My LTS says that retail sales in all gauges are so low now that he might not make enough to
keep the lights on, let alone pocket a little cash.
The LS dealers that advertise here just keep their prices the same with the same profit margin.
I would think that selling 20 locos with a profit margin of $10.00 would be the same as
selling one loco with a $200.00 profit margin.
Mebbe I’m wrong here, but the object is to move merchandise, not sit on the same stuff
forever.
Where are the sales?
Welllll, anyone with a computer, a bit of trust in Online transactions and savvy, to figure out a deal when it is a deal, will more than likely buy on the Internet. I do more often than not after I crunched the numbers and if I buy out of the US when all is said and done i.e. all the charges added I still get a better deal than buying here in the GWN.
Just order something out of NYC (video stuff) that will be 25% cheaper than if I bought here in the GWN … AND it will be better delivery.
Because the LTS thinks it’s impossible to sell 20 locos, and that his customers will want that deep discount anyway even of the volume is not there.
Can’t blame them for being a bit cautious, but there must be some equalizer eventually. The enforcement of sales tax for all Internet transactions will help them.
Greg
Well based on Buy It Now prices listed on Ebay I would say some sellers are content sitting on this stuff waiting for collective insanity to strike the buying public or until hell freezes over - whichever comes first, I wouldn’t touch some of the prices they are asking for with an 11-foot cattle prod !!!
Victor Smith said:That always makes me mad when I see all that "But it Now" stuff. It isnt any different than a store. I thought ebay was an online auction site.
Well based on Buy It Now prices listed on Ebay I would say some sellers are content sitting on this stuff waiting for collective insanity to strike the buying public or until hell freezes over - whichever comes first, I wouldn't touch some of the prices they are asking for with an 11-foot cattle prod !!!
As for volume pricing. I sell the products in my business at discounted prices. I work on volume, but let me tell you, you have to work harder to keep everything in line. Since your profit margins are tight, you have to have your business running like a well oiled machine. Any mistakes cost dearly. I also work in a much higher potential volume business. Large scale just doesnt have the potential high volume business atmosphere. There are a few out there (Trainworld) and they pretty much take up all the potential.
With that said, it doesn’t mean that a small time guy cant do it, but like I said it is a lot of work. Work that some are not willing to do.
Well I priced some styrene strips (in the packet) here the other day and they wanted $9.99 a packet. That was enough to turn me away and look online.
I found that stock on LS is very low. Anything that i would want is out of stock. Look at St Aubins. Everything I click on says out of stock. Kind of hard to have discounts when they dont even have much in stock. I have a water Garden place down the road from me. The owner wants to get into LS trains. He wants to sell and build layouts. He put in a order to Aristo to get started (He will be a dealer for them) Everything he wanted they were out of stock. Most of the track, starter sets and even the lower priced engines ect… The best part is they dont know when some of the stuff will be back in stock. I thought it was bad that you have someone trying to get into the hobby and sell it and he cant even get anything to stock or build in his showroom and outside water gardens. This is just one example of why nothing is getting discounted because there is no over stock to discount.
Years ago, before I even had a GRR, I looked into becoming an Aristocraft dealer.
At the time, Aristo insisted on a brick & mortar store. Strike 1.
Strike 2 & 3…they had a $40,000 minimum first order.
A big part of the reason the LHS prices are so high, they’re buying through a jobber, such as Walthers.
Ralph
Agreed with your last point Ralph. The 2 LHS near me both buy through Walters. You’d think that they would buy direct. And even alot of the large scale stuff goes from Aristo, Bachmann, USAT and others through Canada G Scale before hitting the LHS. IMHO too many middlemen.
Ralph, hit the nail on the head.
The LHS does not have the same volumn pricing that some one like “Train World” has, and you really can’t expect the LHS dealer
to consistly sell to you for less than he is paying for the item.
Some of the “on line” sellers have absolutly no overhead as they
stock, if they stock, items in their homes. no rent to pay on a warehouse or store, no emplyees and all the associated bookwork and expense. Most are just drop shippers all they do is make a phone call
and your order is on it’s way. The only work involved for the “seller” is to collect your money and pay his supplier.
There is no way in Hell that the LHS is going to survive trying to sell model railroading materials only. In fact in most cases they are a real drag on the rest of the business and they make their money on model planes, RC cars or other things.
Scratch building supplies are the same story, the LHS probably has to pay the same price or higher that you pay to an on line source.
I Think that in a very short time you are not going to see “model or scale” railroading equipment or supplies available anywhere but at a few, very limited, on line sources. And that my friends is a damn shame. Just try going to your good ol’ on line source on a Saturday morning, grabbing a cup of coffee and shooting the breeze with several fellow hobbiest about trains, sex, rolling stock, sex, scratch building projects, and sex.
Just my opinion.
Rick
Sad to see the local shops wither away, but on the other hand times have changed. It’s a different world now and there’s no going back. Local shops can’t stock but a small fraction of the available products, and can’t compete with the online business model. Especially when the economy is in the toilet, you’d have to be nuts to make any significant purchases at a local shop.
IMHO the main strength of the local shops is convenience. Even the most highly organized modelers who keep a large inventory of supplies on hand, will always find occasions when they need something “right now!” to finish a project. For the vastly less organized guys like me, that’s a frequent occurrence.
So I try to buy as much “small bits” as I can at the local shop, even when I don’t need it right now.
I wonder though what the fallout will be from the loss of both local hobby shops, and bookstores? These are the only places where the uninitiated can pick up a hobby magazine and get hooked. Losing these sources of new recruits could decimate the hobby magazine business, which in turn will impact the growth of hobbies.
I think the result will be what we are doing here. Most younger people usethe internet extensively. As for brick and morter hobby shops, I dont think they will go away permanently. But to survive, they will have to adapt. There is still nothing better than great customer service. Internet can not provide that.
One thing to consider is that mfrs today are using a different business model compared to even just a few years ago. Instead of producing 10,000 items that could be sold for as low as $200, now they will only make 2,000 total items and charge $1000 for them and too hell with any discounts. They will rely that your desire to have the item will outweigh the added cost resulting from a smaller production run.
And as many people here are saying… to hell with them for that attitude.
I’m going through the net looking for the old LGB centerflows when I can get a good price. I find them superior (in duribility) to the USA variant, and alot cheaper per unit.
Victor Smith said:Very true - The CEO of the fortune 500 company I worked for till retirement was widely quoted from an interview with a trade publication where he said (this is paraphrased) "I'd rather run a 500 million dollar company with a 50% margin than a billion dollar company with a 25% margin". I can't speak to the economic wisdom of that statement but I do know that it equates to the loss of about 10,000 good paying jobs.
One thing to consider is that mfrs today are using a different business model compared to even just a few years ago. Instead of producing 10,000 items that could be sold for as low as $200, now they will only make 2,000 total items and charge $1000 for them and too hell with any discounts. They will rely that your desire to have the item will outweigh the added cost resulting from a smaller production run.
I don’t think it takes an economic expert to see we have a problem with confidence in our economy and that reflects all the way down to the local hobby shop. Believe me, it certainly is reflecting in the local marina. People are cutting back on discretionary spending. I saw a report the other day that most people have $1000.00 less to spend on all things, since this same time last year. Paying a little more at the local hobby shop to help keep it open and for convienience or maybe just going without an item are decisions that everyone is making. There has to be a drastic change for all this to turn around and right now I don’t see it.
Warren Buffet offered this solution, I don’t always agree with his politics, but I think this has merit -
Warren Buffett, in a recent interview with CNBC, offers one of the best quotes about the debt ceiling:
“I could end the deficit in 5 minutes,” he told CNBC. "You just pass a law that says that anytime there is a deficit of more than 3% of GDP, all sitting members of Congress are ineligible for re-election.
The 26th amendment (granting the right to vote for 18 year-olds) took only 3 months & 8 days to be ratified! Why? Simple! The people demanded it. That was in 1971… before computers, e-mail, cell phones, etc. Of the 27 amendments to the Constitution, seven (7) took 1 year or less to become the law of the land…all because of public pressure.
Warren Buffet is asking each addressee to forward this email to a minimum of twenty people on their address list; in turn ask each of those to do likewise. In three days, most people in The United States of America will have the message. This is one idea that really should be passed around.
Congressional Reform Act of 2011
No Tenure / No Pension. A Congressman collects a salary while in office and receives no pay when they are out of office.
Congress (past, present & future) participates in Social Security. All funds in the Congressional retirement fund move to the Social Security system immediately. All future funds flow into the Social Security system, and Congress participates with the American people. It may not be used for any other purpose.
Congress can purchase their own retirement plan, just as all Americans do.
Congress will no longer vote themselves a pay raise. Congressional pay will rise by the lower of CPI or 3%.
Congress loses their current health care system and participates in the same health care system as the American people.
Congress must equally abide by all laws they impose on the American people.
All contracts with past and present Congressmen are void effective 1/1/12. The American people did not make this contract with Congressmen. Congressmen made all these contracts for themselves. Serving in Congress is an honor, not a career. The Founding Fathers envisioned citizen legislators, so ours should serve their term(s), then go home and back to work. If each person contacts a minimum of twenty people then it will only take three days for most people (in the U.S.) to receive the message. Maybe it is time.
THIS IS HOW YOU FIX CONGRESS
and maybe this is how you turn this free fall around.
There are no “sales” because many of the LHS’s have failed to see the future. The “Mom and Pop” LHS is dead because “Mom and Pop” didn’t adapt.
There are two R/C stores in my area that do TREMENDOUS business because their “Brick and Mortar” is a window into their warehouse. Both are very active in internet sales and use their storefront as a way to increase sales and have a physical store in order to be a direct dealer for the manufacturer. Their primary source of sales is internet transactions…And get this, store prices MATCH internet prices! One of these stores was started by a “kid” in his twenties. He works “hard” but you wouldn’t know it…Always smiling.
I am also lucky to have a local large scale train store within a 15 minute drive. Primary source of sales…Internet. Same prices in the store. I can look on line and see exactly what he has on the shelf before making the drive. Another LHS is well over an hour away, no internet presence. Old stock “selling” at absurd prices with little selection.
While the economy is a factor, clearly those LHS’s that “get it” can survive and even thrive.
Ric thats the most logical document I have read in ages, which is why it is doomed to never succeed. I have a Dilbert comic at my desk where Dilbert is offering the following words of wisdom, “As you gain experience, you’ll realize that all logical questions are considered insubordination”
By the way, Warren Buffet is properly credited with the first paragraph…“I could end the deficit in 5 minutes…”. The rest has been added by multiple “revisions” none of which are from Mr. Buffet. Wether we agree with it or not, he did not start this latest “chain mail”.
“The problem with quotes on the internet is you can never tell if they are genuine”
Abraham Lincoln April 1st, 1865
