I like to follow our industry statistics: number of storefronts, violin imports, sales totals and similar data. I find it problematic because, often, it reads like a chamber of commerce blurb used to attract businesses to a city. We, as an industry, attempt to spin the best view of our growth and health, even in down years. On the surface, there’s nothing wrong with that; however, I believe, too often, we slam figures on the board and attempt to tell our story despite profound gaps in the information.

It’s not unlike the Indian parable of the blind men and an elephant, where each touched a different part and came up with a completely different opinion of the elephant’s makeup. We usually have only a portion of the data, and it’s impossible for us to see the full picture.

Take the example of retail sales, both online and in meatspace. First, we’re dealing with a large number of private companies that can disclose—or withhold—whatever they wish. It’s difficult to check figures for accuracy and completeness. Public companies are a matter of record, as are import figures, of course. Yet, there are few public companies in our industry, and many “non-industry” companies sell a substantial amount of music products.

Take Amazon, for example. In addition to the thousands of legitimate online stores running in the Amazon Marketplace, countless shadow stores and multi-industry store-bots show up. Few disclose their sales unless they are a division of a larger industry entity. Remember, too, that Amazon sells on its own, and it’s not about to send us a spreadsheet of the totals broken down by category. No one believes that its MI category sales are inconsequential. Personally, I think it could easily qualify as one of the top five sellers in the music products industry. Yet, even if Amazon’s sales were as large as Guitar Center’s, that would only account for a tiny slice of its revenue. However, in terms of our industry, it would obviously be significant. We just don’t know, though.

We also can’t track—except in hazy terms—sales on non-industry auction sites like eBay, or on Web sites operated by companies acting as direct importers of brands unknown in the industry. There are a lot of $89 flutes and violins showing up in the hands of school players, despite warnings from band directors.

Here’s where it can get overwhelming, though: I’m just talking about new product, and we don’t have a firm handle on it. We all know where another significant portion of industry sales resides: the used market.

I firmly believe that the used market accounts for an additional 30 percent—likely even more—in sales dollars above and beyond the new products we sell. If our industry sales are estimated to hover just south of $8 billion a year, I estimate the undocumented used market is near $3 billion on top of that.

Now, that’s a pretty bold assertion, I know; however, we’re already documenting the tip of the iceberg from sites that do disclose sales…and it might startle some people. For example, Reverb claims sales figures that trend to $280 million this year, and it states that 80 percent of those sales are used gear. That’s almost a quarter of a billion dollars from one site alone! That doesn’t even begin to account for the instruments in stores that sell used stuff under the table, Craigslist sales, private sellers on eBay, swap meets and teacher/student transactions. Oh, and then there are the peer-to-peer sales between neighbors, relatives and music booster members. How much of this have you observed in your market?

Anecdotally, I’ve known scores of families that have been in my store for lessons and accessories; despite multiple children playing, they’ve never bought a new instrument. Not a piano, a band instrument, a violin or a guitar. All were acquired used in some fashion and, in many cases, they were sold yet again when the kids moved on.

Now, part of the issue is that we (usually) make good products that last a lifetime or beyond. However, another reason for the deluge of used goods is that we’ve always been more concerned with selling than with keeping people playing. I’ve called that woeful negligence in this publication for almost 20 years.

That has led to what I feel is a complete scramble of the MI model we should see. Sales reps complain to me that dealers are carrying more gear that is used, rather than buying from them. Well, of course! Used gear is cheaper, plentiful and profitable, and it isn’t easily price checked on a customer’s Amazon app. There are no sales quotas, MAP policies or warranties to deal with. The items are often easier to turn; nicks, scratches and other shopwear are acceptable; and no salesperson will call. What’s not to like?

Meanwhile, manufacturers faced with sluggish sales look for a way to tap into the market that (in their eyes) the dealers don’t seem to care about. So, they sell online or they hook up with Amazon, making dealers even less inclined to carry their lines. It’s the proverbial vicious cycle; in falling into it, we are actually changing the way consumers think of the music industry and its products.

Although we can’t know the true extent of the used market, it’s safe to say that a large and important portion of our industry’s sales come from used goods. And I’m not just engaging in Trumponomic “I don’t know, but many people are saying…” rhetoric, either. Reverb’s sales alone are significant, and I can’t imagine anyone in our industry, with its long tradition of used sales, trade-ins and refurbs, believes that Reverb represents the majority of used activity.

So, what do we do about it? Manufacturers are understandably dismayed by the way used goods diminish new gear sales. However, the used gear also represents a vast number of consumers we can tap into. I believe it also indicates that our estimate of the number of active music makers is flawed…perhaps dramatically so.

I think there are ways for dealers and manufacturers to work together to address this, as well as to sell more, grow the market and ensure a strong future for the industry. Think about it in the context of your market, and we’ll talk more next month.

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