Reacting to what it said are the realities of a changing custom installation marketplace, audio-video component manufacturer Sherbourn Technologies has completely overhauled of its distribution model.
Dan Laufman, president of Sherbourn Technologies.
The Franklin, TN, company is bypassing the traditional model of distributor and rep, and moving to a direct-sales model for both consumers and systems integrators, with a special discount for dealers, in addition to a new, lower pricing structure.
The company previously sold only its “two-channel audiophile, home theater enthusiast” Emotiva brand direct to consumers. Sales analysis from 2012 indicated growth for those products, but not for Sherbourn.
Sherbourn’s new pricing structure:
$1,699 $799C-12 $199
Company executives also observed that there were a growing number of do-it-yourselfers that were building “amazing home theaters,” complete with dedicated room acoustics, large-scale front projection, theater seating, and advanced control systems. And yet, those customers had been cut off from Sherbourn’s “mid/high” CEDIA channel AV receiver line, solely because of what it referred to as “an outdated distribution infrastructure.”
“We still want to embrace the dealer, but we just think there is a different paradigm in place moving forward,” said Dan Laufman, president of Sherbourn Technologies and Emotiva. “Instead of sticking our heads in the sand, we chose to embrace it with a model that works for our customers and the installers.”
Despite the lower prices made possible by direct sales, Laufman said that Sherbourn’s products will be built to the same standards as before, with the same design focus on longevity, integration connectivity, and reference-quality audio and video performance. They also remain backed by Sherbourn’s 10-year warranty, complete technical data for complex installation scenarios, and the company’s technical and customer support team.
Laufman contended that the company’s new distribution plan also provides benefits for its dealers. “I think that the small custom integrator, who has typically been the Sherbourn customer, have been buying from distributors, so used to very slim margins and getting shopped online by customers,” he said. “Our new Direct Dealer Program allows professional installers to make better margins than they would by selling mass-produced consumer brands. Plus we ship for free and provide all of the service we provide for a normal dealer. It’s just in a slightly different business model. And they can still do well with us.”
While maybe not popular with integrators at first, Laufman believes the change, will also benefit dealers that lack a dedicated storefront, by eliminating the order minimums and display requirements often required in the older distribution model.
“They may not be wildly happy about it, but they recognize that they won’t have any sunk investment in the brand, and only have to buy for a particular project.”