Friday, August 3, 2018

The state of Consumer Electronics Chainstores in the US


In 1995, after several cold call rejections from Suzanne, the Comp USA Buyer, Tom (Beier now at Bose) and I sat in my office at Cakewalk wondering how we could possibly get Comp USA to pick up Cakewalk Home Studio. I said “What if we write a song for Suzanne using Home Studio about how we recorded it and send it to her?” Tom and I stayed up late into the night writing lyrics, recording tracks and mixing the song down to a cassette tape. The next day we went out and bought a cassette player, inserted the tape into the player and sent it to Suzanne along with my business card with a simple message that said “Hi Suzanne, Press play.”.


The next day I received a call from Suzanne asking for samples. A few days later she referred us to Ingram Micro and placed a 5,000 unit order. We had been the first to place a music recording software title in a big box consumer electronics store! That summer, Tom and I went to Retail Vision and met with Best Buy, Media Play, Circuit City, Computer City, Fry’s, Micro Center, Wal-Mart, Staples, Radio Shack, Target, Office Max, Office Depot and others. Thus beginning a 20+ year run of music software sales in the explosively emerging CE channel.

Fast forward 20+ years and the world of Big Box Consumer Electronics looks a lot different now. Only a few chains remain. As VP of Sales at Acoustica, we sold our version of Mixcraft Home Studio to Best Buy a few years back through Navarre Distribution. After many years of solid sales and maintaining a slot in a category where in-store shelf-space had rapidly shrunk to an assortment of 15-20 titles, this winter (only because Navarre went into bankruptcy in September 2017) will perhaps be the last holiday season that Home Studio will be available at a Big Box Consumer Electronics chain. To add salt to the wound, because our attempts to contact Best Buy and Navarre have fallen on deaf ears, coupled with the fact that the inventory is on consignment, we are unable to get sell thru reports or collect monies on over 5,000 units of inventory.

While a few hundred thousand dollars in sales may be chump change to Best Buy and Navarre, it is a lot of money to a music software company that could be used towards product development and marketing of a new version of Mixcraft and other new products. We tried to get the inventory back and even asked them to DIF (destroy-in-field) but these requests went unanswered initially. As a matter of fact, when Navarre did get around to responding to our Sales Rep, they invited us to “buy back” the consigned inventory they never paid for! Can you imagine that? Absolutely appalling!

While companies like Microsoft and Intuit have the financial resources to take on this battle legally, or in some cases agreeing to buy back consigned inventory, smaller companies like Acoustica have to sit back, get bullied and watch our products get marked down and sold at Best Buy for $14.99 without seeing even a penny of the sale. The icing on the cake is that Navarre sold inventory they had in their warehouse to liquidators. Today there are multiple listings of Home Studio on eBay at liquidation prices. Ouch!

I do not want to come across as bitter because over the years salespersons like myself have earned a lot of sales commissions thru the CE channel. However, the way it is ending is bittersweet, unfair, and, plain and simple, a BS way of doing business with long-time partners. If you are reading this blog post and agree, and you are a Consumer (or even MI) Op-Ed person, contributing writer or perhaps just totally feel pissed off like we do, please share this post with someone who you think might be able to help expose these corporate bullying tactics.

In the interim, we have gone ahead and set up Mixcraft 8 Home Studio on Steam, which is a cutting-edge leading software download distributor. Sales are nearly the same as on a Big Box CE retailer shelf, our physical COGS are zero, shipping is electronic and we are seeing rapid sales growth in this emerging digital download marketplace.


Editor's Note:  If you would like to take a closer look at Mixcraft 8, please visit www.acoustica.com for more details. Thank you for visiting Anthony’s Home Studio.