After the Fallout: Car Audio Still Strong On The Web

By Amy Gilroy -- TWICE, 4/16/2001

Despite high attrition rates in the dot-com world, leading autosound websites Crutchfield, 800.com, CarDomain (formerly Sounddomain) and Mobile Toys continue to expand and claim that car audio business on the Internet is going strong.

Crutchfield says that 35 percent of its sales are now transacted on its website and Internet sales are still on the rise. 800.com has been so encouraged by the growth of autosound that it is launching this month a new car audio area on the site and expects to double its car audio business in 2001. CarDomain says its sales have tripled since last year and Mobile Toys says the number of dealers and suppliers who use the site as a referral source is now at 2000 and rising.

Car audio websites are fewer in number and were later to come to the Internet than other consumer electronics sites, mainly due to the installation headaches associated with the category. Best Buy does not yet offer car audio on its site and Circuit City displays products but does not sell them via e-commerce.

Those retailers who made significant investments in their websites and in customer service, say their investments are paying off, while the smaller e-tailers are on the decline, say leading e-commerce retailers.

"The days of the guys who sell $100,000 worth of merchandise on the Internet are over," said CarDomain president Alex Algard.

800.com senior VP of merchandise and operations Frank Sadowsky noted, "It was a big myth that the Internet is a low-cost place to do business. It's not. We've spent over $20 million on our website alone and we have an enormous infrastructure with two warehouses. So people who are not well funded are falling by the wayside."

"Call it what you will — cyberspace or e-commerce — it's still mail order," added Crutchfield senior VP of merchanding, Dan Hodgson. "There was the implication that there was infinite growth potential, but it's still the same consumers and realistically only a small segment of the population will buy products by mail," he added.

Crutchfield claims its Internet sales are growing at a rate of 30 percent over the prior year, and some of that business is incremental, according to Hodgson. "It still continues to be the vehicle through which we encounter the greatest number of new buyers and new names for our mailing list," he notes. Another benefit of e-commerce is that the Internet allows Crutchfield to stock items that are impractical to include in the catalog. "In some cases, we only put part of a line in our print catalog but the full representation is on our website," Hodgson explained. The company can also offer a wider assortment of accessories, he added.

The Internet also helps Crutchfield reach early adopters. As an example, car MP3 players sell particularly well on the Internet, Hodgson said.

But both Crutchfield and 800.com admit that the Internet limits a target audience to the do-it-yourself-installer, but both say there is still a thriving market within that demographic.

800.com is opening a new car audio section on its site this month that will triple the company's product assortment to several hundred mobile items. The company spiffed up the graphics to suit a younger demographic and has added the full Blaupunkt and Phoenix Gold lines. Sadowski said the new section carries "a more aggressive, youth-oriented tone."

"Our plan this year with the opening of the new portion of our site is to double our sales [in car audio] from last year. And we think that's a modest goal as our sales have been very strong in mobile, which is why we are making this investment. We only really opened up mobile last spring," Sadowsky explained.

Obtaining authorization to carry a particular brand continues to be a challenge for e-commerce sites, he admitted, although 800.com claims to carry only authorized brands and remains the only company authorized to sell Sony car audio on the web. Sadowsky said 800.com also now buys all products direct rather than through a distributor.

Mobile Toys, which operates as a mobile electronics information site and refers consumers to local retailers, expanded its operations in January. The company is now offering a WebStore service to retailers — essentially allowing retailers to use Mobile Toys' car audio "fit guide" which identifies which products fit which vehicles — on their own websites. Mobile Toys adapts the fit guide to show only the products sold by the retailer. It also provides the site hosting. The cost for the service is $49.95 per month plus a $500 set up fee. Mobile Toys said 20 retailers are currently signed up for the WebStore.

The company also works with Sears and Best Buy, offering a fit guide in in-store kiosks so a customer can be sure the product he is buying will fit in his car. According to Ken Appel, VP of marketing, the service drastically reduces the number of product returns.

CarDomain changed its name from Sounddomain last August as it is also branching into selling car accessories, but its car audio website remains www.sounddomain.com.

The company claims to be rated as one of the top automotive websites by PC Data, Reston, Va., with more than 10 million page views per month. CarDomain sells more than 60 car audio brands and is the exclusive authorized website for high end brands such as Image Dynamics, Focal, Oz Audio and RT Obcon.

The company claims it has profited from the demise of smaller websites. "Our cost of business has actually gone down with all the fallout of the dotcoms out there. We're no longer seeing so many people sell a product at negative margins," said Algard.