Velodyne Terminates Reps & Becomes an Internet Direct Subwoofer Company

[admin]

We went online today and, lo and behold, Velodyne has turned into an online subwoofer company. After investigating, and hearing back from a rep, Velodyne is terminating its entire network of manufacturer reps, and selling direct to consumer. This was... surprising to say the least, and we're interested to see where it takes the company in terms of new products and their existing lines. Everything seems on the table, though we'll certainly keep an eye on this as things progress. On July 25 all of Velodyne's sales reps were given notice that their relationship with Velodyne (some of which spanned over 25 years) would be terminated in just three days. At the same time, Velodyne launched its online website and began selling its products. This will be a VERY interesting year for Velodyne, and what happens next, and how quickly it happens, will reveal very quickly whether or not this was the best decision, or worst mistake, in the company's 28 year history. What do you think? Comment in our forums below.

Discuss "Velodyne Fires Reps Sells Direct Online" here. Read the article.

 

[its phillip]

Sucks for all their reps, I guess.

 

[SnowmaNick]

I agree it sucks for their reps, but I am also having trouble figuring out why customers would buy these online. Velo has always made good products, but their prices have been higher than ID's with comparable or better products. With Velo you got that warm fuzzy of a dealer being nearby, supply chain, infrastructure, in store demo's, etc, that at least partially justified some of the added costs. Now, they are an ID company that has proven products, but not proven that they can survive/thrive in the ID world. It is still unknown how well they will respond to issues popping up with products without this.

Additionally, it looks like they have not lowered their prices at all (based off of a quick search with the products listed in their "Buy Now" online store vs. existing MSRP).

So my question is, why bother? Sure, some customers who have wanted a Velo and may not have had a dealer nearby can buy these now, but will they when a whole world of ID sub's, from companies with proven track records (for service, support, etc to an online community) that have stellar product for less $$$, exists? (think of Seaton, SVS, eD, Rythmik, Hsu, Epik).

 

[AcuDefTechGuy]

I think it's all about quality, quantity, availablity, and pricing.

You just can't compete in this Cyber Generation unless you sell directly online.

Most companies have Direct sales online stores. Even KEF has a direct sales website.

Soon, B&W, Revel, and everyone else will also have a direct sales website.

Cyber Sale is the name of the game.

 

[FirstReflection]

This'll be fun, if nothing else

Velodyne has remained something of a "standard-bearer" in the subwoofer world. It's been common to compare what you can get online vs what you can get "in store" - with that unnamed "in store" brand often referring to Velodyne. Now, we'll get to see how everyone truly stacks up!

I fully expect Velo to make numerous changes. Right now, they're likely selling off stock. They also still have large inventory out there in brick & mortar stores, so I'm thinking that's why the current prices on the website are the same as MSRP.

As an ID company now though, I think Velo will have to (finally) shrink its product line (man, do they ever have a lot of product lines!), and dropping prices seems like an obvious "next step".

If Velo has any obvious advantages, it's that they are well known for their QC and reliability, and they obviously have the manufacturing capability and capacity to compete with any of the established ID brands. With their sheer size, they can exert a lot of downward pressure on the other ID subwoofer brands and that's going to give them a leg up, IMO.

Who knows how this will ultimately all turn out. But if Velo can maintain its reputation for solid build quality, simplify its (currently too large) product catalogue and dramatically lower its prices due to no middlemen, I can see them dominating the subwoofer market once again and really forcing the smaller ID subwoofer brands to either step up, or get out of the way!

 

[templemaners]

Bold move by Velodyne, and one that I think will only work if they cut their prices significantly. Why am I going to spend $1500 on a Velodyne Optimum 12 if I can get (prices w/o shipping):

• A SVS SB-13 plus for $1200
• TWO Rythmik F12's for $1600
• or two Epik Empires for $1500

Value for the money is the name of the game, especially nowadays. I don't see enough value added features (see: remote and some auto EQ features) to make me ever want to consider buying one compared to one of the established ID brands. Also, I think they are underestimating the online buyer - someone who I think is more judgemental, measurement oriented, and is looking for good performance for their $. Different class of consumer than the B&M subwoofer buyer IMO.

 

[j_garcia]

Eliminating reps obviously means they can sell closer to cost themselves and the mark up isn't going to someone else. As said before though, sucks for those reps.

They are also going head to head with established ID companies in what is becoming a more crowded online market for subs though. They are already a solid subwoofer company, so products aren't the problem. Getting people to buy is, so better pricing will end up being key for them to be successful changing directions. They are local for me, so, maybe I could get away without shipping

 

[MinusTheBear]

As a well established B&M company all these years my bet is they have more efficient factories and resources than the vast array of popular ID speaker/sub companies. The changes to their pricing structure should be significant (passing savings onto the consumer) or I would hope. This move wouldn't make sense otherwise. Velodyne is not like your typical popular small ID company that can only be competitive where it cuts out the middle man because their production, costs and scales of production are not efficient enough (the ID myth of value).

 

[SnowmaNick]

I agree that Velo more than likely benefits from great economies of scale than the typical small ID. I also understand why, with products still on sales floors, that they haven't chosen to yet change their prices. I think they are in a precarious position with the later though as some people may find it very frustrating to buy product X at say $1,499 and then two weeks after they purchase it in a store, it is available online for say, $799 (all prices are notional here). True this happens with many products as a new model comes out, or the products age and R&D is recouped, but if the product remains the same, and is relatively new, there is a higher chance of ill will towards the company after said price drop.

A possible course would be for Velo to rebadge, rename products with perhaps small tweaks to the feature set to avoid this. As it stands now though, well, it will be interesting to watch.

 

[shadyJ]

To kind of rephrase what has already been said, Velodyne's products were suited to brick and mortar rather than ID. They will have to redesign many of their products to make them competitive with ID subs at all. If companies like Hsu, Epik, and SVS had brick and mortar presence at the same prices next to Velodyne subs, I can't believe many would go with Velodyne, except those who need a very small subwoofer. Then again, Velodyne almost certainly has a hell of an engineering team, and other resources to draw on that smaller ID sub companies wish they had. It'll be interesting to see how this plays out, but I am guessing it won't end well for Velodyne.

 

[avliner]

You know what? With Velo out of the track at the B&M shops from now on, I believe that the "long-while" traditional B&M brands, such as Polk, Klipsch, JBL, Infinity, Energy and so on are a bit more relieved, as their market-share should improve somewhat, no?

 

[MinusTheBear]

You know what? With Velo out of the track at the B&M shops from now on, I believe that the "long-while" traditional B&M brands, such as Polk, Klipsch, JBL, Infinity, Energy and so on are a bit more relieved, as their market-share should improve somewhat, no?

I think Polk and Klipsch could careless. As for Infinity they compete just fine with either B&M and ID. Ironically Infinity offers better value than most ID companies and are cheaper priced (atleast in terms of speakers)! Lately (last year or so) Energy seems to be blowing out a lot of their models. Who knows what they are up to under their new ownership and all.

What velodyne needs to do now is just roll with it and really prove how they can pass it onto the customer. Since they were B&M prior they can actually show the ID theory of savings and not be one just based on myth.

 

[avliner]

... Since they were B&M prior they can actually show the ID theory of savings and not be one just based on myth.

Yeah, most definetely!

They can even say now: I've been there once before, you know...

 

[j_garcia]

When they started out here, they were practically ID like company back then, except nobody really bought subs on the internet at that point AFAIK. They were kind of word of mouth and were very small. They have grown considerably since those days.

 

[avliner]

John,

as they say: back to where you belong though

 

[Sputter]

This will be interesting. Will they reduce their pricing to be competitive
or keep their prices high for an even bigger profit margin?

Of course ID shoppers tend to be more savvy than what they're used to in a B&M setting. They won't likely be dealing with 'it's expensive so it has to be better' crowd as much.

 

[annunaki]

Correct me if I am wrong, but CEDIA is just around the corner is it not? Early September every year I believe.

What great timing to launch a completely new product line during one of the biggest Audio shows and completely move to a more profitable distribution model. They will leave pricing in place for dealers to get rid of their current stock until then.

I would say that if this happens, and I expect it will, that this was a very strategic plan that has been in place for quite some time.

 

[gene]

It's not really clear how Velodyne will support their existing Dealer network. If they lower MSRP of their products online, I suspect their dealers won't be happy. If they don't lower MSRP, they won't be competitive with other online subwoofer brands. This is a perplexing situation that I am watching with great interest.

 

[MinusTheBear]

A situation like what annunaki suggested makes perfect sense and probably what they have planned. Giving the dealers a time period to unload existing stock before they revamp and launch their online product lines and pricing structures.

 

[Warpdrv]

A situation like what annunaki suggested makes perfect sense and probably what they have planned. Giving the dealers a time period to unload existing stock before they revamp and launch their online product lines and pricing structures.

While I agree with the way annunaki laid things out... I'll add that I can't see Velodyne realeasing a whole new product line in any such short period of time...

It took them many many years to revamp their old aged DD series... as just a simple example... They pretty much just updated everything.