UpFront with Steven Savvides
Since 2003, Musical Distributors Group (MDG) has built a strong reputation within the industry and has distinguished itself through building uniquely close relationships with the brands it represents.
MMR recently sat down with company president, Steven Savvides, to get the scoop on recent developments at MDG, future plans for the organization, and to learn Savvides’ take on the current state of the MI world.
MMR: Let’s talk a little bit about how MDG got started.
Steven Savvides: Our roots are as manufacturer’s representatives. We are salespeople first and foremost. MDG was incorporated in 2003 and was born out of the manufacturer’s rep firm, Right Track Marketing. The company was originally established to facilitate the sales of products we were no longer representing.
MMR: Can you tell me more about Right Track Marketing and your own background?
SS: Working as an independent sales rep for 25 years, I started Right Track Marketing in 1997 and represented many top audio brands in the Mid-Atlantic, New York Metro and, New England Territories including Alesis, Tascam, Behringer, AKG, Fostex, Telex, EV, Monster Cable, and ESP Guitars, among others. After a noticeable shift in the way manufacturer’s handled their sales teams, many adopting a direct sales approach, we realized the growing volatility of the independent sales rep model. To protect themselves, many firms diversified by expanding into other channels such as consumer, video and installation. We decided to begin distributing many of the brands we were no longer representing since our relationships and sales channels were very well established.
In time, more brands approached us to stock and distribute their products, on the East Coast at first, then nationally, then into Canada, then globally.
MMR: Discuss the notion of being “channel brand partners” and the approaches you apply to the various lines you work with.
SS: Although we are listed and known as “Distributors” we consider ourselves more as “Channel and Brand Partners” for the lines we work with. The concept of being channel brand partners elevates the relationship between MDG and our manufacturers to a synergistic level. In addition to the standard administrative and sales functions a distributor performs for its brands, we get involved with our manufacturers to the point where we fully understand their business, their goals and their abilities. We then develop a customized business plan for them for the US market and form an alliance towards mutual success. Since we are building “their brand,” the more ownership they have in their own success, the more they understand what actions we need to jointly take to achieve our shared goals.
We basically operate under three scenarios:
We are Exclusive USA (or USA/Canada) Distributors and Channel partners with 90 percent of the brands we carry and handle the entire supply chain and marketing aspect of their business in the USA, sometime including a USA website component etc. We are basically Fernandes USA, EBS USA, G7th Capo et cetera.
We are Exclusive MI/Pro Audio partners for some brands that are also sold via other channels. For example, Olympus sells cameras, binoculars, etc via a massive consumer channel, but we are their exclusive partner for the Music Industry.
We offer warehousing, fulfillment and invoicing/collection services to companies who either wish to outsource these functions or need to add additional shipping points etc. to their operation.
For example, we provided all the fulfillment services to Adam Audio in 2009 while they transitioned their operation from LA to NY.
In short, we work with companies that are both familiar with our industry, and those that are not to offer the specific services and help they require to succeed.
MMR: Any types of companies and brands that you look for, in particular?
SS: In searching for brand partnership, we gravitate towards two types of companies. Those who are established in perhaps other parts of the world, have solid track records and viable products, but need a way to succeed in the USA – or those that are startups, but have a product or products that are innovative, exciting and offer a promising growth opportunity.
MMR: How many employees does MDG currently have? What are your facilities?
SS: We currently employee 20 people in the following departments: Sales (Inside and Outside), Administrative (Operations, Credit), Customer Service (Repair, Guitar Set-up & Admin), Warehouse (Shipping Receiving), Executive Management, plus 11 independent Rep Firms.
We operate out of Boonton, NJ in a 15,000 sq foot facility housing our offices, training center, product demo room, guitar set-up and luthier stations and warehouse. We have an additional 7,000 sq feet of warehouse and office space in an adjoining building.
MMR: How did your recent partnerships with Vintage, Laney, and i-Tab come about?
SS: We are thrilled that all three of these companies approached us at this past Winter NAMM 2010. It’s rewarding to see that our reputation has attracted the attention of well respected brands such as Laney and Vintage and that i-Tab, as a new brand, did their due diligence and identified us as the company they wanted to work with to bring them to the US consumer.
Laney was ending a five-year relationship with a previous distributor and was looking for a US partner with a track record, one who could help them achieve the same high level of success they enjoy in the rest of the world. Most notable about our initial dealings with Laney were the quality of people they had working for them and the history of innovative and quality products. We are looking forward to, and expecting big things from Laney in the coming year and feel that the timing could not be better.
Vintage had already entered the US market via a partnership with a Canadian distributor, but needed to go beyond that and work with a company with established US dealer relationships and a stronger infrastructure. Again, a situation whereby a very well organized and successful company in their own right, Vintage saw the benefit of working with a company very similar to themselves. There is a great deal of technical innovation occurring and the Super-Matic self tuning guitar is going to be one of the watershed products in our industry.
i-Tab had a great product concept and was developing their product line and needed a partner to help them navigate the entire US sales channel, including Chain Stores, Mass Merchants and E-commerce opportunities.
MMR: Any other upcoming specific developments that you care to discuss?
SS: Moving forward, MDG is looking toward finding unique and innovative products that would have a real impact in the marketplace. We have not ever been particularly concerned about whether or not a product has a track record or history. As we see it, the development and establishment of that product in the marketplace is our job. It is imperative that we believe in the product and feel we can work well with the people involved in its creation and development. Our focus moving forward is moving towards international distribution and developing the relationships to make that happen.
MMR: What’s your general take on the state of the MI market?
SS: Quite honestly, the MI market has lost track of what it was originally supposed to be – fun. Too many people have the misconception that this is the finance industry or commodities exchange or the medical profession. At the end of the day, if people never buy another musical instrument, nobody dies and the world will not grind to a halt. There is plenty of blame to go around but when I look at the MI industry of today vs. the industry of 1984. I sometimes wonder if they are the same industry. Fortunately, in most product categories, the “race to the bottom” is over and both consumers and manufacturers are demanding better quality at fair prices. I would like to believe we will see a bit more of the rebellious spirit that helped create the digital recording revolution, guitar innovation and products that were not so “traditional”. Musicians are not supposed to be “traditional”, their job is to push the envelope and move forward, not continually look back and mimic the past. I think we are seeing a trend towards individuality and hopefully the new products coming down the pike will reflect that.
MMR: Expectations for the coming year?
SS: The race to the bottom is over. Hopefully the realization that to be competitive there needs to be a healthy mix of product offerings catering to a larger portion of the buying public. I think we are going to see dealers take chances on lines that differentiate themselves from their competition and hopefully inspire a new generation of musicians. It would be sad to see MI devolve to what the record industry has become: a sad shell of its former greatness. We have the capacity and ability to move forward, but do we have the passion and desire? I would like to think so. It is with that hope and belief that I can go to the office each day, ready to deal with whatever awaits.