Music123 Bankrupt!

[Chad]

Because they buy for less

But if the price is still MAP'd how does that make a difference? Unless manufacturers are concurrently raising M&P cost as they lower MF/GC cost? i.e. if M&Ps are still making the same margin, why does this matter?

[Chad]

Plus they have selection. I can't have that weird of taste that I can't get EB Super Slinkys locally?

That *is* super lame. I live in a town that has 18,500 people and both M&P music stores carry EB strings along with many other brands. If a shop is that out of touch with reality, they're just begging to die.

[fritzreiser]

Good riddance. Music123 was the worst online company I ever dealt with.

:ROTF: +1

[mattsmusiccenter]

But if the price is still MAP'd how does that make a difference? Unless manufacturers are concurrently raising M&P cost as they lower MF/GC cost? i.e. if M&Ps are still making the same margin, why does this matter?

There are many ways to get around MAP, like bundling for instance (buy this, get that free), and GC does all of them. GC is big enough that they're able to leverage lower prices from vendors, which allows them to operate more profitably, in some cases GC flat out owns the vendor.

They also have a huge selection, which an indy (M&P) isn't able to keep on hand. Seasoned shoppers may not spend their money at GC's, but clearly alot of people do. Last year they posted 1.7 billion in sales (MF included), while their closest competitor (Sam Ash) posted only $700 million in sales.

GC is also publicly traded and has a constant influx of cash. If one of their stores has a couple down years it hurts them alot less than an indy.

Question is, what will happen to the industry if GC goes under? They reported lower than expected gains in the 3rd quarter and their stock immediately dropped 10%, a couple more reports like that and the influx of cash ceases. Then it's game over!

[charvelguy]

then Wallymart buys them out.

[Chad]

then Wallymart buys them out.

http://news.yahoo.com/s/ap/20061201/ap_on_bi_co_ne/all_business_1

[toejam]

We all need to buy stock in Matt's Music Center.

[Chad]

There are many ways to get around MAP, like bundling for instance (buy this, get that free), and GC does all of them. GC is big enough that they're able to leverage lower prices from vendors, which allows them to operate more profitably, in some cases GC flat out owns the vendor.

They also have a huge selection, which an indy (M&P) isn't able to keep on hand. Seasoned shoppers may not spend their money at GC's, but clearly alot of people do. Last year they posted 1.7 billion in sales (MF included), while their closest competitor (Sam Ash) posted only $700 million in sales.

GC is also publicly traded and has a constant influx of cash. If one of their stores has a couple down years it hurts them alot less than an indy.

Question is, what will happen to the industry if GC goes under? They reported lower than expected gains in the 3rd quarter and their stock immediately dropped 10%, a couple more reports like that and the influx of cash ceases. Then it's game over!

Thanks for the info, Matt. Just curious, do you by chance know how much inventory at cost a well stocked GC carries? I've been to the one in Indy and it has a nice size and selection. Would $1m to $2m be in the ballpark?

[SouthPlatteDemon]

http://news.yahoo.com/s/ap/20061201/...all_business_1

Thanks for the linky. I've started avoiding them because it takes to long to get in and out.

[mattsmusiccenter]

Yeah, a couple million is probably accurate.

Thanks for the info, Matt. Just curious, do you by chance know how much inventory at cost a well stocked GC carries? I've been to the one in Indy and it has a nice size and selection. Would $1m to $2m be in the ballpark?

[VulfgangPfuck]

Where do you buy groceries, plywood, candy, toys, video games, clothes, cookware, computers, stereo equipment, aspirin, etc. or go to eat when you go out?

I'm assuming you don't shop at Walmart, Target, Home Depot, Lowes, Safeway, Circuit City, Best Buy, Toys R Us, McDonald's, Ruby Tuesday, Bennigans, or any other place like them.

And when you shop at Mom & Pop places, what products do you buy? There aren't many made that aren't part of a corporate conglomerate.

You know what I was reffering to Tim. We're talking about music store chains.
I realize the scope of my comment was quite large. I didn't mean it to be a blanket statement per-se.

I'm talking about the independant music shops, and smaller family run places. I'm still very bitter towards the large music store chains after working for them for a while. I wasn't fired from any of them, but I left them disgusted by their selling practices.

It burns my ass to see them sucking up everything involved in the business they can.

[scaristei]

First of all I want you to all to know that Guitar Center purchased Musician's Friend about 5 years ago...so it is all the same company....Got it !

Secondly - GC's model of opperation is to 1. Take the money out of the marketplace - ie: cut what ever deal it takes to make the sale. By doing this they are able to move more product than most anyone.

The problem (besides customer service and "product knowledge" both being in "last place") - is that what GC does to their supplyers, is - because of the volume of sales, the companies want to keep GC happy. But what happens when GC wants (demands) the same inventory for the manufacturer, but at a lower price? Well if the manufacturer says "no", then GC, drops the products from it's line for a quarter or two and then asks the manufacturer if they have changed their mind and agreed to selling the inventory at the new "reduced price"...(sometimes - just to put the "screws to the company" - the in order to get GC to place that order, they (GC) will demand and even "lower price" for that same inventory...) If the company gives in to GC's demands for lower prices, then the product is back in the GC stores....and the MF catalogue....but if the manufacturer still refuses to "play ball", GC and MF, simply "cut them out" of their inventory and no longer carry the product.

Sounds extreme....I have watched this happen three times to companies who - out of respect for them - will not mention - But Fender (which is Fender and Jackson and god knows who else) always plays ball !

GC and MF 's business practices only "boarder on legal" and are definitely immorral.....I do buy my strings from MF in bulk - but will not even enter a GC store.....I find it all on ebay or on line ! ! ! !

[mm2002]

I won't miss 123 at all. This does make me curious though, why doesn't anybody here ever talk about Sweetwater? I have been doing business with them since around 1991, and have never been anything but super pleased with their service. I don't buy guitars from them, but they are my "go to" for electronics. Some people think they are high priced, but my salesperson has always matched anybodys price out there. Damn good folks to deal with.

[Bert]

I'm surprised to hear such bad opinions of Music 123. I've purchased stuff from them 3 times -- my last order arrived just a couple days ago. Their site was great, selection was great, prices were reasonable, and i was immediately shipped exactly what I had ordered. Was I just lucky?

[toejam]

I won't miss 123 at all. This does make me curious though, why doesn't anybody here ever talk about Sweetwater? I have been doing business with them since around 1991, and have never been anything but super pleased with their service. I don't buy guitars from them, but they are my "go to" for electronics. Some people think they are high priced, but my salesperson has always matched anybodys price out there. Damn good folks to deal with.

Sweetwater is a great company. I've talked with a couple of their sales guys in the past, and they're extremely helpful and great to deal with.