By Amy Gilroy
Sonic Electronix, or really its founder and CEO, Nathaniel Victor–the high school kid turned 12-volt discounting maverick– may come full circle and open up a true retail-style brick and mortar store with installation bays next year, and it’s possible, it may be a full consumer electronics store offering TVs and home audio electronics.
In case you don’t know Nathaniel, he started selling car stereo on the Internet in high school in August of 2000. The manufacturers laughed at a kid trying to take on their lines. He had no credit. But he kept going; he bought product on-the-cheap, he packed boxes and kept analyzing sales. At some point, he moved into his own two bedroom apartment with one room stuffed with merchandise. Now he does $30 million a year, runs a physical warehouse-style car stereo outlet in Valencia, CA, and employs 60 people, 25 of whom are in customer service, he says.
“The manufacturers looked at a kid. I was really so small, I looked 15. I had no money or credit to my name. I told them what I wanted to do and they chuckled. So I started programming my own software for the order processing module….I went to LA to speak to distributors, ditching school,” said Nathaniel.
He graduated high school, got a Fulbright scholarship to college and was studying computer science and business when he dropped out at 20 to pursue retailing full time.
“At that point, I really understood, and still do, the importance of software development but also followed up with customer service.” His friend Chris started helping with the day-to-day business (he’s now VP purchasing) and he hired a guy to pack boxes. The warehouse-style store opened in November 2003 in Valencia with 2,000 square feet and has grown to 50,000.
Sonic created a car enthusiast site that carries just about every kit, harness and adapter. When you visit its warehouse, you place the order on the phone first and come in and pick it up. The store carries about 8,200 SKUs most of which are in stock. There’s no on-site installation. You call an 800 number for tech support. Nathaniel says five of his phone operators are ex-installers and the full phone staff undergoes four weeks of training.
Now Sonic is expanding into more traditional retailing. Within the next year, Sonic will open a full-fledged retail store with about four installation bays. It ill include traditional floor salesman and will stock merchandise beyond car electronics, including TVs, home audio, home theater, computers and portable electronics. The store will likely focus primarily on car audio store, but with a wide assortment of other products, said Nathaniel.
In the meantime, Sonic will open a second warehouse in Kentucky (Nathaniel doesn’t want everyone to know to the city). By May 1, the Valencia store will expand to 60,000 square feet.
For many retailers, Sonic’s prices are the ones to beat. His prices are below MAP (Minimum Advertised Price) on lines that won’t authorize him although he says he adheres to MAP for all his authorized lines. His operation has sparked plenty of controversy and many are displeased with his pricing practices.
Nathaniel’s response is: “When we are not direct with a company, we have no reason to honor their MAPs. Why would we? When we have a price book and we’re direct, then we follow that game.” He also points out that he tried to go direct with manufacturers as a kid just starting out and wasn’t taken seriously. (Please note Nate’s response in the comments –hit the “comment” button above).
Photo: Nathaniel Victor, founder and CEO of Sonic Electronix
Sonic Electronix to Open True Store
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Quality Product
Excellent Customer Service
Cheap Price
“You can only pick two”
I personally think sonicElectronix is doing a great job. They were able to beat prices for me on many occasions and have fully warranted my purchases. I have met Nate and have spoken with him a few times. He is a good person doing good things and has so much ambition. He seems to care for his employees and customers and offers some of the best prices around. It seems anyone who is angry with his way of business are simply people on the other end of things that have not made such smart business decisions and and are feeling a bit jealous. I am all for sonic electronix and cant wait to visit their store. I just hope that it is local to me!
I remember a few years ago, probably at MERA KnowledgeFest, a key retailer was wondering when the next generation of kids would start owning 12 volt shops. He expected the new kids would open up shops just like his with louder demo boards. It seems to me that Nate, here, is the next generation and a product of what the kids want: low prices on the Internet.
Now, I’m not the shop getting my rear kicked by Internet pricing (although believe me, my finances have suffered from the slowdown in car audio). I’m just noting, the next generation seems to want to do a lot of its business on the Internet at a low price, and the industry might do well to adjust its practices to fit with that reality. Is there a way to adjust MAP and transshipping policies to be more fair and more realistic? I don’t know.
But it does seem that if you can make your website act like the new equivalent of a sound off contest–with tons of information on cars and audio and related forums, this is the new way to get kids to “gather”–its not at your store but at your Internet store. Just some observations.
–Amy Gilroy
Hey,you have to give this kid credit. Our industry is in a down swing and this guy worked out a money making formula. How many of you can say your stores are growing by leaps. Its a dog eat dog world and some have to roll around in it so they can make a buck. I still sell my products at full retail and wont let a car go unless its perfect. 50 points or nothing!!!!
I can just imagine the retail store now. Customers trying to swap products and get warranty help, in person, on products that now have their serial numbers removed, and the sales people have to explain the “reserialization” process! Good luck man, but youve messed over a lot of people with your sideways deals and striping products of its serial numbers to cover your tracks so manufacturers cant tell where you got their ill gotten goods from.
I am alwatys impressed with success stories. However, this is a great example of the RACE TO ZERO! Everyone tries to match his prices and shipping. But, hey what he carries is now worthlesss good luck selling yourself and making retail in this economy. THANK GOD FOR CUSTOM WORK AND DISTRIBUTORS THAT NOW WHORE OUT ALMOST EVERY LINE OUT THERE! We can try to compete. Or, just realize that almost every manufacturer and distributor sells sideways. And, comes up with some lame bul@#$Sh&t excuse to make up for it. CASH IS KING GOOD LUCK THE 80’s will never return. So hey some cool waves and a tasty buzz can still be had!
I encourage people to wait and give us a shot… We are working on some revolutionary things to actually HELP the retail shops. We are not Wal-Mart/Amazon and we do not want to eat you alive. In addition to our retail vision, we also plan on working with other retailers to help them better compete with mass merchants and online marketplaces. Give us a shot… better yet, send me an email if you want nv***[email protected]. Thanks.
I think Sonic does a great job for one there honest and know what there talking about unlike Crutchfield (have had many crappy experiences) I also do know they have warranties on all there products and offer extended warranties, so when you say they do not offer or a customer cannot have a item warrantied your wrong. As well I think they will smoke the local shops in there area for one because he will keep the price low and wont rip consumers off like the local competitors will because they have to mark up the product so much just to stay alive. I worked for a shop before and the mark up is crazy I do understand that they have overhead and have to pay for shop supplies etc, but Sonic has the internet sales to bring the shop overhead down so they will STILL beat the hell out of the local guys because they have another source of selling products, not just locally BUT internationally.
It’s commendable that Victor has pursued his future so tenaciously in a cut-throat industry like car audio. Although I can’t agree with his business practices, I can’t blame him for his pricing practices. If the manufacturers of these products don’t want guys like this to sell their product, they would find a way to stop it. Unfortunately, most brand name manufacturers no longer care about keeping their products out of transhippers’ warehouses. Therefore, the price is whored out, and any real value of these products are disappearing.
And if the customer wants a b-stock product with no real warranty and no support, then they will learn the hard way like most other internet store junkies. We have a 55 Gallon drum in our store, as a trash can to hold all the internet bought junk that failed and Sonic Electronix, and the like, wouldn’t honor any warranty. We use it as a reminder of the difference between buying from an honest brick and mortar store, and the internet.
Many of the lines wouldn’t go direct with him because he had no support mechanisms in place- no way to demo the product to make sure the client got the right parts for what they wanted to accomplish; no installation; and so forth. Plus he was selling online, which is against he dealer agreements for many lines.
It’ll be interesting to see how he does in a store, with all the overhead of trying to offer what the established specialists do in terms of “demoing the experience”, and still trying to stay at his online prices.
great now we will have a retail location to send our hate mail to!