COMPANY PROFILE

Reverb.com CEO David Kalt wants
to remove the “friction” from theonline selling experience.

REVERB.COM

Removing “Friction”
From Online Selling

Fast growing e-commerce site is the alternative to eBay,
with lower fees, unique content, and a musician-friendly
vibe that keeps customers coming backM

ost people who visit marketplace
websites such as Amazon andeBay have a pretty clear idea ofthe products they’re about to buy. The
objective of such platforms is to get consumers to click “buy now”—now.
Relative newbie Reverb.com, which isexclusively dedicated to music products,
is growing rapidly with a very different
108 MUSIC TRADES July 2015

m.o.: capturing the sense of exploration,
discovery, and joy associated with browsing the aisles of a beautifully merchandised, impossibly well-stocked brickand-mortar store. What’s more, sellers,
including many retailers, have taken notethat moving gear on Reverb.com is a lot
cheaper than on competitors such as eBay
and Amazon.com.

The Reverb.com marketplace has
amassed around 400,000 registeredusers and attracts about 3.5 million
unique visitors every month. Retailers
listing inventory on the site include SamAsh, Full Compass, and Cascio, as wellas many smaller independents.
Transactions conducted on the site
topped $38 million in 2014, and founderDavid Kalt projects that figure to climb
to $140 million this year and $300 million in 2016. About 60% of those sales
were of used products; 40% were new.
Kalt says he always conceived of thesite as serving the entire m.i. space,“with a sweet spot for affordable, quality used gear,” and that vision has beenrealized in its prodigious selection ofguitars, drums, DJ equipment, and pro
audio gear. Over the past two years it
has also significantly expanded its band& orchestra inventory. “Sometimes
inventory moves between b&o dealersthrough a broker,” he says. “We canremove some of that friction so that adealer with a rental program can buy
instruments from Reverb.com.”
According to Kalt, more than 45,000
sellers have used the site since it waslaunched in January 2013. AroundREVERB.COM

Located across the street from Chicago Music Exchange (also owned by DavidKalt), Reverb.com’s modern offices accommodate a technology team of 25, plus 12
men and women in “customer engagement.”

3,000 of those would be consideredwith a low enough commission, I woulddealers. The remainder are mainly indiremove any friction in the selling
viduals, from musicians wanting toprocess that might lead sellers to skirt
upgrade their only instrument—“wethe platform.” Retailers find that level
always want something, but to get it,reasonable, he adds, “like accepting amost of us have to get rid of something
credit card for purchases. What they likeelse”—to a “huge community” of “flipeven more is that we bring the buyers topers” who buy and sell instruments as athem, ‘credit card in hand,’—and thenhobby or avocation.
we send them the money. All they haveOn the surface, Reverb.com may
to do is ship the product and service theappear to be occupying thesale. That’s Reverb’ssame general commercial TRANSACTIONS ON
value proposition.”space as eBay and Amazon. REVERB.COM
But the lower rate is
But from its much more TOPPED $38
only the beginning ofaffordable sales commis- MILLION IN 2014,that value proposition.
sions to its carefully con- AND ARE PROJECTED Beyond making thestructed buying and selling TO CLIMB TO $140
site very user-friendly
experiences, Kalt has fash- MILLION THIS YEAR
and easily navigable,
ioned it to be the un-eBay: AND $300 MILLION
Reverb.com is becomfocused, personal, engaging,ing known for its Price
IN 2016.
and super-easy for both sellGuide, which Kalt
ers and buyers. Users cancharacterizes as “asave their searches, with their own
Kelley Blue Book for musical instruchoice of search terms, and they canments and pro audio gear.” The Guide
create their own media feed with theenables site visitors to see and compare
product attributes that interest them.
historical prices of the products, both
For retailers, love at first sight starts
new and used, that they’re browsing.
with Reverb.com’s 3.5% sale commisThis resource is good for especiallysion, a stark contrast to Amazon’s 15%
reassuring inexperienced buyers (andand eBay’s 10%. The rate was deterfor related reasons equally helpful tomined “very strategically,” says Kalt.
sellers) that the prices they see are rea“There was way too much friction at
sonable—that they’re not at risk ofanything above about 7%. I realized thatbeing fleeced. Currently including about
if I could build a profitable business
11,000 listings, the Guide is maintained
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by a team of three staffers focused oncollecting reliable pricing information
based on current transactions.
A guitarist and self-identified “guitargeek” since his youth, Kalt spent twoyears as an assistant engineer at arecording studio before training his
computer programming talents on thetravel and stock option trading industries. He launched OptionsXpress in
2000, took it public in 2005, but grewbored “running a large public company”
and stepped down as CEO in 2007.
(Three years later Charles Schwab purchased the business for $1 billion.)
In 2010 Kalt registered the domainname “reverb.com,” with plans tolaunch a site to compete withMusician’s Friend. Unable to securemajor product lines without an established business, he acquired Chicago
Music Exchange in 2010 and spent thebetter part of three years aligning its
operation with his vision for an ideal
guitar store.
Focusing on acoustic and electric guitars and basses, amps, effects, anddrums, Chicago Music Exchange is
expected to ring up $32 million in sales
this year. CME is known for its impressive stock of American-made boutiqueand vintage instruments, but its inventory covers everything from high-end toentry-level products, and by design its
vibe is “never intimidating; it’s very
egalitarian. Even if you can afford a$30,000 guitar,” says Kalt, “you may
still want to buy or sell a $200 pedal.
I’ve been fortunate to have had financial success in previous businesses, but
I want the same things as my hardworking blue collar customers want.
I’m sick of the elitist attitude you
encounter in some music stores.”Kalt’s success in replicating that welcoming vibe on Reverb.com is reflected
in testimonials from both buyers andretailers. According to Brian Douglas,owner and general manager of CreamCity Music in Milwaukee, Wisconsin,
the site engenders “a great sense of community among the buyers and the stores.
Our connection and relationship withbuyers is much more direct and intimatethan with platforms like eBay andAmazon. Also, its fee structure is exceptional; a retailer can make a decent margin selling product on Reverb.”
With specialists in all main product

REVERB.COM

categories, Reverb.com’s staff ofaround 45 includes a technology teamof 25 and 12 men and women in customer engagement—“what other businesses call customer service,” Kalt
explains. “If you have a problem oneBay, you can’t get through to anyone.
We resolve issues, we help both buyers
and sellers, and we make the processreally, really easy.” Ten of Chicago
Music Exchange’s 45 employees spend
most of their day on email, instant messaging, web chat, or Reverb.com, relaying communications between sellers
and buyers on specific details about theproducts. About 50% of all Reverb.com
transactions involve the same kind ofcorrespondence.
To ensure a good shopping experiencefor buyers, Reverb.com’s sophisticatedsoftware analytics and vigilant content
team identify and remove content
deemed fraudulent, counterfeit, or having questionable descriptions, bad photography, or a price that’s out of linewith historical norms. Similarly, forsellers, it bans buyers with “flaky”
shopping tendencies—for example,making many (often lowball) offers but
never buying—that sellers characterize
as “noise” on more established platforms. “Some sites have become verybuyer-centric,” says Kalt. “We want toconnect our sellers with really good,interested buyers. We weed out theannoying players so sellers have as
good an experience as our buyers.”
The shopping experience is further
enhanced by what Kalt calls “curation,”
which groups products by both conventional and potentially more compelling
criteria. For example, 1980s Japaneseelectric guitars could be grouped into acollection, or a Ludwig Vistalite drumset could be included in a Led Zeppelin
exhibit. The goal is to create hundredsof engaging narratives around the vastarray of products. Some items aregrouped into the “Deals and Steals” and“Price Drops” sections of Reverb.com’ssite, whose “narratives” have nearly
universal allure among buyers and“give motivated sellers a great way tomove gear.”
Another lure to the site is a growing
body of educational articles written by
Reverb.com employees or outside
experts. Examples include a well-written piece on how recording interfaces
112 MUSIC TRADES July 2015

work that is linked to the FOR RETAILERS, LOVEcan basically push arecording interface product AT FIRST SIGHT
button and have all orpage, and the entertaining STARTS WITH
any portion of their“Totally Crazy [Vintage]
inventory data copied
REVERB.COM’S 3.5%
Effects” by Dave Hunter.
from their own e-com“Our content team is very SALE COMMISSION, A
merce platform toknowledgeable and objec- STARK CONTRAST TO
Reverb.com.
tive,” says Kalt; “they have AMAZON’S 15% AND
From its Price Guide
no agenda. We really want EBAY’S 10%.
to its data manageto help musicians figure out
menttools,
what they want and need,
Reverb.com is all
and we want to make it fun to browse
about removing the friction in online
for gear.” Other attractions include
selling. “As long as people want to buy
videos featuring product demos, store
on Amazon and eBay, many brick-andand manufacturer profiles, and even
instruction such as how to play Cream’s“Sunshine of Your Love.”
Rich, informative content also serves
Reverb.com’s goal of search engine
optimization. This is especially important since Google and other major
search engines began to correlate eachsite’s ranking to the usefulness of its
content as reflected by the number ofvisitors it attracts.
One of Reverb.com’s fastest-growing
constituencies comprises boutique guitar, amp, and effects pedal manufacturers. “Let’s say you’re a boutique amp
maker trying to unload a bunch of B
stock,” says Kalt. “You put them on
Reverb.com, and lo and behold, a bunchof retailers make offers on them.” Some
suppliers sell “direct” throughReverb.com as they might throughAmazon, as well as through their dealers. Success on the site has helped somemanufacturers establish or augment
their dealer networks. Kalt recounts
how Paul Reed Smith browsed
Reverb.com’s Top Shops section, whichlists its top 200-300 best-performing
retailers, and referred his reps to thosedealers. “A number of small manufacturers encourage their dealers to sell
their products on Reverb.com,” he continues. “And some of them ask us how
we can help their dealers increase theirsales on Reverb. They help us withinformation on new products, and wewrite articles highlighting them or post
video demos, all of which direct consumers back to one of their dealers.”
In another area where Reverb.com ismaking e-commerce easier, the company has developed extensive data importing capabilities, recently integratingwith other platforms such as Shopify,
Bigcommerce, and Magento. Retailers

mortar dealers have determined they
have to sell there,” says Kalt. “But overjust the last couple of years, more andmore buyers are saying that they love
the Reverb buying experience—ourcontent, our Price Guide, our customer
engagement. Retailers who aren’t selling on Reverb are missing a huge audience of buyers, the ones who haveexperienced a robust marketplacedesigned specifically for their needs asm.i. retailers.”
NAMM Booth 1526
www.reverb.com

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