Why we dropped Marten Design and Jorma Design
What we have here is what we think is the most egregious violation of the implied contract between manufacturer, distributor and dealer in the history of high-end audio. To the tune of approximately one million dollars; ten times worse than anything we have ever heard of in our industry.
What follows are the details of this little horror story… just in time for Halloween :-/
None of the principal players think there is anything wrong with what happened. We do. You decide. We just could not, in good conscience, keep quiet about what happened; ‘events’ like this can be life threatening to any business, especially small businesses.
Also, because we are so closely identified with these brands, and have been their most public champions for so long, we feel we need to explain why we are no longer in their corner.
Apparently the number of dollar signs got to be too much for Marten and Jorma and their greed drove out all common sense.
We did well with these brands. We sold, or at least our customers bought, the vast majority of the higher-end Marten speakers sold in North America [all but one pair according to several sources], and similarly with the higher quality Jorma cables [especially if you include our dealer friends who we nagged into picking up these cables]. Worldwide, we encouraged several of our friends to buy the top speakers in the Marten line, as well as lots of Jorma Design Prime cables.
But it is misleading and unethical, in our opinion, to set up a dealer network that works hard to convince customers to buy something, and have the dealer lose the sales to their distributor or manufacturer because the distributor or manufacturer offers the customer a much, much lower price.
But this has been our experience with Marten Design and Jorma Design and their distributor. Marten and Jorma are both Swedish manufacturers and attend most shows together; Jorma cable is used inside Marten speakers.
Most of this involves one particular customer.
This is not any ordinary customer. We had the pleasure of spending several days in the guest room in his lovely home, demoing gear, including a nice Jorma Design cables versus Nordost Odin shootout. He traveled to our store a few times, spending several days while we demoed Jorma cables and the Marten Coltrane Supreme speakers. He bought almost $200K of gear from us. We gave him nice, industry-standard discounts based on the various brands’ stated discount policies at the time.
He eventually bought approximately $1M in Marten and Jorma Design products, including the new version of our (now $500K) Marten Coltrane Supreme speakers. From our distributor. At the same time we were busy convincing him [obviously successful] that this gear was great [and it is].
Its been almost 3 years. We presented detailed, well-documented time-lines, which nobody is disputing. We asked for extremely modest compensation for these direct sales, and our requests have been rejected.
Sucks for us, huh?
But wait, there’s more
We thought the distributor was selling at 30%, maybe 40% off. What honest dealer can make a living at these discounts? What dealer can compete with their own distributor on pricing? What customer would turn down the opportunity to save $100K to $200K?
But it turns out our distributor claims (and we believe him) that the prices were so low that he was making nothing on most of the Marten sales, and a pittance on the Jorma sales.
Marten says this is not selling direct, but picture yourself as a distributor [or a dealer like us] selling a million dollars in gear. If you are making hardly anything off the deal, or nothing at all, what would you call it?
This extreme discount pricing we just learned about a month or so ago.
Why doesn’t the distributor drop these lines, being taken advantage of this way? As far as we can tell his EAR distributorship is run like a normal, healthy distributorship.
Probably for the same reason we were so hesitant to finally give up on these guys. We spent 10 years investing in, promoting and demoing these brands. We took them 6 times to RMAF, 4 of those times with the large Marten Coltrane Supreme 4-box speakers, and took Jorma about 7 times. Look at the photos of our rooms on our ‘shows‘ page, look at the pictures of our shop on our ‘tour‘ page – we featured these brands all over the place. It is hard to throw away 10 years of hard work.
And, you know, we kind of fall in love with our gear. We identify with it, and it is identified with us.
They make excellent products. But in our experience they make extremely poor business partners.
We tried for almost three years to try and work this out with Marten and Jorma.
Most manufacturers compensate their dealers and distributors when this happens. Manufacturers sometimes want to handle celebrities or very large sales directly. It has happened here twice before with two different manufacturers and they were happy to compensate us, without being asked, at several times the percentage we were asking from Marten and Jorma.
Several members of the industry watched this as it unfolded. They are horrified.
For a small business, this kind of thing can be devastating, both financially and psychologically.
Jorma has no clue why we are upset, believes that we don’t help his sales, and that we should just drop his line immediately. Marten responds with “shit happens” and tries to put the blame back on the distributor [who obviously has serious issues].
We still cannot fathom why they are not more interested in building their brand than screwing their partners out of what is, at this scale, chump change.
So long Marten Design and Jorma Design. Hello big wide world of lots of other speakers and cables!
We really enjoy building up brands from nothing to a million plus in sales.
Moving forward, we are expanding to offer additional services to both the industry and to audiophiles.
We now offer a new website development service catering primarily to the high-end audio industry. This will hopefully help the general public to find us all significantly more appetizing. Give us a call or drop us an email if you are interested.
We are also in the process of massively updating Ultimist, a search engine and more, that finds you the best deals, right now, on high-end audio gear in the U.S., and soon, the World!
And now we return you to our regularly scheduled programming.
P.S. Sometime during the middle of all this they declared our customer to be a ‘showroom’, often using this to excuse their previous and subsequent behavior. This is an old trick used by disreputable distributors and manufacturers to sell at large discounts out the back door, as well as to do what was done to us. There are many reasons why this ‘showroom’ excuse is especially specious in this case.
First, almost all customers, especially but not exclusively at the high end of the market, offer to be showrooms. They think it is great fun that we’d want to bring other people to their homes to hear their systems. We’d like to assure our customers that it is quite unusual for someone to receive several $100K’s of dollars in discounts because they offer to be a showroom.
If it is important to have a showroom in San Diego, isn’t it important to have one in Beverly Hills? How about the Bay Area? At least one on the Peninsula, one in S.F. and one across the bay in Berkeley, at the minimum, since nobody wants to spend an hour or more to get anywhere. How about Manhattan? Miami? Houston? Paris? Munich? Hamburg?
So any customer of any dealer or distributor of theirs can be declared a ‘showroom’, just about anywhere, at any time, because it is important to have a showroom there. Any customer of any dealer or distributor can buy direct at significantly below dealer cost leaving their dealers and distributors high and dry, just by declaring themselves to be a ‘showroom’.
Seems like a problematic policy to us if a manufacturer wants distributors and dealers.