Emerald Guitar needs North American Headquarters

[jdrnd]

What would be best for guitar players in North America would be for Emerald to have an outpost(s) in the United States. Outposts on both coasts and possibly in the central portion of the country would be ideal. If guitars could be distributed to certain well placed guitar stores, it would allow people to try the guitars.

At present, buying an Emerald guitar without playing one, relying solely on testimonials, feels (to me) like gambling at Las Vegas. And I own one!

If guitarists could hold and play an Emerald, they would be more likely to buy one. Sales would go up. Then again so would prices. Presently, the cost of an Emerald part does not include any profit to a middleman (i.e. guitar stores).

Early in the game Alistair considered developing some U.S. distributors. There were a number of reasons that he did not go that way and in the long run he may have made the right decision. He really doesn't need to add to his volume of sales and his primary market seems to increasingly be custom instruments. And there is also this--little by little his instruments are turning up everywhere and people are finding owners willing to share a play or two; the Kramster, for example, has probably shared his collection with at least 276 people.

[Captain Jim]

Cool thing about owning your own business: you get to decide how business is done. The buying public gets to vote with their dollars. Emerald did have dealers at one time. They chose to change their business model and go direct with their customers. No different really from a boutique guitar builder - you deal with them direct, they build you the guitar you want. It just so happens that they are located in Ireland. Judging from the shipping videos, they sell a good portion of their guitars to buyers in North America... that doesn't mean they should leave their home, go out on a limb spending a fortune to establish showcase centers, for a niche product.

Speaking as a retired business owner, bigger is not always better. And having a multi-tier business model, with dealers or a showcase storefront doesn't fit every product. Anyone remember Gateway Computers? They became a very big thing for a short time, with showcase centers but still selling direct. It didn't work. And that is for a very mainstream product.

I don't know what percentage of the public would be considered guitar players, but I imagine it isn't a large percentage. Of those guitar players, where do acoustic sales sit compared to electric - a walk through any Guitar Center might give you an idea (certainly seem to be a LOT more electric guitars compared to acoustics). Of that smaller proportion of acoustic guitar players, how many own (or want to own) a carbon fiber guitar? Of those carbon fiber players, how many prefer a traditional guitar shape compared to the forward thinking design of an Emerald? We are now down to a niche, within a niche.

Those of us who own Emerald guitars know how great they are... especially when you first get one and see how "different is good"... you want to proclaim to the world: "Everyone should have one of these!" I know I did. I mean, seriously, how could anyone play one of these and not want one???

The truth of the matter is: not everyone wants one... regardless of what the product might be. For some products, like say paperclips, every office supply place stocks them. People are not going to seek you out to do business with you directly, even if you make a better paperclip. A good product starts with a passion. A smart business owner determines how best to get that product to buyers (not necessarily to the entire public). What is the best way to get to that buyer of a niche product?

Back in the 70s, Taylor Guitars started with Bob Taylor building guitars and Kurt Listug finding buyers for those guitars. That business evolved and through some great product development, consistency in manufacturing through some use of automated building, expanded dealerships, they are the world's biggest acoustic guitar builder.

Contrast that with Olson Guitars. If you want to buy one, you go to them. Starting price is now at $20,000. Obviously, not everyone who wants an acoustic guitar will be going that route. Yet, each of those businesses is a going concern. If you live in Ireland and want an Olson Guitar, you can be sure there won't be an Olson Showcase Center in Dublin so you can check one out.

Alistair has been in business for over 20 years. Easy to see that he has learned a lot along the way, both in guitar building and business. His company makes great guitars. As good as they are, there isn't the demand for them to automate all the processes and have Showcase Centers located around the globe. If you don't consider carbon fiber guitar building to be a boutique enterprise, and think we can all agree that, at most, it is a cottage industry. Alistair chose to sell direct with his guitars, which I think is a very smart decision. With internet advertising, you can target your market audience at a very small cost per exposure. Emerald is known enough that they aren't a "start-up," so there is a customer base established. With current production of carbon fiber guitars, and so much skilled hand work involved, it isn't going to be a "numbers game" where they can expand like Taylor Guitars.

I get that there are some who would like to have a place where they could put their hands on some Emerald Guitars. That does not equate to Emerald needing to expand to that.

In 2018, that meant talking Kramster into a small gathering of the carbon fiber faithful who were in the desert southwest. I got to play his "old school" X10, and we all swapped guitars... Earl's wife Alice bought her first X7 after playing mine. Getting to play a Lucky 13 and a Savoy convinced me that I'd wait for the X10 to be released. I think Mark wound up buying another RainSong. It was a 2 hour get-together that didn't cost any manufacturer anything. I ordered an X10 shortly after the reintroduction of that model in late May of that year... without ever getting to see or touch one in person.

Not to rain on your parade, but what you are suggesting makes no economic sense for Emerald's business model. They are currently 3 to 4 months out on most builds (longer for some custom work), so it seems that what they are doing is working for them. Without the enormous overhead increase of "an outpost or three."

Whew... looking at what I just wrote, there's a half hour of my life I'll never get back. Going back to my second paragraph: bigger isn't always better.

[Captain Jim]

Evan, you are WAY less wordy than I am.

[jdrnd]

Originally Posted by Captain Jim

I get that there are some who would like to have a place where they could put their hands on some Emerald Guitars. That does not equate to Emerald needing to expand to that.

better.

You are right.

I just want a place to check out Emerald guitars before buying.
I represent me, not Emerald.

Captain;

True. But your explanations are more thorough.

[RP]

Originally Posted by jdrnd

You are right.

I just want a place to check out Emerald guitars before buying.
I represent me, not Emerald.

I get that and suggested an idea to Emerald that would standardize the way in which interested US residents could conceivably audition Emeralds without developing corporate centers in the US. Supposedly the idea was presented to Alistair, but I never heard any more about it so I dropped it. From that I assumed two things:

1) Alistair has a much better idea than I as to the goals that he wants his company to achieve.

2) Alistair has a much better idea than I as to the manner in which he wants his company to meet those goals.

[mountainmaster]

Emerald already sells most of its guitars in North America. Europe is where they need to expand.

So I would argue for an Emerald headquarters on the European main land, preferably in my country of course. Sadly I know it is not going to happen.

[jdinco]

Seems to be working pretty well the way it is ! Now if their customer service was not good, it would be a different story.

[jdrnd]

I am not faulting Alistair for creating his Universe.

He does not need help in justifying how he operates.
I make no claims to speak for anybody else but me.
I like my X-30. It sounds great. In fact it sounds so good that I am thinking of getting an X20.
I would like to be able to travel 100 miles or less (less than 10 would be ideal), to try an X-20, X-10, X20 nylon, and Kestrel.
A local outpost would be great.

It is unlikely that I will buy another wooden guitar. I don't need the headaches surrounding their care. It is clear to me that CF is the future.

I suspect Alistair knows this. But so do others, maybe others at this forum. The future is CF. Emerald has a head start (Kodak invented the digital camera and was years ahead of others).

Emerald has the ability to capture the world. If it doesn't somebody else will.

[jdrnd]

I just looked at the latest Emerald shipping video.
It looks like all the guitars are being shipped to North America.

[Captain Jim]

Let's see what it would take...

Assuming a leased building rather than buying or building.

Leasehold improvements: $25,000 (including some acoustic treatment)
Rent: $2,000 per month ($24,000 per year)
Utilities: $300 per month ($3,600 per year)
Payroll (skeleton crew of two, willing to work for $15/hr): $64,400 per year
Taxes and payroll insurance: $12,000 per year
Insurance: $500 per month ($6,000 per year)
Guitar inventory: at least a dozen guitars so it doesn't look bare, could be sold as "demo" after they've been played a while.
Misc: $500 per month ($6,000 per year)

So, about $141,000 in additional overhead per year that first year, before a single extra guitar is sold. Assuming the figure often tossed around of 500 guitars per year is accurate, that works out to almost $300 per guitar sold. Of course that ratio would decrease as more guitars are sold. If more guitars are sold. This is the reason some small manufacturers choose to sell direct instead of having to sell at a wholesale price to dealers.

Triple that number to have one in the middle of the country and add a lot more for the additional expense of one on each coast. It doesn't take long to get to $1,000 extra per guitar sold. If it is necessary to locate one 10 minutes from you, that may also increase the cost.

For a labor intensive product like a carbon fiber guitar, you don't just get to pocket the extra money from selling more: you have increased capital expenditures in the production facility, more payroll, more payroll taxes, more benefit expenditures, more material costs (may be able to buy better in bulk, though)... and as a retired employer who truly treated staff like family, I can assure you that more staff ultimately makes for more stress for the owner.

I'm not including anything for therapy for the two (or six) employees as the shredders who haunt Guitar Center discover this place and come in to bang away on the demo guitars. I'm also probably low on a lot of the figures above.

I get where you're coming from though. I bought an X7. It sounds and plays so good, I bought an X20. The X20 sounds and plays so good, I bought an X10 (level 2). I would probably have sticker shock to go into one of these Outposts and see how much each guitar has gone up in price. Might make better financial sense to use that extra increase in cost to buy a plane ticket to Ireland and let those who are going along with Emerald's business model to save the extra expense.

Just tossing out some fun thoughts about the premise. Over the years as a business owner, I had a few people give me their thoughts on how I should run my business. None of them had any idea what our P&L and balance sheets looked like. Most of them were trying to sell me something (usually advertising). None of them had any stake in the health of my business(es). A banker friend of mine thought I was crazy when I said I had a plan to work that "80/20 thing." I had to remind him of that when it all played out.

It's been a long time since I tossed around numbers; thanks for the thoughts. I'll be quiet now.

[steelvibe]

This is a great thread and interesting to hear it from Captain Jim’s perspective and insider business experience.

I used to think that Emerald would benefit from a North American dealer presence but this thread changed my mind.

Might not be much of value but if there is one thing I would add is that Emeralds do not struggle to sell in the used market provided that the asking price is reasonable. Buying an Emerald sight unseen or heard doesn’t hurt anyone in the transaction;

*Emerald sells a guitar

*Buyers tries and decides it isn’t for them and quickly resells at a reasonable small loss (usually)

*The Emerald curious, and on very worse case scenario, buy an Emerald in drove-off-the-lot cost and without the wait.

Everyone wins.

[jklotz]

Having ordered one and awaiting delivery as I type, I can offer my perspective, based solely on my experience. My order was as basic as it gets, a stock carbon x-20 with an LR Baggs Anthem.

The guitar was promised in 4 months. It was done in 2.5. Pretty good, right? Especially during covid. I received an email telling me it was done, and would I like to pay the balance now or continue on with the 4 payment plan (which I never signed up for - it was assigned automatically when I ordered). I responded immediately, pay the balance and have the guitar shipped asap. I received a response 4 days later telling me they'd invoice me for the balance. 2 days after that, and invoice is emailed to me for a monthly payment. I promptly emailed back I don't want to make a monthly payment. I want to pay in full and get my guitar. After another 4 days went by with no response, I payed the invoice for the monthly payment, thinking maybe that was the holdup. 2 days later, after not hearing anything, I managed to get in touch with Kevin, via their online chat, who told me it might be best to do the final transaction over the phone. I responded ok, here is my number. 4 days later I get a call. I give them my credit card number. Another week goes by and nothing. At this point I am emailing daily asking for a tracking number. Every time I sent an email, I would also go to their online chat and copy/paste the same email. No response.

By then, I was pretty frustrated. I emailed Alistair directly and asked where is my guitar? The next day, he replies and tells me the guitar shipped and he will have somebody get back to me with the details. They did, and gave me a tracking number, also mentioning they ship with limited tracking information and my sales person should have told me about that. They never did. Tracking says my package made it to Heathrow and was handed off to their partner and further information is unavailable. It's been that way for 3 days now. Meanwhile, I'm checking their site daily and my order number says "processing", and it still does. I also emailed asking about having a spare saddle included with my order, which was never responded to.

Needless to say, it has been stressful. I realize they are in Ireland. I understand covid is going on. I get that there is a time difference. But this is a substantial amount of money. I'm sure I will get my guitar eventually. I hope I do. But INHO, they need to stop investing in 3D modeling web pages of pretty pictures and invest in logistics infrastructure to facilitate the back end of the business.

So, do they need a North American Headquarters? I don't know. But they sure could use a lei-son here handle timely communications and help facilitate shipping and tracking. The whole process felt amateur at best.

[RIKI1968]

Not to hijack your string but, I heard “Emerald” and decided to chime in and even offer my latest gear video.

Emerald double neck owner, here..Colorado, USA.

If any Americans ever had any questions, feel free to make friends with me.

https://youtu.be/OxhKvVb2xJ4