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Fender Selling Guitars Direct to Customers - Good or Bad?

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  • Fender Selling Guitars Direct to Customers - Good or Bad?

    A few days back I read an article about Fender selling guitars direct to their customers. This wasn't all that surprising because they started the American Design Series, which is kind of a Carvin model of making people believe their getting a custom made instrument instead of understanding their picking from stock options:

    http://www.fender.com/american-design/

    I think this will be a very positive step for FMIC. I don't really buy a lot of their newer guitars, but here are the pluses I see:

    1- Increased Profit - Fender sells a guitar to GC or a dealer at a much lower cost. By selling the guitar themselves they can sell for MAP and make a lot more money. Especially since they already are paying to package and ship guitars to dealers. Expanding the shipping department and setting up a call center for customer service won't cost much - especially since FMIC outsources work to India, Mexico, etc....

    2- Guaranteed Revenue - If GC goes under FMIC will lose a boatload of money. If they began selling direct they could minimize their dependence on their dealer network and limit the risk of not getting paid.

    3- Control Pricing - If there were less places to buy Fender guitars they could easily control pricing. I would think it would be pretty easy to force the online retailers to obey and local dealerships could be reduced. There is always the used market, but making the guitars available in a limited way like this could increase profits.

    4- Lower Costs for Consumer - In theory, they could probably lower costs to the consumer. I doubt they would actually do this, but MAP would be the sale price and like Carvin does (or used to do) they could make up a stupid MSRP that the guitar would sell for if it were available in a regular store.

    5- Offer More Options - Car companies have been making a ton off this for years. Say you offered some "upgrades" to customers. You could start with a low price and reel them in:

    Example - Fender USA Stratocatser $799 (MSRP $2000) then as you configure it:

    Options - Special paint $125.00, Upgraded Pickups $150, Straplocks $25, Upgrade Gigbag to HSC $75, Special Ralph Machio Tone Control $50, Tusq Nut $35

    Now it's $1259.00 - of course there will be shipping unless you use the coupon code and maybe a 5%-10% coupon now and again.

    All in all I think it's a great way for Fender to eliminate competition and make more money. A smaller company probably couldn't do this on their scale but there are a lot of people already buying Fender products online from dealers (probably more sales then in local stores).

    Any thoughts?
    Last edited by BG76; 08-17-2014, 08:23 AM.

  • #2
    Well, it's about time. The only short coming I can see is the lack of neck options. So, major win to be able to configure but major fail not to include more neck options. I'd like a fat neck to go with my fat 50's pickups.
    Last edited by billybilly; 08-17-2014, 09:02 AM.
    One MIA Fender Strat, one Gibson Les Paul, one Martin Acoustic, what more do you need?

    http://i1099.photobucket.com/albums/...ps92b32f13.gif

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    • #3
      no hardtail strat option
      This space intentionally left blank

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      • #4
        I think it's a good idea.....

        but I also think it's a sign fender is getting desperate.

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        • #5
          Mostly beneifits Fender cause we really cant go to the factory to try out a guitar before purchase so I am thinking there will be more returns. I guess anything that requires less trips to guitar center is a win for us.Also cuts out price gouging middle men but stops impulse purchases too.

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          • #6
            Their not going to be the last company to do it. I'm surprised it took them this long.

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            • #7
              I don't see it as them getting desperate, I see it as them taking advantage of the opportunities the internet offers them.

              There was a time when people wanted to go into a store to buy a guitar. I think that the market share of people who just order from a website is large enough that doing this makes sense.

              As for the lack of options in the example I posted that's how they started selling direct a while back. There was an announcement that they will be selling most of the stock guitars and basses online direct very soon - not the configurable things.

              Say they sell an MSRP guitar to MF, etc... for half (wholesale) price. The dealer ships it as it was received from the factory and makes a profit. If they do this themselves they can.
              A few months ago, Fender announced plans to sell customized guitars direct to the consumer through its website, calling it the “Fender Design Experience.” Now, word is out that Fender will be selling ALL of its branded products through the website.
              That was the message Fender gave to key North American dealers earlier this month. However, interim CEO Scott Gilbertson said the company remained “committed to grow our business in partnerships with our dealers.”
              Gilbertson is a Partner at TPG Growth, the private investment firm that controls FMIC and he was formerly COO of J. Crew and Senior VP for Under Armour Performance Apparel. He is currently on the board for Fender and The Vincraft Group, MarketTools and 3-Day Blinds. He is an observer to the boards of Adknowledge, Become, Inc. and Mammoth/Petbarn.
              So, when will you be able to buy Fender products through the Fender website? No date was given, but check back here for updates.
              Last edited by BG76; 08-17-2014, 02:52 PM.

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              • #8
                Originally posted by slvrsrpnt View Post
                no hardtail strat option
                ^ Pretty much all I need to know.
                Official HCAG “Theory-Challenged Hack”
                Member of the IBANEZ ACOUSTIC ASSASSINS
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                • #9
                  Originally posted by slvrsrpnt View Post
                  no hardtail strat option
                  What a shortcoming.
                  One MIA Fender Strat, one Gibson Les Paul, one Martin Acoustic, what more do you need?

                  http://i1099.photobucket.com/albums/...ps92b32f13.gif

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                  • #10
                    I have to agree with the above, the lack of wood choices for necks and no hard tail or Floyd options.

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                    • #11
                      Originally posted by Luthier-Atlanta View Post
                      I have to agree with the above, the lack of wood choices for necks and no hard tail or Floyd options.

                      Their like Carvin. Carvin gives you the impression that it's custom to your specs but it really isn't. They give you a set of parameters and you build it within that. You don't get a option of pickups etc. You get the type of pickups they provide for you. It's the same with the Schecter custom shop.

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                      • #12
                        Originally posted by sammyreynolds01 View Post


                        Their like Carvin. Carvin gives you the impression that it's custom to your specs but it really isn't. They give you a set of parameters and you build it within that. You don't get a option of pickups etc. You get the type of pickups they provide for you. It's the same with the Schecter custom shop.

                        with carvin though it's a pretty wide range of parameters. The body wood options give you all the standard choices and the top woods are pretty good too. The usual fretboard woods. You can get all kinds of bridges and hardware. Yeah of course they are only going to offer you carvin pickups. Just like fender or gibson or suhr....

                        It's certainly more options than the fender and gibson "custom shops" which aren't custom shops at all. Just factory produced guitars to closer 50's and 60's specs.

                        At this point I think nobody is naive about it all so it really doesn't matter.

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                        • #13
                          here's the Bitch though. Who will plop down the money for a guitar, sight unseen, or unplayed. Carven get's a way with it, since that's how it's always been with them. Fender, whose models vary constantly..... who knows what you will end up with?
                          My Music: www.soundclick.com/bands/default.cfm?bandID=440762Some of my guitars: 64 or so Domino Beatle bass; 70 Epiphone ET260 bass 73 Ibanez 2398; 79 Epiphone Genesis; 79 Manoman; 78 Gibson L6S; 95 Ibanez JS-700; 04 Samick Lasalle JZ3: 05 Ibanez AS73; 07 Gary Kramer Simulator T and quite a few others.

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                          • #14
                            Have to see how it rolls. If they cut out the middle man then the prices should drop. Its like self checkout at a store. They should give you a discount to self checkout. They don't. Then companies want you to change with paperless billing and don't give a discount incentive. Just have to see.
                            THE MAZI BEE MILITIA

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                            • #15
                              I've been expecting this for a while.

                              I think once they take all of the risks into account we're going to be left with:

                              - Most smaller brick and mortar retailers shedding them like a snake skin because they won't be able to compete
                              - Fender partnering with a smaller collection of huge online distributors and providing commercial sweeteners to compensate for them competing directly
                              - Fender keeping their direct sale prices the same or higher than their distributors (see above) and never discounting
                              - Restricting the online sales to the USA, because they can still control the retail channels in other countries
                              - Potentially higher quality because the "duds" that have been passed over within the GC empire won't build up over time

                              Have no illusions that this will in any way be better or more cost-effective for Joe Public. You know these guys don't roll like that.

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