Retooled NHT Speaker Part of New Strategy on Affordable Audio

After changes of ownership and a move to an online business model, speaker company NHT is back to market with a second-generation SuperZero speaker as part of streamlined, direct online distribution model. The speakers have been retooled and re-priced at a “value-oriented” $99 each, Chris Byrne, co-owner of NHT told Consumer Electronics Daily.

That’s down 30 percent from the 1993 price, Byrne said. The lower price is designed to fit with what Byrne sees as a “return to good, affordable audio” in the market. A new crossover allows wider sound dispersion, versus the “sweet spot” goal associated with traditional speakers, to reflect “how people listen today,” Byrne said. The speakers can be matched with the $349 Super 8 10-inch subwoofer to fill out the bottom end, he said.

The speakers can also be matched with a $129 Sherwood stereo receiver that NHT is selling on its website along with related products from Sanus Systems, Audioquest, Omnimount and other small CE companies. NHT doesn’t stock products for other manufacturers but handles sales and support and then turns over invoices to manufacturers for shipping. The company’s online staff has been trained to support the products it sells, Byrne said. NHT is talking to “a couple more companies about lifestyle products” and “decent, low-priced turntables,” he said. Byrne sees the collaborative sales model as the future for small audio companies. “We don’t make as much on their stuff,” compared with what the company makes on its own speakers, Byrne said, but “I don’t have to tie up my inventory with their gear.” The affiliates get “very decent margin” and sales that they wouldn’t make otherwise, he said.

Byrne’s dream is to take the model further to create a one-stop online shop for consumers, so instead of going to various websites to put together a wireless system, for instance, they can go to one place where they have five or six options, he said. Each time they go to a different site, they get a different story, “when all they want is for e-tailers to solve their problem,” he said. In his vision, the complete system would ship with instructions, which he said could require an affiliate organization with a central Web engine.

NHT is also selling business-to-business to dealers who can buy without volume purchase requirements. Dealers put in a code on the NHT website to receive wholesale prices and to learn about upcoming promotions if they want to take part. “We encourage them not to carry inventory,” Byrne said, and shipping is charged to the dealers for orders under $500. Dealers get 30 percent lower prices, on-time delivery and they pay when the order ships, he said. The low barrier to entry has yielded 200 installer dealers, he said, who have “kept us in business as we build the consumer side.”

Removing volume requirements has “taken out bandit retailers, because we're not forcing anyone to buy anything,” Byrne said. “We're cleaner than we ever been,” he said, because there’s no incentive for dealers to sell surplus inventory to audiophile liquidators. The only rule, he said, is that to remain listed on the NHT website, dealers need to buy something every 60 days. But no minimum purchase is required.

Dealer concerns about the sales model have centered on Internet sales in general, direct competition with the company, loss of a rebate program, and NHT’s requirement that dealers pay freight, he said. “We keep telling them to stop thinking about the old days,” Byrne said. Costs for reps and distribution in the past were built into the end price, he said. “We don’t do that anymore, so everybody gets the benefit of a lower price,” he said, saying dealers get better margins and can sell a product that’s more attractively priced to consumers. The sales mix is 65/35, and Byrne wants to bring up the consumer sales side to make it 50/50, he said. The company is driving traffic to its site through search engine optimization and links to reviews, he said. Since bringing on a strategist for e-commerce marketing, the site has gone from page six to page one of many Web search results, he said.

Byrne said the direct collaborative model is “starting to work.” Working together in a cooperative way is “going to be small companies’ salvation,” he said. Revenue-sharing may turn out to be a temporary phenomenon, “but it’s the first time in four years that I've actually seen a path out” of a difficult sales environment for little audio companies, he said. “How many loudspeakers can you sell to consumers without offering the rest of the store?”