Everything sells online: music equipment

By moving online, a Canadian high-end speaker manufacturer proved that customers don't necessarily need to face the music before opening the wallet.

You might not think high-end stereo speakers would sell online. After all, how could you buy audio equipment without testing quality? Think again. Axiom Canada Inc., whose products consistently win raves from audiophile publications, moved three years ago to selling exclusively online and, perhaps surprisingly, sales boomed. President and CEO Ian Colquhoun says annual revenues now exceed $10 million. This is after five years of average annual growth between 35% and 45%–which compares to revenue growth in the overall U.S. home-speaker market last year of only 16%, according to the Consumer Electronics Association, based in Arlington, Va. Colquhoun expects Axiom to keep growing at a 25% to 30% clip.

Colquhoun started building and selling speakers in high school and founded Axiom in remote Dwight, Ont., in 1980. For 20 years, Axiom sold speakers the traditional way: sales agents placed the company's products on retail shelves across the country and customers auditioned them before buying. Then came the Internet. Axiom was already eyeing the U.S. market, where it had a small word-of-mouth following but no dealers. A website looked an inexpensive way to take it further. In 2000, Axiom launched a bare-bones U.S.-only site. American sales, almost nothing five years ago, today represent 75% of total revenues.

But as Colquhoun notes, dealers don't like manufacturers selling direct–they tend to see it as competition. “So sometimes,” he says, “you have to make a decision.” After the U.S. website took off, a Canadian site was the obvious next step. Colquhoun knew he would lose dealers if he started selling online here, so in 2003 he pulled out of retail entirely. Canadian sales took a hit, he concedes, but are now back to where they were and growing again.

How does Axiom manage to sell a sensual experience online? Colquhoun cites word of mouth about consistently high product quality, the result of continual research and development. The return rate, less than 2%, supports this. But savvy marketing also plays a role.

The company hired six experienced audio experts, including veteran Canadian journalist Alan Lofft, now the company's public face. They respond to site visitors' e-mails and phone calls–2,500 a month. Lofft writes the website and a newsletter. But they don't sell. That's crucial, Colquhoun says. His experts help customers figure out what they want and need and explain the no-questions-asked return policy, then leave callers to place their orders at the site. Which, surprisingly or not, they do–an average of about 1,000 times a month.