Sonos & Costco

This is completely a wild guess on my part and I have no direct knowledge to backup my claim.

Sonos is neither the manufacturer nor the distributor. That is mainly due to the capital cost and resources required to do so. Sonos has an arrangement with the manufacture (in China I believe) to get some sort of cut per sale or sales. The distributor (maybe Ingram) has an exclusive deal to distribute and sell Sonos in the US, for say, they pay Sonos $x.00 for each controller sold and $y.00 for each ZP.

All sales of Sonos in the US go through this distributor, even the Sonos Web sales. Say when one orders a ZP on the Sonos Web site and pays $499.00, Sonos in turn sends an order to the distributor and pays them $399.00 to “drop ship” the ZP.

In this type of arrangement Sonos probably has limited if any control of sales, maybe with the exception of first rights to inventory. Meaning Sonos gets their orders filled before others. The distributor obviously wants to sell as many units as they can, as they make more money. That means if a Costco, which most likely is a very good customer selling many items this distributor sells, wants to buy Sonos, they are going to sell to Costco.

Sonos’s control of sales comes in the form of authorizing resellers. If one becomes an authorized reseller, Sonos will back you up with warranty and technical services. This way Sonos can ensure reputable dealers are selling their product. At the same time, help protect the dealer’s investment in a storefront, advertising, etc. from some guy selling Sonos out of the back of his van on the corner by not supporting him with warranty or technical services.

Sonos is making (or should be) money from every sale, whether from an authorized dealer or not, however they very much want the sales to happen through authorized dealers for many reasons. A couple are to make sure their product is represented properly and to “reward” the dealer for being loyal. A company like Costco will only jump on the bandwagon it they thought they could sell a bunch and in turn make a bunch of money. The moment sales didn’t meet Costco expectations they would drop Sonos, i.e. no loyalty.

My impression of Sonos is they are a company that very much cares about quality and users experience. That is evident by how well they support their product and not releasing a product or feature until it is ready. Sonos is a small privately held company that has the luxury of not feeling the external pressure from stockholders about “numbers” being right. The flip side of being small is they have to make some sort of arrangements for manufacturing and distribution because their resources are limited.

Again this is totally a wild guess about Sonos. That means I very well could be completely wrong.

The end result: due to the nature of the product, I think it would be very wise to buy it from Sonos directly or through an authorized dealer. In my experience, Sonos customer service and support is second to none. It is well worth any “premium” one might have to pay over a Costco price by far.

UR

I have to admit I'm still confused.

I get that Costco are not 'authorized' and so they back the product themselves. What I don't understand, like Anjrober, is where Costco is getting their Sonos units from?

"Grey market" is usually applied to goods that are not intended for sale in a region. So there are people selling Sonos systems in the UK, that would be considered grey market as Sonos doesn't sell in Europe yet. But that's generally in ones & twos, or at best a dozen. People are able to purchase in the US, take them to Europe and sell for a premium.

That's not the case with Costco, who are selling in North America, and Costco generally sells Volume. I also don't understand how Costco selling 1000 units, for example, is a bad thing for Sonos. I mean at some point thay had to be purchased from Sonos? 😕 Frankly if even I bought from Crutchfield I would probably still come to this site for support, so I don't see that the retailer has a large after-sale support requirement. On most electronics I go back to the manufacturer for support, not the retailer.

I'm seriously looking to get a Sonos, and I am a Costco customer, but I certainly don't want to do anything that is bad for Sonos....

Gray market stuff is always disrupting to the market.

The official distributer invests a lot of time and energy (money) developing a product and introducing it into the market. There are advertising, trade shows, dealer education, sending units to reviewers, website, etc. expenses. The distributor may have been investing money into their product for years before the first unit was sold. Typically the warranty is funded by the distrubuter in each country or region. Everybody knows that a few units will fail and part of the selling price is reserved for honoring the warranty promise. The warranty is an incentive for the customer to purchase a unit. Warranties vary by region. US warranties are somewhat longer than others.

The gray marketer somehow obtains popular units and, since he has not incurred any of the expenses the developing company, typically not funding any sort of warranty, can easily undercut the distributor's price and make a fast sale.

None of this activity is particularly illegal or immoral -- after all, capitalism is supposed to deliver the lowest possible price to the consumer. However, asking the original distributer to provide warranty service for a unit it never sold is not quite fair.

If the gray marketer does a really good job of selling lots of cheap units, he could put the original distributor out of business. At that point the gray marketer loses interest in the unit, because without advertising and support the product is no longer attractive -- gray marketers want easy sales. The gray marketer then moves on to the next hot item, and the original product, distributor, and product support fade into history.

[font=Verdana][size=2]Costco sounds like the outlet to purchase a bundle to tear apart for mods. If you destroy it in a year they will take it back for refund. And since they are not the manufacturer they won't know it was tampered with, just that it was not satisfactory.[/size][/font]
[font=Verdana][size=2][/size][/font]
[font=Verdana][size=2]Hey...don't worry...I might be devious enough to think this but I am way to stupid to know what I was looking at when I opened one.[/size][/font]

Costco has a very generous return policy, for at least one year after purchase they will refund your money if you have any problems.

This would seem to be a good option for a Sonos purchase, and I don't see a downside for Sonos, but perhaps I'm missing something. 😕

Can someone from Sonos explain why a Costco purchase is not as good as a direct purchase?

So does this mean that costco does not actually have any units to ship/sell...seems odd for a company of that size/recognition would offer for sale merchandise that it cannot fullfill.

If they can fulfill it then I am not sure exactly what the earlier statement that sonos will not fulfill the orders means.

Please clarify.