As I understand their policy at Lionel, to be a "factory direct dealer" and get the stuff shipped straight to you rather than thru a wholesaler, you need to order more than $75,000 annually.
That figure may not be up-to-date as I got it several years ago. Anyway, you need to order a lot from Lionel or else buy it from a wholesaler. If you get it straight from Lionel, you get it for like 30 or 40% below MSRP and so have some leeway in pricing the merchandise to sell. But if you have to get it from a wholesaler and pay, say 80% or more of MSRP, you don't have any leeway at all or you won't make a profit. Most LHS need to make a profit of 20% or so to cover their expenses and make a small profit. Toy trains are not a high margin business, believe me!
LHS are truly caught between a rock and a hard place on a lot of new product orders.
But if you have to get it from a wholesaler and pay, say 80% or more of MSRP, you don't have any leeway at all or you won't make a profit. Most LHS need to make a profit of 20% or so to cover their expenses and make a small profit. Toy trains are not a high margin business, believe me!
Standard discount price from a wholesaler is 60% of MSRP. The problem for the small hobby shop is right in the ads of yer trade magazines. Check the starter sets against the catalog and you'll see the big mail order houses selling retail a few bucks below what the hobby shop can buy for. That's why you'll find posts on these forums that so-and-so is a crook and I won't buy there anymore. A profit of 20% wouldn't come close to keeping you in business as a local Hobby Shop and this is why they're either closing or carrying items other than trains.
E-bay and mail order are taking their toll on this hobby for sure but it's the nutty distribution system that's been strangling the hobby for years. Without exposure in the corner store most people don't know these trains exist. The Hobby is in a death spiral.. Some call it a funnel but it's too small to advertise mainstream and it's limiting its exposure by other means.
To all,
Getting back to the original topic, I have heard both good and bad concerning MTH. I love their Tinplate Tradition stuff because they are basically the only game in town for ready to run standard gauge. As far as the O-gauge stuff is concerned, I do not have any of their equipment.
Keep on training,
Mike C. from Indiana
Warburton wrote: As I understand their policy at Lionel, to be a "factory direct dealer" and get the stuff shipped straight to you rather than thru a wholesaler, you need to order more than $75,000 annually. That figure may not be up-to-date as I got it several years ago. Anyway, you need to order a lot from Lionel or else buy it from a wholesaler. If you get it straight from Lionel, you get it for like 30 or 40% below MSRP and so have some leeway in pricing the merchandise to sell. But if you have to get it from a wholesaler and pay, say 80% or more of MSRP, you don't have any leeway at all or you won't make a profit. Most LHS need to make a profit of 20% or so to cover their expenses and make a small profit. Toy trains are not a high margin business, believe me!LHS are truly caught between a rock and a hard place on a lot of new product orders.
Maybe toy trains need the exposure of a larger than Target company to generate interest
Warburton wrote:I think over the next 5 to 10 years, LHS are an endangered species.
I think over the next 5 to 10 years, LHS are an endangered species.
And it does not stop there. Your local hardware store, your local florist, your local economics.
What the manufactures can not see is there future. When the few guys left selling there product, start dictating to them.
Rod L.
It's been my experience that no two companies have the same concept of scale in mind, especially when it comes to O27 toy trains. I can mix Lionel traditional freight cars with Industrial Rail, and the only difference is that Industrial Rail stock is heavier. On the other hand, both MTH and K-Line freight cars tend to run about 10% larger than Lionel. The equipment runs just fine, but the difference in size does look a bit odd when you're mixing cars from different manufacturers. Luckily all of my passenger cars are Rail King, so I just use my MTH and K-Line boxcars as head-end cars.
The two hobby shops I frequent carry an equal amount of Lionel and MTH stock. And while most of the salesmen tend to favor Lionel, the only negative comments I've heard are about K-Line's couplers. I've had to replace all the trucks and couplers on my K-Line equipment.
If a dealer is consistently bad mouthing one of the manufacturers, ask them why. If their reasons are reasonable, you know what their concerns/issues are. If their reasons don't make sense or they can't/won't tell you why they are saying what they are saying, maybe it's time to move on. A lot of dealers have "issues" and you might be supprised about the number of beefs that are more than personality clashes or personal biases (aka there are legitimate problems with the relationship).
Lionel's catalog msrp's are generally higher than MTH's because the distribution network is completely different. Not better/not worse, just different. Vendors may specify minimum purchase quantities or dictate other "terms" that may make direct sales almost impossible for smaller or lower volume shops.
Re resale of "used" items. You may want to see if the local dealer will sell on contingency and take a small fee for the transaction. If he has to buy your item and turn around and sell it, he has to buy it for less than he intends to resell it or he won't make any money. This doesn'r mean he's trying to gouge you, it's just business.
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