search out every last cheap ZYX, but often choose between what is offered. OTOH when you have a product, like the X-32 consumers will search to find it.
Interesting times.
JR
Enjoying rapid sales growth does not automatically translate to huge cash reserves. While the paper profit is there, you have to first buy the parts, then assemble them into sellable products, then ship the SKUs, then get paid. Cash flow is probably better for the manufacturer than distributors though. Containers full of product generally are pre-paid at time of shipment with letters of credit, so the manufacturer doesn't have to worry about dealers pushing out invoices 60-90 days or longer. Uli has expressed admiration for the old Dell business model where you could get paid in advance to build products to order, but even that business model has run it's course, and no musical equipment manufacturer AFAIK enjoys self-funding sales growth..
An interesting dynamic here is the relative value of distribution. When selling generic, me-too products the distribution is extremely important. The consumer will not search out every last cheap ZYX, but often choose between what is offered. OTOH when you have a product, like the X-32 consumers will search to find it.
Interesting times.
JR
Re: Behringer leaving Guitar Center
So will that mean GC is blowing out the remaining stock of Behringer gear?
Does this affect their Sister stores? "Guitar Center's sister companies/subsidiaries incorporate Music & Arts, Musician's Friend, GuitarCenter.com, LMI, Giardinelli, Musician.com, Private Reserve Guitars, Woodwind and Brasswind, Music 123, and Harmony Central."
So will that mean GC is blowing out the remaining stock of Behringer gear?
Does this affect their Sister stores? "Guitar Center's sister companies/subsidiaries incorporate Music & Arts, Musician's Friend, GuitarCenter.com, LMI, Giardinelli, Musician.com, Private Reserve Guitars, Woodwind and Brasswind, Music 123, and Harmony Central."
Re: Behringer leaving Guitar Center
I think it's GC is dropping Behringer, not the other way around... but here's the flip side. I think GC will be fine without Behringer - They have several bottom-level brands to fill the space, including Kustom, Phonic & Harbinger; moving up from there they still carry Peavey (I wouldn't consider them a bottom-level brand). The lost sales on the X32 may sting, but no knowing how many people were buying theirs through GC (I'm guessing very few).
GC has to figure out what can they do to use their space to have an advantage over more knowledgeable mom and pops or the internets, and I haven't seen it yet. I laughed when someone told me they were getting into amp repair - it's the last place I'd ever go to get any amp fixed.
http://www.musicincmag.com/News/2014/140519/140519_GC.html
"On May 16, Guitar Center terminated its relationship with Behringer. According to Guitar Center sources, “the decision was made by Guitar Center executive leadership based on Behringer’s revision to unreasonable business terms late last year and a continuous history of attempting to force unfavorable changes into agreements.”
“Decisions like this are never made easily,” a Guitar Center spokesperson said. “There are rare occasions where the integrity of the relationships and agreements we make with vendors are challenged, despite the potential impact to the bottom line or overall sales. We can’t speak for anyone else in the industry, but we’d had enough of watching Behringer try to do business this way. It’s not the way we like to work with people and it’s not productive. They made some questionable choices that put us into a position to develop a contingency plan. As we re-evaluated that plan several weeks ago, we found that it would allow us to build better relationships with other vendor partners in the category. When Plan B starts to make this much business sense, it became clear we didn’t need to tolerate this anymore. We’re focused on where we can succeed in partnership with our new vendors and we’re excited about the future.”
I think it's GC is dropping Behringer, not the other way around... but here's the flip side. I think GC will be fine without Behringer - They have several bottom-level brands to fill the space, including Kustom, Phonic & Harbinger; moving up from there they still carry Peavey (I wouldn't consider them a bottom-level brand). The lost sales on the X32 may sting, but no knowing how many people were buying theirs through GC (I'm guessing very few).
GC has to figure out what can they do to use their space to have an advantage over more knowledgeable mom and pops or the internets, and I haven't seen it yet. I laughed when someone told me they were getting into amp repair - it's the last place I'd ever go to get any amp fixed.
http://www.musicincmag.com/News/2014/140519/140519_GC.html
"On May 16, Guitar Center terminated its relationship with Behringer. According to Guitar Center sources, “the decision was made by Guitar Center executive leadership based on Behringer’s revision to unreasonable business terms late last year and a continuous history of attempting to force unfavorable changes into agreements.”
“Decisions like this are never made easily,” a Guitar Center spokesperson said. “There are rare occasions where the integrity of the relationships and agreements we make with vendors are challenged, despite the potential impact to the bottom line or overall sales. We can’t speak for anyone else in the industry, but we’d had enough of watching Behringer try to do business this way. It’s not the way we like to work with people and it’s not productive. They made some questionable choices that put us into a position to develop a contingency plan. As we re-evaluated that plan several weeks ago, we found that it would allow us to build better relationships with other vendor partners in the category. When Plan B starts to make this much business sense, it became clear we didn’t need to tolerate this anymore. We’re focused on where we can succeed in partnership with our new vendors and we’re excited about the future.”
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Re: Behringer leaving Guitar Center
GC is full of shit. They were put on credit hold, they didn't pay their bill, and then put on "business hold" which meant no more product shipment until the bills were paid, and further orders were COD or pre-pay only. GC can't do business that way, so they bailed.
Now they're lining up the next set of chumps to treat the same way. Another reason to avoid Banjo Depot.
GC is full of shit. They were put on credit hold, they didn't pay their bill, and then put on "business hold" which meant no more product shipment until the bills were paid, and further orders were COD or pre-pay only. GC can't do business that way, so they bailed.
Now they're lining up the next set of chumps to treat the same way. Another reason to avoid Banjo Depot.
Re: Behringer leaving Guitar Center
Basically behringer went to GC and said pay us what you owe us or we will be asking to be paid before we send the items to you, GC decided not to pay it's debts and since behringer would not sell to them anymore decided to try to claim it was "behringers" fault and terminated the contract with them.
Other manufacturers will take note of what they are doing and will act accordingly as and when necessary. No one is going to supply a company that can't pay. Same thing happened to DV in the UK.
I see GC as being on a short cliff about to take a very long walk.
Sent from my Nokia Lumia 625
Basically behringer went to GC and said pay us what you owe us or we will be asking to be paid before we send the items to you, GC decided not to pay it's debts and since behringer would not sell to them anymore decided to try to claim it was "behringers" fault and terminated the contract with them.
Other manufacturers will take note of what they are doing and will act accordingly as and when necessary. No one is going to supply a company that can't pay. Same thing happened to DV in the UK.
I see GC as being on a short cliff about to take a very long walk.
Sent from my Nokia Lumia 625
Re: Behringer leaving Guitar Center
While I haven't followed the gossip about GC closely IIRC they recently re-financed their debt so are not on any cliff. Since we are nearing the end of a historic period of low interest rates this is a combination of smart business and potential sign of weakness.
It seems clear that Behringer(?) tightened up credit terms with GC. Not sure if this is a direct account or GC is dealing with US distributor. Sounds like direct account. GC is probably not growing their top line sales so being too liberal with credit lines would just be taking on more of the co-party risk for no benefit. Why not tighten up available credit, especially with bad industry publicity to use as an excuse?
I think the arm waving chicken-little web posts about the imminent demise of GC are probably overstated, but fiscal prudence suggests not becoming the largest creditor in any possible bankruptcy should the music stop. This may have more drama associated with it than it deserves. Both sides are spinning this to make themselves look good, or less bad. As I've said before this looks like a lose-lose for both parties involved.
As a consequence of too low interest rates for too long there are probably a number of companies that are over extended debt wise. At the same time we have a contraction going on for bricks and mortar merchants as consumers transition to web purchases. GC probably reflects a little of both trends. I would not be afraid to purchase from GC while I would not make any long term bets about their future.
JR
While I haven't followed the gossip about GC closely IIRC they recently re-financed their debt so are not on any cliff. Since we are nearing the end of a historic period of low interest rates this is a combination of smart business and potential sign of weakness.
It seems clear that Behringer(?) tightened up credit terms with GC. Not sure if this is a direct account or GC is dealing with US distributor. Sounds like direct account. GC is probably not growing their top line sales so being too liberal with credit lines would just be taking on more of the co-party risk for no benefit. Why not tighten up available credit, especially with bad industry publicity to use as an excuse?
I think the arm waving chicken-little web posts about the imminent demise of GC are probably overstated, but fiscal prudence suggests not becoming the largest creditor in any possible bankruptcy should the music stop. This may have more drama associated with it than it deserves. Both sides are spinning this to make themselves look good, or less bad. As I've said before this looks like a lose-lose for both parties involved.
As a consequence of too low interest rates for too long there are probably a number of companies that are over extended debt wise. At the same time we have a contraction going on for bricks and mortar merchants as consumers transition to web purchases. GC probably reflects a little of both trends. I would not be afraid to purchase from GC while I would not make any long term bets about their future.
JR
Re: Behringer leaving Guitar Center
A usual, there are probably 2 sides to this coin. I see this as a struggle between 2 800-pound-gorillas. The business model for lots of manufacturers relies heavily on massive on-line discount houses, and GC has been, for better or worse, the most massive. Yes, GC has some serious financial problems, and I don't doubt that this is a significant contributor to the parting of ways.
The company I work at is a Behringer dealer, on a very small scale. It's also true that Behringer has a history of re-working dealer price structure and terms frequently, and on what seems random whim, sometimes reducing dealer profit margin to unmanageable levels, and re-organizing arrangements to something that might make sense for Behringer's business model while making absolutely no sense for the dealer's business model. Guitar Center might be the largest retailer to decide that Behringer's approach no longer made sense for their business, but they're certainly not the first retailer to make that decision.
The push-&-shove between the 2 has been visible for a while, perhaps coming to a head not long ago with the debacle over the X32 Compact. (I'm probably going to get some of the details of this rather shadowy situation wrong, but I'm pretty sure of the basic story line....) GC apparently cut some type of favorable deal to be essentially the sole supplier for the early run of these, and then had problems moving them at the rate they anticipated. There was a serious struggle between B and GC on dealing with this situation, ultimately resulting in GC selling off the stock below normal dealer cost (more exactly, below what normal dealer cost had been 2 days earlier.....), forcing Behringer to temporarily remove the X32 Compact from it's dealer price list to avoid dealer agreement violations. There weren't any angels in this situation-- Behringer seemed to have been perfectly happy to cut the original deal despite treating all of their smaller dealers poorly, and certainly wouldn't have felt bad if the deal had worked out the way both Behringer & GC anticipated.
GC's financial crunch aside, I'm not sure that parting ways is a bad decision for them. If GC can sell Brand X compressors at a higher price, with more markup, it might not hurt them a lot that they're selling fewer compressors, or that the compressor comes form a different manufacturer...
Kent Elliott
A usual, there are probably 2 sides to this coin. I see this as a struggle between 2 800-pound-gorillas. The business model for lots of manufacturers relies heavily on massive on-line discount houses, and GC has been, for better or worse, the most massive. Yes, GC has some serious financial problems, and I don't doubt that this is a significant contributor to the parting of ways.
The company I work at is a Behringer dealer, on a very small scale. It's also true that Behringer has a history of re-working dealer price structure and terms frequently, and on what seems random whim, sometimes reducing dealer profit margin to unmanageable levels, and re-organizing arrangements to something that might make sense for Behringer's business model while making absolutely no sense for the dealer's business model. Guitar Center might be the largest retailer to decide that Behringer's approach no longer made sense for their business, but they're certainly not the first retailer to make that decision.
The push-&-shove between the 2 has been visible for a while, perhaps coming to a head not long ago with the debacle over the X32 Compact. (I'm probably going to get some of the details of this rather shadowy situation wrong, but I'm pretty sure of the basic story line....) GC apparently cut some type of favorable deal to be essentially the sole supplier for the early run of these, and then had problems moving them at the rate they anticipated. There was a serious struggle between B and GC on dealing with this situation, ultimately resulting in GC selling off the stock below normal dealer cost (more exactly, below what normal dealer cost had been 2 days earlier.....), forcing Behringer to temporarily remove the X32 Compact from it's dealer price list to avoid dealer agreement violations. There weren't any angels in this situation-- Behringer seemed to have been perfectly happy to cut the original deal despite treating all of their smaller dealers poorly, and certainly wouldn't have felt bad if the deal had worked out the way both Behringer & GC anticipated.
GC's financial crunch aside, I'm not sure that parting ways is a bad decision for them. If GC can sell Brand X compressors at a higher price, with more markup, it might not hurt them a lot that they're selling fewer compressors, or that the compressor comes form a different manufacturer...
Kent Elliott
Re: Behringer leaving Guitar Center
Tim - thanks for the clarity on this. Was showing the other side but hadn't heard of this, but makes sense given liquidity concerns at GC.
I avoid them wherever possible.
Tim - thanks for the clarity on this. Was showing the other side but hadn't heard of this, but makes sense given liquidity concerns at GC.
I avoid them wherever possible.
Re: Behringer leaving Guitar Center
Stopped by guitar center today to get a few fresh SM58's and a smaller mixer for an install. I asked the audio guy if he knew of this, and he either truthfully didn't know, or was denying it. He said he had heard nothing of it. Fwiw...
Stopped by guitar center today to get a few fresh SM58's and a smaller mixer for an install. I asked the audio guy if he knew of this, and he either truthfully didn't know, or was denying it. He said he had heard nothing of it. Fwiw...
Re: Behringer leaving Guitar Center
Some would say that fits right into the status quo for their sales reps.
Re: Behringer leaving Guitar Center
Not that anyone would have trained or told them to look out for things like this anyway.
Not that anyone would have trained or told them to look out for things like this anyway.
Re: Behringer leaving Guitar Center
Our dealer says, nobody gets credit with behringer and never did!
Our dealer says, nobody gets credit with behringer and never did!
Re: Behringer leaving Guitar Center
Also just announced that Musicians Friend has announced that they would no longer carry Behringer. Reason given was that it was over the shipping delays.
I guess they had allot of iX16 pre sales on hold for 2 years with a wait of another year for the X18.
Also just announced that Musicians Friend has announced that they would no longer carry Behringer. Reason given was that it was over the shipping delays.
I guess they had allot of iX16 pre sales on hold for 2 years with a wait of another year for the X18.
Re: Behringer leaving Guitar Center
The real reason is that MF is part of GC, and they are no longer dealers and couldn't sell/deliver the product if the container hit the dock yesterday. Spin, spin, spin.
The real reason is that MF is part of GC, and they are no longer dealers and couldn't sell/deliver the product if the container hit the dock yesterday. Spin, spin, spin.