JAN. 14 I GAMA I TRENDS
E-tailers Sound Off
on the Recession,
New Technologies

Harvey Levy, chairman of the Guitar and Accessories Marketing Association (GAMA), mentioned the concept of paradigm shifts as he called the organization’s annual pre-NAMM Show meeting to order on Jan. 14 at the Marriott Hotel in Anaheim, Calif.

As if to crystallize his point, GAMA hosted a panel discussion with the heads of three major online music retailers: Noah Herschman, director of home electronics for Amazon.com; Craig Johnson, CEO of Musician’s Friend; and Jim Hovey, CEO of American Music Supply. They answered questions about how the recession, emerging demographics and new technologies are affecting music retail.

Exceeding expectations, according to Johnson, remains key to generating sales in a tough economy. “Look at all areas of your operation that touch a customer,” he said. “If you can meet or exceed expectations, that’s the best way to [overcome] this economic trend.”

All three panelists agreed that the Internet continues to expand the overall market for musical products. “You capture a swath of people who might never go into a [music store],” Herschman said.

Still, he offered a statistic that suggested the market is tipped in favor of brick-and-mortar stores. “Sixty-nine percent of people who searched online bought at a bricks-and-mortar store,” he said. “Only 39 percent of people who went to a bricks-and-mortar store [then] bought online.”

Herschman added that only a small percentage of Amazon.com’s roughly 100,000 musical instrument SKUs come from the company’s own warehouse. The rest come from music retail partners that sell through the Web site. “We like smaller dealers,” he said. “We invite them to sell on our platform.”

Hovey identified the youth market as a major, growing demographic. “They walk around with laptops like we did with baseball mitts,” he said.

Supplying information quickly is key to capturing this demographic. Here, the panelists chimed in about new technologies. Hovey said his company’s Web site, for instance, features audio files for each Zildjian cymbal it sells. Johnson mentioned that Musician’s Friend has found success by partnering with manufacturers to feature video factory tours. Herschman mentioned a feature on Amazon.com that lets consumers buy product quickly using their cell phones.

Still, even Herschman acknowledged online shopping’s limitations. “You can do a lot with Flash,” he said. “But until we can have a hologram up in your living room, you won’t be able to see the product firsthand.” MI