Last modified: March 19, 2018
Remember in 1987 when Axel Rose and his boys produced “Welcome to the Jungle”? Take a look at this classic Guns N’ Roses video if you need a refresher. I promise, the hair is awesome.
The music industry is all about making musical art, making money and giving everyone the ability to be heard. Welcome to today’s jungle where we’re hearing a thunderous noise from brands in the music industry as they navigate a decline in retail footprints and increased competition for maintaining direct customer relationships. How can music brands be successful in this increasingly complex environment?
Although a few premier brands have managed to smell the roses (hopefully not Axel’s) by leading the charge to sell directly to their customers online, most brands still have a lot of fear that they won’t be able to successfully build a direct-to-consumer (D2C) channel. To help crush this fear, and not Slash’s top hat, let’s look at the facts.
Guitar Center, the #1 music retailer in the U.S. continues to spiral out of control. The company is facing massive debt coming due soon and rapid management turnover, with three chief executive officers in the last two-and-a-half years alone.
Sweetwater.com (Amazon for Music) is the #2 music retailer in the U.S., second only toâ€¦..Guitar Center. In 2016, they smashed their previous revenue record and topped the $500 million mark. The company sold more than 87,000 guitars in 2016. Pro audio, microphones, keyboards, guitar amps and effects, and drums were among other product categories that delivered growth. Although we’d never recommend a strategy void of retail partners, the reality is that when a purchase is made through a retail channel, the retailer owns that customer relationship and has no obligation to remarket your products.
Your customers are buying online:
- 81% of shoppers conduct online research before making big purchases.
- 44% of people go directly to Amazon to start their product searches, compared to 34% who use search engines like Google, Bing and Yahoo to search for products.
- Mobile commerce makes up 30% of all U.S. ecommerce.
Distributors are shrinking their physical footprint in favor of opening their own online stores because that’s where customers shop. Leaving many brands asking, “Why am I not doing that”?
So, why aren’t you?
We work with many brands selling within the music industry; again and again, we hear the same reasons why a D2C channel won’t work. The conversation typically goes something like this:
- Question: “Are you selling your products online from your website?”
- Answer: “No way, I’m loyal to my channel who has supported me the last 20 years.”
- Question: “So, if they go out of business, will they keep paying you the money you bank on to run your business and pay your employees?
- Answer: “We’d have to backpedal and likely have to make a few cuts while we figure out a new strategy.”
- Question: “By that point, you’re already left behind. Why not be proactive and control your destiny to protect the excellent brand you’ve spent years building?”
This reluctance to go direct and diversify channel mix is a theme that is echoed in another Digital River blog called, 5 Stages of Retail Stagnation Grief. The good news is there are ecommerce partners that can help you make this shift and premier music brands that have already paved the way in successfully building direct strategies. Look at the work Fender, Gibson, Cakewalk, iZotope, Sennheiser, Onkyo, and Line 6 have done to continue winning.
Learn more about how to take control of your customer relationship with a direct ecommerce channel; we would love to discuss how a direct strategy could make a difference for your business.