I remember some years ago when Horizon Hobby bought out Athearn. It was a huge topic on these forums of how, why and what happened. The end result was that Walthers coiuld never sell Athearn products again. With that said, I was searching the web the other day looking for a particular Athearn locomotive and ran across numerous sellers. Then i got thinking, why is it that Walthers appears the only hobby store on earth than CANNOT sell Athearn products? Is there a law that bans certain manufactures from selling their products to certain distributors?
No law so far as I know. But Walthers is a distributer and Horizon Hobbies acts as the distributer for Athearn (and Roundhouse as well). I suppose the hobby store part of Walthers in Wisconsin could carry Athearn just like any other hobby store, but the economics of it precludes them from being a distributer for Athearn. And since they make more off their own distribution products, I would suspect that's all they carry in their own store.
Paul
It's quite easily explained. Walthers and Horizon are competitors as wholesale distributors and "manufacturers". It's generally considered bad form in the wide world of business to sell your competitor's products.
Try buying brand new Ford Focus from a Chevy dealer some time, if only for the entertainment value of the coffee spraying out the salesman's nose.
Andre
Oh, Contrare,
Here in our City we have Capital Buick GMC and Capital Ford right beside them and they have the same owner... one stop for either makes.
Johnboy out.
from Saskatchewan, in the Great White North..
We have met the enemy, and he is us............ (Pogo)
last mountain & eastern hogger Oh, Contrare, Here in our City we have Capital Buick GMC and Capital Ford right beside them and they have the same owner... one stop for either makes. Johnboy out.
We have the same situation here in southern Ontario, where one company has dealerships for 22 different brands, many located adjacent to one another.
Bowser, which has its own product lines of rolling stock and locomotives, also offer the same from many different manufacturers/distributors, including Horizon and Walthers.
Wayne
First, the car business is not the best comparison since one person can own multiple dealerships. BUT, FORD would pull your dealership in a minute if you used your FORD building and infrastructure to sell a CHEVY from your other dealership next door.....
Sometimes car manufacurers do allow "combined" dealerships with other manufacturers, but that requires special conditions. Generally each manufacturer "group" (FORD/LINCOLN), (DODGE/CHYSLER/RAM/JEEP), will have its own buildings/shop/etc, even at the "mega dealership".
Second, Horizon "chooses" to be the sole distributor for all their products. Yes Walthers could buy Athearn from Horizon for their retail store just like any other retail operation does. But since they are also a manufacturer/distributor they simply choose to promote their own products, or other products they can purchase as a wholesaler.
But there is a history here, which makes the two companies not really interested in doing business with each other.
Back in the day, before Horizon owned Athearn, when Athearn was without question the largest supplier of HO plastic freight car kits, and Walthers was likely the largest distributor, all was well between them - until - Walthers bought Trains Miniature and went into the plastic freight car business themselves.
From that day on, long before the internet, Athearn products received less and less "page space" and quality of "promotion" in the Walthers catalog while Walthers own line of freight cars got fancy color layouts in the front of the catalog.
As someone who managed a hobby shop train department at the time, I can tell you all our regional distributors had more Athearn in stock then Walthers did.......
This went on for years, the two big boys in a sort of cold war the customers did not know about.
Athearn had some distribution polices back then that did not help the situation. They willingly sold to anyone with a sales tax licence and a check book who could meet the minimum order requirements.
Walthers felt they should not spend catalog space and money promoting a product easliy sold at big discounts by "basement" dealers when they are trying to sell it as a wholesale supplier to small shops....or at full retail to their mail order/walk in retail customers, especially since they had their own freight cars to sell.
The Athearn family wanted out, Horizon came in, and fixed all these problems with one simple choice - SINGLE POINT DISTRIBUTION.
Learn that term, it is the future of sales and manufacturing, in this hobby and in many other businesses.
In stead of some big dealers (basement, mail order or brick and mortar) buying Athearn as a wholesaler and discounting it heavily, while other smaller dealers have to pay 20% more from distributors like Walthers, Horizion sells direct to all Athearn retailers with only small price differences between the largest and smallest customers.
This means a more level playing field for dealers and more stable pricing for customers.
Contrary to the thinking at the time, this saved Athearn, as did a series of other changes to keep up with a changing hobby......
Today, Walthers plays both ends against the middle. They are a distributor at one price level to small shops, a manufacturer selling at the lowest price level to big retailers like Trainworld or ModelTrainStuff, and a retail/mailorder/internet store charging full retail.
Bowser has also long been all three, manufacturer, distributor and retailer - but with a little more integrity than Walthers in my view......
I'm not sure, as the number of distributors has declined to nearly zero, but I suspect Bowser no longer sells to other distributors for resale to small retailers, they are willing to sell to those retailers directly - no need for that middle man.
And so, Horizon is Athearn's only "middleman", and their owner......smart plan in my view.
Sheldon
I cannot say if Bowser has stopped selling to distributors. I think they still do. They are a distributor for less product lines than they once were. I have them trying to see if Horizon still has a particular early version challenger for December...
willy6 I remember some years ago when Horizon Hobby bought out Athearn. It was a huge topic on these forums of how, why and what happened. The end result was that Walthers coiuld never sell Athearn products again. With that said, I was searching the web the other day looking for a particular Athearn locomotive and ran across numerous sellers. Then i got thinking, why is it that Walthers appears the only hobby store on earth than CANNOT sell Athearn products? Is there a law that bans certain manufactures from selling their products to certain distributors?
So Willy, would you pay full retail for Athearn just to be able to buy it from Walthers? Your local dealer can buy Athearn from Horizon and likely sells it at some sort of discount. Walthers would charge him more and he would not be able to discount it.
Forget anything you ever learned about volume pricing - very little of it applies to this business. There is a bottom price no matter how much you buy. And there is a "necessary" markup to make a profit - this is not Walmart.
There is no financial advantage for Horizon to sell Athearn to Walthers and no advantage for Walthers to sell it. Especially not in the internet/information age.
PRR8259 I cannot say if Bowser has stopped selling to distributors. I think they still do. They are a distributor for less product lines than they once were. I have them trying to see if Horizon still has a particular early version challenger for December...
John, I'm sure they would, but I suspect that there is simply no need. What shop would not simply do business with Bowser directly - I know they are willing to sell to even the smallest ligit shops.
And, distributors who are not also manufacturers are nearly a dead issue......
Who is still a distributor in this business? Horizon, Walthers, Bowser, ConCor.......
I know there are still a few others, but let's face it, its dieing faster than the retail shops.
One more example to make sure people understrand:
Trainworld sells all brands at low prices.
Walthers is a manufacturer, distributor and a list price retailer.
Walthers sells Bachmann both retail and as a wholesaler.
Trainworld buys Walthers brand products from Walthers at "wholesale" price levels.
Trainworld and Walthers both buy Bachmann products from Bachmann at same "wholesale" price level.
So Walthers sells Bachmann to small dealers at higher "dealer" price levels.
So Trainworld would never buy Bachmann products from Walthers when they can get them cheaper direct from Bachmann. Walthers would charge Trainworld about the same price Trainworld is selling those Bachmann products for.
PRR8259I cannot say if Bowser has stopped selling to distributors. I think they still do.
Yes, Bowser still sells to at least one distributor.
Atlas I believe still sells direct. Friend of mine whose retirement job is selling trains, mostly at train shows, has pretty much only Atlas now, since you have to be a brick and mortar store to buy from Walthers and many of the others.
--Randy
Modeling the Reading Railroad in the 1950's
Visit my web site at www.readingeastpenn.com for construction updates, DCC Info, and more.
Sheldon--
There are according to my sales manager friend, about "6 or 7" big national distributors remaining, that so far as I know are not also manufacturers. Their computers are real time linked to the inventory of at least 4, plus Horizon, but they only see in stock items, not available reservations or pre-orders.
So to get me a challenger, they have to call for availability if not fully reserved...If fully reserved, I would have to go elsewhere.
John
So what? Dealerships are franchises. There's nothing to stop a franchisee from owning multiple franchises from multiple companies. In any case, you can't buy a Ford from Capital Buick nor a Buick from Capital Ford, which is precisely the point.They may have the same owner, but they're separate entities.
PRR8259 Sheldon-- There are according to my sales manager friend, about "6 or 7" big national distributors remaining, that so far as I know are not also manufacturers. Their computers are real time linked to the inventory of at least 4, plus Horizon, but they only see in stock items, not available reservations or pre-orders. So to get me a challenger, they have to call for availability if not fully reserved...If fully reserved, I would have to go elsewhere. John
My point exactly, there use to be 5-6 regional ones just here in the Mid Atlantic, and similar numbers in other major market regions.
Hi Sheldon--
I was not trying to refute anything...only post what I know to be true.
After others have gone the direct sales only approach, my friends at least briefly for a minute or two considered it, but so far have thought better of their relationship with their network, to not do that. Probably will not happen until some market forces would force that to occur. They believe in supporting the lhs not destroying...they said every lhs you lose, we lose future hobbyists in a 50 mile radius and nobody wants that.
As I recall, we couldn't even buy Athearn products through Walthers before Horizon bought Athearn. It would probably be less expensive for the LHS business if they only had to deal with 1 distributor, not 2, as each probably requres some sort of minimum monthly business.
It takes an iron man to play with a toy iron horse.
MisterBeasley As I recall, we couldn't even buy Athearn products through Walthers before Horizon bought Athearn. It would probably be less expensive for the LHS business if they only had to deal with 1 distributor, not 2, as each probably requres some sort of minimum monthly business.
The hobby shop I worked at had 6 or 7 distributors including Walthers. Our biggest supplier was Cleveland Hobby Supply (now out of business) who had the best stock of Athearn cars and locomotives. But we bought from all of them along with buying from the manufacturers themselves for example Champ Decals, Karline Cars and Trucks, etc.
Rick Jesionowski
Rule 1: This is my railroad.
Rule 2: I make the rules.
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Very briefly after the Athearn/Horizon "dee-vorse" from Walthers, I recall that Athearn did supply specially painted F units for one of the then-new Walthers named trains. Then of course Walthers developed its own F units as part of its Proto/Life-Like acquisition and the separation was final and complete. My understanding is that is entirely Horizon's decision, not Walthers's. I'd be surprised to learn there are legal or anti-trust reasons why Walthers could not distribute Athearn if Horizon was willing.
And my recollection -- supported by the Walthers catalogs in my collection -- is that as long as they handled Athearn, Walthers gave them ample space in the catalog including to the extensive line of Athearn parts. I do and did a great deal of my regular LHS shopping at the Walthers showroom and I never had problems buying Athearn parts there. It did become a problem after the divorce because few hobby shops cared or care now to stock Athearn parts (or anyone else's).
What I do recall was that originally the Walthers catalogs were pretty much purely alphabetical so that "A" (AHM, Athearn, and so on) came before "W" but eventually Walthers put their own stuff first under each topic be it locomotives, freight cars, structures, track, whatever. So Athearn was perhaps less prominent than before, but I do not recall that Athearn stuff was left out of the Walthers catalog as a consequence.
Dave Nelson
andrechapelonIn any case, you can't buy a Ford from Capital Buick nor a Buick from Capital Ford, which is precisely the point.
I bought a used Chevy Impala from a Ford dealer so one could buy a used Buick from Capital Ford or a used Ford from Capital Buick.
Larry
Conductor.
Summerset Ry.
"Stay Alert, Don't get hurt Safety First!"
BRAKIE andrechapelon In any case, you can't buy a Ford from Capital Buick nor a Buick from Capital Ford, which is precisely the point. I bought a used Chevy Impala from a Ford dealer so one could buy a used Buick from Capital Ford or a used Ford from Capital Buick.
andrechapelon
In any case, you can't buy a Ford from Capital Buick nor a Buick from Capital Ford, which is precisely the point.
dknelson Very briefly after the Athearn/Horizon "dee-vorse" from Walthers, I recall that Athearn did supply specially painted F units for one of the then-new Walthers named trains. Then of course Walthers developed its own F units as part of its Proto/Life-Like acquisition and the separation was final and complete. My understanding is that is entirely Horizon's decision, not Walthers's. I'd be surprised to learn there are legal or anti-trust reasons why Walthers could not distribute Athearn if Horizon was willing. And my recollection -- supported by the Walthers catalogs in my collection -- is that as long as they handled Athearn, Walthers gave them ample space in the catalog including to the extensive line of Athearn parts. I do and did a great deal of my regular LHS shopping at the Walthers showroom and I never had problems buying Athearn parts there. It did become a problem after the divorce because few hobby shops cared or care now to stock Athearn parts (or anyone else's). What I do recall was that originally the Walthers catalogs were pretty much purely alphabetical so that "A" (AHM, Athearn, and so on) came before "W" but eventually Walthers put their own stuff first under each topic be it locomotives, freight cars, structures, track, whatever. So Athearn was perhaps less prominent than before, but I do not recall that Athearn stuff was left out of the Walthers catalog as a consequence. Dave Nelson
Dave, Athearn was not left out of the catalog, but the listings became a long list of item numbers/road names with one tiny, fuzzy black and white picture of each car type, while the Wathers cars had big color spreads....I still have many of those catalogs, this is not just "from memory".....
Athearn provided those Genesis F units because that deal had been made, they honored it.
There is no advantage for Horizon to sell to Walthers at distributor levels, they are doing just fine with single point dustribution. And if Walthers wanted to pay the same the same price as any other dealer to sell Athearn to retail customers, I'm sure Horizon would welcome their business.
But if my guess is right about Walthers, they won't pay that price level to sell something that competes directly with their own products, which they make a very good markup on when they sell them retail.
Another factoid for the Athearn/Walthers issue:
Amtrak gave/sold Walthers the exclusive rights to the Phase V paint scheme (the "blue wave" on locos). When Athearn R-T-R made P42 locos in Phase V paint, the Athearn end box label can say, in fine print, "Wm. K. Walthers, Inc. is an authorized Amtrak supplier" or, "Made exclusively for Wm. K. Walthers, Inc."
Interesting, no? At least it proves that Athearn and Walthers can still work together from time to time, even though they are competitors.
Paul3 Another factoid for the Athearn/Walthers issue: Amtrak gave/sold Walthers the exclusive rights to the Phase V paint scheme (the "blue wave" on locos). When Athearn R-T-R made P42 locos in Phase V paint, the Athearn end box label can say, in fine print, "Wm. K. Walthers, Inc. is an authorized Amtrak supplier" or, "Made exclusively for Wm. K. Walthers, Inc." Interesting, no? At least it proves that Athearn and Walthers can still work together from time to time, even though they are competitors.
I'm sure their relationship is fine at this point, they simply understand the economics of the situation. It's the customers who don't get it.
Before the web, we needed multiple channels of distribution for products, and many people still feel comfortable about that.
But all those layers of distribution raise prices. The discount prices we enjoy today are largely a result of the elimination of middle man distributors. And the dependence on distributors is why small shops cannot compete price wise with the big boys.
Probably true today, but back in the 1970's I was surprized to see a small dealorship in a small town that sold Ford, GM and Chrysler from one small lot. Two or three new cars of each brand were in stock.
I tried to sell my two cents worth, but no one would give me a plug nickel for it.
I don't have a leg to stand on.
DSchmitt Probably true today, but back in the 1970's I was surprized to see a small dealorship in a small town that sold Ford, GM and Chrysler from one small lot. Two or three new cars of each brand were in stock.
Even today, car makers have different rules about stuff like that for very "rural" areas.
Back in the day, many "big three" dealers also sold small specialty brands like CHECKER, BRICKLIN, DeLOREAN and this was allowed under their agreements.