My local hobby shop sells mostly race cars and airplanes with a couple of Lionel sets at Christmas. He is not a Lionel distributor, purchasing from a supplier. I approched him with a rather large list for a quote. He expressed interest saying that it would be a good time to bevome a distrubuter as there are none in my immediate area. Closest about 100 miles away. After many phone calls, applications, demands from Lionel for pictures of his store .... they turned him down with this comment. "You have become too much of a bother for us to consider your application."
I find Lionel's attitude strange. Any comments ?
If your were a manufacturer of quality products for over 100 years, I don't think you would want just some clown selling your items. Lionel does "background" checks on every facility it authorizes to sell it's products.
Sounds like your hobby shop is not fully committed. Why could he not get all the information they needed from him in a timely manner?
I find that your hobby shop is smart to sell many different items. IMO if they would sell just trains they would soon be out of business like many others. It seems only the larger stores are surviving !
Bob Keller
I find Lionel's attitude strange. Any comments ?"
You're assuming your dealer is giving you an unbiased version of the events, but I'm inclined to doubt it is a word for word, blow for blow description of what transpired. Lionel doesn't benefit from insulting potential dealers, but your dealer looks better in your eyes by making excuses blaming Lionel for why he isn't becoming a Lionel dealer. Perhaps he is successfully shifting blame from his own unwillingness or inability to fulfill Lionel's requirements to their alleged rudeness and intransigence? Just a thought.
There is also a HUGE difference between becomming a Lionel Authorized Value Added Dealer and a distributor. The dealer sells to the customer, but the distributor buys products in bulk and large quantities to be distributed to the various hobby retailers.
Many folks don't realize that some of the major internet/mail order retailers are also distributors. Train Express would be one of those places. Distributors receive products at around half or more off regular retail prices, whereas the normal local retailer gets around 25% off list at best, depending on how much they buy from the distributor (and how quicly they pay the distributor for their inventory), and also pays shipping.
Lionel also has a pretty detailed and in-depth application for becomming a dealer. Not only are there a lot of personal and personal financial questions, but then they consider how many other Lionel VA dealers are already in the immediate area given market demand for that area.
It is possible to sell Lionel products at a hobby shop without necessarily becoming an authorized Lionel VA dealer, but your selection will be more limited as will the availability of some products. Distributors also have their own rules and policies. There are hobby shops that sell one train brand and not another because they prefer to deal with only one distributor who offers them the widest range of other hobby products. There's a simple economic reason here: the more products the dealer buys from one distributor, the better the chances for a better wholesale cost. Then that dealer may also get bonus discounts (such as wholesale clearances and blowouts) from that distributor as a way of thanks for doing his business with that particular distributor.
Now, with all the high end products being made today with their rather hefty price tags, the limited overall market, the lack of national advertising, the small profit margins and the public demand for discount pricing (due in part to the small number of deep discount large mail order venues), is it any wonder that small hobby shops are closing doors left and right?
As Alan Miller joked rather accurately on another post on the other forum, (and I'm paraphrasing) go ahead and buy your mail order blowout $91 train set - and help put another hobby shop out of business.
brianel, Agent 027
"Praise the Lord. I may not have everything I desire, but the Lord has come through for what I need."
I don't think the dealer is telling you the whole story and is mincing words. Some may say Lionel makes it impossible to become an authorized dealer when really, they (the dealer) don't have the credentials to serve people properly. They get offended by this and tell all kinds of twisted stories.
Not sure that your local hobby shop guy is telling you all the facts!
I talked to a local hobby shop owner in Port St. Lucie FL and he said that Lionel wants him to commit to a $5000.00 minimum order and Lionel has control of what is sent; example would be that Lionel could send him five locomotives for $1000.00 each or send him one $1000.00 locomotive and some track & switches and transformers, claimed he never knew what arrived until he opened the shipment at the store.
Another thing about companies like GarGraves Track or others, there is a minimum dollar amount that the company would like the hobby shop to order, I think that GarGraves is $250.00, may have gone up.
There are many reasons why a hobby shop owner won't sell certain stuff and usually boils down to financial.
Lee F.
"he said that Lionel wants him to commit to a $5000.00 minimum order and Lionel has control of what is sent"
Another dealer with a thoroughly unbelievable story to explain why he isn't a Lionel dealer. I'd like to hear confirmation of this from someone at Lionel who knows, but I checked with a dealer I know who orders directly from Lionel and he said something not suited for a family bulletin board :).
Neil,
What I told you was straight from local hobby shop owners nearby to me. A few years ago I was offered a chance to buy a hobby shop in Stuart FL but turned it down as I didn't want to go in debt to the tune of $90,000.00, U.S. money. The 90 grand was just for his inventory. Besides the 90 grand I would have to pay rent & utilities for the building I was going to occupy, about $600.00 a month, to me not such a great deal looking back on it as the hobby shop owner went out of business in about three years. Also need to add in insurance.
phillyreading wrote: I talked to a local hobby shop owner in Port St. Lucie FL and he said that Lionel wants him to commit to a $5000.00 minimum order and Lionel has control of what is sent; example would be that Lionel could send him five locomotives for $1000.00 each or send him one $1000.00 locomotive and some track & switches and transformers, claimed he never knew what arrived until he opened the shipment at the store.Lee F.
If the above policies are true, a cynic might see a disturbing pattern here.
1) Adopt an arrogant attitude toward current dealers by depriving them of the flexibility to order only the merchandise they think they can sell.
2) Set the bar very high to become a new dealer.
3) Bankruptcy.
And of course, stage 3 will have the effect of reinforcing stage 2, because signing up too many new dealers while in the midst of bankruptcy proceedings only serves to undercut the company's credibility.
"What I told you was straight from local hobby shop owners nearby to me."
My disbelief was more about the part where Lionel decides what you get for your $5,000 minimum order than the obvious expenses of doing business. I can understand a high bar for new dealerships if they are trying to encourage folks to order from distributors instead of from the factory, at least for very small dealers. Many manufacturers in the hobby business that aren't cottage industries do not sell direct to dealers. Servicing small orders is not what they are set up to do, and certainly not what Lionel wants or should be doing. But I can tell you that dealers ordering significantly more product (in the hundreds of thousands per year) do not have to accept what Lionel chooses to send, but rather tell Lionel what they want from each catalog.
What you need to do to become a authorized value added retailer is outlined on Lionel's web site.
http://www.lionel.com/Dealers/Findex.cfm
There are other/different requirements for other business relationships. A VAR does not usually buy from Lionel, he buys from a wholesaler. A wholesaler has a different relationship and would require different terms/commitments. Wholesaler's have their own terms for selling to dealers (aka LHS). This is why there is a big difference between the LHS prices and the deep discounts offered by the large mail order houses (who are authotrized direct dealers). I think there are only 20 or so direct dealers in the country.
I told the guy about it and he said Lionel dumps there poor selling products to discount stores to cut there loses.
They actually offer the stuff to dealers first. Most of them don't want the stuff because a) they can't move the stuff they already bought, b) are unwilling to discount the stuff they paid the higher price on, and c) are unwilling to buy the harder to move stuff in required quantities (usually dumped in case quantities).
They actually "dump" the stuff to whomever will buy it in quantity. Even though the products are deep discounted, who needs two gamble on multiple cases of something that may not sell.
Reading T-1 wrote:I was talking to the owner of my LHS he had some lionel HO scale models (These models were for display only) The price he was selling them at was $32.95. I had just bought one of the models at a Discount store (Ollies) for $9.95. I told the guy about it and he said Lionel dumps there poor selling products to discount stores to cut there loses. Mean while he's stuck with a product that he has to sell for a big loss to get rid of these items. Were is the loyality to there dealers?
That's funny I purchased one of these die casts from my Lionel dealer a couple years ago for about $9.95. Matter of fact he was giving some away to young kids to get them interested in the hobby. $32,95 seems a tad high.......
North of the 49th
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