Pre-ordering

[Anonymous]

The thread "What do you think the mark-up is?" tangentially raised some important questions for me (a newbie). When I see rolling stock I want in a Lionel Cat. at $59 that's due for release in August and an internet dealer is listing it as Early Buy for $45 what does this ultimately mean: 1) is this discounted early price really going to disappear when the car hits the shelves? 2) is it sometimes the case (as suggested in the above thread) that there is sometimes a shortage of cars such that preordering is a good idea if you really want a particular car? 3) is it customary that you pay total price at time of ordering? I realize that there may be no "pat" answers--I'm just asking what generally happens! As usual, my gratitude for this site and all you "been there, done that" folk who share with us newbies.

[mpzpw3]

I can only give you one experience that I have had. I wanted the Santa Fe postwar celebration reefer from Lionel. My local hobby shop said I could order it at the full retail price, to assure that I would get one. I recently ordered the same car mail order for $14.00 less than the early buy. I wish I could use my local dealer more often, but the numbers add up quickly. At any rate, some items sell out during the "early buy", usually specialty cars and engines. In my opinion, most cars and accessories are available at almost any time throughout the year at discounted prices. For the best prices, look at the ads in Classic Toy Trains and other publications, and remember to look at their websites for items not listed in the ads. Go to your local dealer, and when out of town, look at other local dealers, for the most part, the smaller retailer will have the product you are looking for, even if they are a few years old. Some give discounts, some don't. In today's market place, unfortunataly, the big mail order houses are your best source for either pre-ordering, or old stock.

[brianel027]

To add to what mpzpw said... the early buy offers help the dealer in that he knows a certain number of a product will be paid for. Let's say it's a semi-scale reefer and the dealer could order 3, 6 or 12. Obviously he gets a slightly better price on 12, but will he sell them?? If he gets customers to guarantee 7 sold with the early buy, it's worth it for the dealer to get 12. Or let's say it's an itme like the $25 Lionel starter cars. The dealer knows he'll sell them all over the course of the year. But if customers take an early buy, it guarantees the dealer some immediate return on his inventory investment.

Some products if they are highly anticipated may get alloted to dealers... that is quantities that any dealer can order will be limited. But business is business. On most items, it is the bigger mail order places that take the bulk of product, so they get the best prices.

As mpzpw alluded to, most product made is readily available. It's not in the mfgers. interest to not make enough of something - leaving frustrated customers. But it's not good to over produce either.

The thing that has hurt pre-orders (in addition to what mpzpw said about prices) is when the item doesn't look as it was shown in the catalog. Remember, newly introduced items are usually shown as conceptual drawings or production mock-ups or pre-samples. Folks get miffed when the expensive steam engine they ordered looks dramatically different from the catalog. It's always a pleasant surprise when the item looks better than the catalog... I have Railking items that certainly look better than the catalog. BUT it's frustrating when it's the other way around.

Seems the trend is going to smaller production runs. Something that is received well and sells can be made again. It's not always easy for the various companies to anticipate what will be a big hit or not. K-Line has struck it lucky a few times: with their scale sized passenger cars in the early 1990's, later with the die-cast spine cars and then with the die-cast hoppers. Notice how everyone came out with die-cast cars after K-Line's success.

Lionel seems to have done well with their new series of detailed cars with the new coupler design... the Milk Cars seem to be selling well. On the other hand, I'm sure big things were anticipated for Lionel's Railscope when first introduced in 1989. With lukewarm sales, plans for the second loco were scrapped.

The best rule is if YOU really want something and it's a must have for you, preorder it.... you know you'll have it. Most normal cataloged items will be available... that's the idea of them being in the catalog. The catalog is still the wish book and is the best advertisement the companies have.
It may not happen as much, but it can happen... something you want but decide you'll wait on it (or think you'll wait for the blowout price) - and then it's gone. And even with all the trains being made, there are ones (made recently) that sold out and so far don't show up on ebay too frequently. But part of the fun is the hunt.

[Roger Bielen]

I've found that with preordering my local dealer discounts the item as good as the dealers in the mags. The sales tax vs. shipping usually favors the tax. He knows the item is sold, doesn't have to tieup money in inventory, and may get a better quantity discount. The local dealer is a Lionel direct distributor and probably gets a good price to start with.

Additionally, dealing locally builds a relationship with the dealer. There've been occasions when I've needed a small part or repair that I received gratis.

[Anonymous]

And of course, the new Lionel Acela (page 30-31 in the 2004 VOL. 1 catalog) HAS to be pre-ordered to get it built, so this is something that will not go away.

[Big_Boy_4005]

Well, let me continue my explanation from the other topic.

Like I said before, I used to work in a hobby store, but it was many years ago. Things may have changed, but probably not too much, especially wehn it comes to early buy.

Back in the early 80's, when I was doing this for a living, Lionel had two levels of marketing, distributors, and dealers.

Distributors bought directly from the factory, they got the trains at the best price. Each distributor could sell to as many dealers as they wanted to handle. The requirement for dealers was that they be an authorized service station, and have a qualified repair person and an inventory of parts.

A distributor could also be a dealer, which was the case for the store that I worked at.

Each catalog came with an order form, telling the distributor HIS cost per piece, and the number of pieces in a case. Engines were packed 3 to a case, cars 12 to a case, etc...and WHEN the order was due into the factory.

My boss would copy the sheet, saving the original for the factory, and his final order. He would then white out the prices, and type in the prices he was charging the dealers, and send that list to them. His markup was something like 5 or 10%, I forget. Then he made a second list, with different prices, slightly higher than the than the dealer's list. This was the early buy list, and was mailed out to a long list of customers.

Both lists had due dates earlier than than the factory due date so that we could compile the orders, and combine them with our own order for the store. The dealers weren't bound to the case lots like my boss was, and we used the store's order to fill and balance the cases. Remember, we didn't have computers back then, hardware was expensive and software was worse.

The payment terms from the factory were also on the master order sheet. The factory wanted a certain amount of money with the order, and the balance within 30 days of delivery, or something like that. That part had nothing to do with me.

Each dealer could set what ever terms they wanted wtih their own customers, some wanted all up front, but most wanted to cover what they needed to give my boss to place the order, plus their markup, with the rest due on delivery.

My boss wasn't much different, except that if someone placed an order and later didn't follow through, if they ever wanted to place another order, it was all up front.

There are two twists to this whole story, one was that some items were limited. This meant that no matter how many orders there were, we couldn't get more than that number, period. That made for a real juggling act, and on occasion got a little ugly.

Speaking of ugly, then there was the issue of pricing. The Problem was that my boss could undersell his dealers, I'm sure you can imagine what they thought of that .

This problem was probably at least part of the reason that Lionel has gone back to putting prices in the catalogs, after many years of not listing them at all.

[brianel027]

Very good explanation Big_Boy. It's been a few years since I was involved in the biz, but when I was, the dealer wholesale was approximately 28% off list. Plus the small dealer always pays freight and shipping. If you were a small dealer with good cash flow, you could pay for product upfront and get a slightly better price versus the 30, 60 or 90 day payment due prices.

Obviously business is business. Retailing has changed, and low prices are what attract the customers. I love those Wal-Mart commercials where they show the happy employees talking about how important the workers and good service are. Non-sense. People shop Wal-Mart for low prices. The sales associates smile just as much at K-Mart. People don't shop for smiles, they shop for low prices.

The train business is a little different in that people, especially newcomers, are going to need help, advice and assistance. We older seasoned train guys have fond memories of seeing display layouts and watching the trains run... this SELLS trains, especially to kids. You won't get the help and advice from an 800 number, though you do get the best price. This works to the advantage of knowledgeable train buyers, and to the disadvantage of the newcomer.

We've all read gripes about grouchy local dealers. I don't approve, but I sure do understand. It's hard to stock product and have customers come into your shop only to see the product and then mailorder from somewhere else. Believe it or not, I've actaully witnessed folks telling a small dealer that they ordered the product he has on his shelf from somewhere else because of price. They then wonder why that dealer doesn't want to provide service or answer anymore questions. Selling trains is a tough business these days. Not only because train buyers are more savy price-wise, but also because of pricing and the vast amount of product being made. As I've said before, you wouldn't see the blowout prices from select venues if the stuff was selling well in the first place.

I will also say that I think it was the very attractive wholesale prices that helped lead to the initial success of the Industrial Rail product. Sure it was nice product and traditionally sized, but what if the prices had been the same as Lionel's? My dealer loved the IR product... his wholsale was low so inturn his shop prices were good - which meant the product sold! He used to wonder out loud with me why the others couldn't offer dealers the same attractive wholesale prices? He'd stock a few Lionel items knowing full well the high prices would help sell other product like better made, lower priced Industrial Rail.

[Big_Boy_4005]

Yeah Brian, that was one of the big problems back then, there was no list price given,
not in the catalog and not on the order form. My boss just worked from a basic formula, since he had been doing it for so long. 28% sounds a little low for the distributor, but it does sound close for what he charged his dealers.

I wrote a post over on the MR forum about local hobby stores yesterday, and it had some of the same thoughts as you did here. The topic was about product reviews, if anyone wants to check it out. It was about MR, but I mentioned CTT as being very similar.

[Anonymous]

Thanks for all the excellent information. Roger, I agree that it's a good idea to develop a relationship with a local dealer (although closest to me is 30 mi.) Generally, I don't mind paying 5-10% more in order to keep business local so long as the local merchant gives me some sort of "added value." More and more though, I find I'm better treated by internet businesses than by locals. Regardless, next time I'm in a neighboring town with a Train Store, I'll check it out. Thanks again to eveyone!