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Morten Larsen, CEO of Audiosupport, a growing distributor serving the EU.

Audiosupport

A leading Danish firm helps suppliers navigate the challenging
currents and eddies of EU distribution

Denmark-based distributor and logistics facilitator Audiosupport has grown each year since it “started from scratch” in 2013. Selling exclusively to dealers—never directly to end-users—its distribution territory varies depending on the line: Some lines are strictly local, some Scandinavian, and some EU-wide. In total, the company ships throughout Scandinavia, Germany, Austria, France, Spain, Portugal, and other EU nations.

A music products industry veteran since 1974, owner and CEO Morten Larsen got his start apprenticing in a local music store. Over the years he has owned retail stores, worked as a store manager, buyer, and head of marketing, and in artist relations and distribution.

Audiosupport carries a wide array of products from top brands including Aguilar, Dean, DiMarzio, Luna, Mooer, Morley, Rotosound, Spector, Source Audio, BC Rich, Vater, ddrum, Solomon, MXL, and many others. To build a strong portfolio, Larsen explains, Audiosupport “doesn’t necessarily go for the biggest brands, but [instead] brands that provide good opportunities or have been mistreated in the marketplace. Our philosophy is to be the warehouse/employee that companies don’t have to invest in themselves: Being their ‘guys on the ground’ in Europe, taking care of a certain product, at a low cost, makes us attractive to the big buyers.”

Larsen points out that 70% of Europe’s music products market is controlled by very few retailers, and that “their buyers know the factories, the suppliers, and the people involved, so in theory they could go direct with a lot of business.” But even the biggest dealers can’t stock everything, he notes, creating a need for his company to be the inexpensive link between the supplier and the customer.
Audiosupport has also gained a foothold by catering to smaller brick-and-mortar stores, a path that necessitates running a very lean business. “Today there is no room for an expensive infrastructure, fancy office buildings, and a costly operation,” says Larsen. “Distribution needs to prove its value to stay in the game, especially where the retail outlets are fewer and bigger.” In those cases, he says, Audiosupport serves more as a logistics company, “but one with solid knowledge of the market.”

Beyond knowledge of product lines and distinct markets, it is Audiosupport’s particular expertise in the vagaries of cross-border EU commerce that endears it to many of its vendor clients. Describing a constantly changing market, where prices “change by the day to an extent we have never seen before,” Larsen explains, “In Europe, we are not allowed to dictate a MAP price. With various VAT rates and trends in each country—yet being a part of an open market—it is a tricky situation. Many U.S. companies still don’t understand the market, and we’re increasingly more conscious about products that we can control within the EU marketplace. Many companies still need a European policy, suggested EU prices, and a local partner to enforce some kind of control over the market.”

Suppliers that “juggle between distribution and direct sales” in the same marketplace are creating confusion, he continues. “You can’t have a distributor in Holland and sell direct in Belgium unless you’re willing to differentiate the prices, or make a firm decision on your policy.” And yet many brands, focused on their U.S. business, take this haphazard approach, carelessly limiting their exports with a “take what we can get” attitude. “Especially a lot of the B brands, but also certain A brands, could improve their operation in Europe by getting their act together,” he says. “This is where we believe that we have something to offer.”

Audiosupport benefits from a strong Scandinavian economy and a very “connected” society, with ubiquitous internet access and free computers or iPads for kids at school. The result is “lots of knowledge and a very organized society where it’s easy to get things done.” But the region also presents challenges. The biggest is Scandinavia’s 25% VAT, the highest in the EU, which drives many consumers to import online. Audiosupport competes with “a very efficient and well-functioning infrastructure, and a skilled workforce. Our hourly wages are higher, but a worker here gets more done in 37 hours compared to many countries.” The company’s central location and honed logistics capabilities equip it to ship anywhere in Europe in 24 to 48 hours.

Larsen estimates that 70-80% of EU music retail is conducted online, making the aforementioned “connected society” both a blessing and a curse. Complicating the widespread customer awareness of global pricing that all major markets face, in the EU, says Larsen, “Kids don’t calculate the freight costs, VAT, customs, etc. Furthermore, all prices in the U.S. are advertised without sales tax, whereas you have to include the VAT in advertised EU prices. So if the kids don’t know all the contributors to the difference, it looks huge to them.” All explanations aside, EU nations’ disparate requirements affect the distributor’s price structure—“yet another reason for brands to have a clear policy in Europe.”

With its current infrastructure, Audiosupport can grow its sales another 30% “without being exhausted,” accommodated by additional warehouse space available nearby. “But we don’t rent or hire if the business isn’t there,” Larsen stresses. “We are both able and willing to expand, but very much aware of the costs.” Focusing on low-cost operation and fast and efficient deliveries, Audiosupport aims to continue optimizing its logistics capabilities. “We want to minimize our costs and expand our territory so we can turn more products at a competitive price. And we want to offer different service levels tailored for individual customers, offering anything from pure logistics to full-blown distribution.”

www.audiosupport.dk


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