The great fear I think most of us have in dealing with a small company, especially one where we have to send a large sum of money in advance (to a foreign country) is that what happens if the transaction goes bad. Obviously, one way to ameliorate that fear is not pay in advance. However, this then turns the problem around to be one for the company, not knowing you as a customer. Paying some intermediary, like a credit card company, increases the transaction costs, but shifts much of the risk to the intermediary.
We have to remember that in hi end audio, almost everyone is small. When you call the company to ask about a product, you are very typically talking with the owner/inventor directly. You do not get a call center person working from a script. Almost all the so called big boys are still pretty small, and almost all of them started as one or a few people. BTW, that is also true of most all high end retailers and distributors. For scale, think about a business that has annual sales of $10M a year, under size limit of the US Small Business Administration classification for most small businesses. If they are selling their DAC, for example, for $5,000 wholesale (close to $10K retail), then they would have to have annual sales of 2000 units a year, or about one for every working hour.
However, if you are buying, there is a big difference in the chain (and as Bonzo says, this is often, but not always, reflected in the price to the consumer). For the larger companies, particularly selling in foreign countries, there is typically a distributor, and then a retailer. For a medium sized company, the manufacturer may go directly to a retailer, usually a limited number with whom they have to establish a personal relationship. Then the really small companies will sell direct. (There are a few medium that do that also). There are definitely pros and cons for the manufacturer. The retailer does the sales and manages payments from the customers as well as refunds, and also does a lot of the marketing/advertising and hand holding for customers, and absorbs much of the risk. The distributor also provides marketing to the retailer, with which he often has a long time relationship, and also provides a question/answer expertise for the retailer and customer, particularly in a worldwide market, where language and time zones are issues, and also absorbs some risk.
Obviously, if one is starting out, a distributor or retailer may not want to take you on, particularly if you have not had any track record with previous products or some very favorable press or buzz on the internet. If you become successful, particularly, if you are in a expansion mode, hiring new staff, increasing the size of your manufacturing facility, then you won't have the time to do a lot of marketing, sales, and customer service, or if you hire internal staff to do that, they can become a significant overhead for your operation. Some manufacturers choose to stay small, sacrificing potential profits for better control of their products. But, I think, that is a very small number.
Larry
PS. Although an academic for most of my life, I started a non-profit educational operating foundation toward the end of my career and ran it for 10 years until I retired, eight years ago. We started with one person, me, and I retired, having 135 full staff and annual revenues in the mid $30M. So I went through all the stages and many of the tribulations that most of these companies are going through. Fortunately my foundation is still going strong.
