Hobby Shop rage

[PB&J RR]

Ok, maybe not rage but a good dose of not to fricken happy...

I was sitting here, tying up loose ends on a business I was planning and called up Uncle Bill (Wm K. Walthers) to set up my wholesaler account and the lady informed me that I had to have a regular brick and mortar store, I couldn't wholesale with Walthers if I only planned an online E-tail store... This is disasterous, preposterous, vociferous, even rhinocerous....  Ehy its a calamity... ...ok I am done venting... anyone have any suggestions for another wholesale supplier?

 

[Don Gibson]

WALTHERS IS a distributor. Suprise!

If you don't like it, shop around for more limited lines, offering credit, and yearly contracts to meet.

WHO is looking for US disribution? Now, How much business can you guaratee?

[SpaceMouse]

Try going directly to the manufacturers.

[brochhau]

I would try Walthers again.  Last year I was considering the same thing and for an online-only business, they required a working website that accepted credit cards, and a $5000 minimum initial purchase, 40% of which had to be Walthers products.

Granted, policies always change.  If I remember right, they had a specific person for e-tailers, so try to get to that department.

Good luck,

Scott 

[modelmaker51]

I know your pain!

I've had the same problem with Walthers since I started my custom business in 1989.

1 alternative: Portman Hobby Distributors, [phone], Peeksville, NY. If they have it in stock, I would have it 3 to 4 days later.

The Plastrct website has a whole list of distributors you can try: http://www.plastruct.com/Pages/USDistributors.html

You're not going to get any great discounts for orders under $500, just the standard 40% off retail. The more you buy the larger the discount.

For Walthers products I made a deal with my LHS to pay "cost plus 10%". It's a good deal for both, his costs are covered and he gets credit for the sale, you get the product you need.

Good Luck.

 

[Railphotog]

This isn't anything new, they've had the same policy for decades.

 

 

[Doug T]

Like Bob mentioned this has been going on for a long time. You need to use your internet as a phone directory. Look up hobby distributors/wholesalers in your area and cities near you. Call these people and see if they will sell to you. Some may and some will not. Cleveland, Ohio had several (at least 3 ) distributors/wholesalers located there.

The reason you may have problems is the distributors/wholesalers are protecting the brick and mortar stores from basement operators. Brick and mortar stores have rent, utilities, mortgage payments, taxes to handle.

Basement operators sell from home, train shows and ebay. They have very little invested compared to a hobby shop owner.

[loathar]

Have your home/garage rezoned commercial.

[Doug T]

Something else to think about. You will need a state tax license to sell in Ohio. If you get caught selling without a license thay can confiscate all your merchandise, they can fine you and you still will have to appear in court.

If you sell at train shows out of your county, you need to charge the sales tax of that county. You need to keep track of all sales (location and date) and where they were made. You will have to file federal and stae income tax forms, claim all profits, expenses of your business.

You can write off all business expenses if you do train shows. Such as table cost, food, gas to get there and a motel if you are out of town. Places where you do business to buy supplies for your business have state tax exempt forms. If you have a tax exempt form on file at these businesses, they will not charge you sales tax on what you buy. But you need to show your tax number to be elgible for the tax exempt status.

I had a craft business in Ohio and in Wisconsin when I lived there. The average hobbyist who sells at a train show is a one or two time seller. He can usually get away without a license as he is not trying to generate a steady income.

[riogrande5761]

The irony is that so many of the brick and morter stores have closed or are closing because of the difficulty in making it.  The hobby dealers that do survive have to use mail order and internet sales to survive.

[bearman]

The irony is that so many of the brick and morter stores have closed or are closing because of the difficulty in making it.  The hobby dealers that do survive have to use mail order and internet sales to survive.

There's at least one bricks and mortar place in this town that is doing very well without mailorder or internet sales, and it is not a hobby store, just a train store.  It will honor Walther's sales prices and gives a 10% discount for every 100$ spent at the place.  18 months ago it tripled it's floor space, so business can't be too bad.

[jktrains]

 The internet only, eBay type sellers are what is killing the local hobby store with a physical location.  It's even more of a threat than people who are train show only vendors.  As a prior post said, the local hobby shop with a physical location has made a significant investment and put capital at risk.  They have rent, utilities etc that must be paid that you won't incur creating an unfair advantage.  Those people who continually post on this forum about how they will never pay 'retail' for anything because they can get it cheaper online are truly damaging this hobby and many hobbies in general.  As a young teen I can remember planning the 'big' trip to the hobby store when I would ride my bike to the local shop.  I spent my hard earned money on Athearn & MDC shake the box kits and other things like plastic models or model rockets and engines.  Nowadays, kids can't do that.  The brick and mortar stores are few and far between, having been slowly killed off by e-stores that don't have to pay the same fixed costs.

Personally, I congratulate Walthers for trying to hold the line.  Also consider that as an e-store your nothing but competition to them since they've started selling direct to consumers on-line.

As a group we need to continue patronize the LHS.  Do you really want to mail-order that jar of boxcar brown Floquil paint from an e-store?  You may save a $1 or $2 but will spend far more on shipping and handling.  Plus, you'll wait a week to get it when you could go to the LHS and have it today.  Oh yeah, except the LHS went out of business because everyone was buying things online.  I'll freely admit to buying things online or on eBay, usually things that my LHS doesn't stock or carry or are OOP.  One LHS will honor the prices in Walthers monthly sale catalog.  And you end up saving the shipping costs.

From the business side, depending on how you set-up and run the business you run the risk of it being call a hobby by the IRS and not a business.  If it is a 'hobby' then any losses you incur are non-deductible.  Don't forget about collecting and remitting sales tax.  The new Streamline Sales Tax Project, of which Ohio is a member I believe, which would require you to collect sales tax on non-Ohio sales.  Add to that Ohio CAT.  This are all things the bricks and mortar stores must deal with which the basement seller usually tends to ignore.

 

[dknelson]

This is hardly a new policy at Walthers or one that they keep a secret.  They learned that clubs were nominating one guy to be a "dealer" and then they'd all get their trains at the Walthers wholesale price.  

Locally here in Milwaukee a guy I know who had a Walthers dealership agreement was surprised one day when someone from Walthers actually showed up to make sure that yes trains were actually for sale at his hardware store, even though primarily most customers bought from the catalog   They also had a quota for how much he had to sell in order to keep the agreement in force. 

Dave Nelson

 

[Railphotog]

 As a group we need to continue patronize the LHS. 

Can't agree more!  BUT I cannot personally afford to pay their prices for the more expensive equipment, it seems to be usually way out of line with reality.  A shop in another city had some Bachmann On30 equipment that I was interested in, but could not/would not pay their prices.  An On30 Climax has a US retail price of $275.00, and it seems this is what they based their price on.  At the time the Canadian dollar was quite low compared to the US dollar, so one could expect to pay more.  They wanted $387.50 for the model!!  Add on our 14% tax and it would be over $400.00!  Thanks but no thanks.   The very same model was offered at US discount shops for around US$125.00.  So ordering it from them, paying the exchange on the money, the postage, and the sales tax they collect at the border meant I could get it for around $200.00, or about half the shop's price.   So it was either get it at a price I could afford or do without.  I feel sorry for the shop, but $200.00 is just as good in my pocket as theirs!

Also at a local shop I asked for the price on an MRC Prodigy Express DCC system, was quoted "around $180.00". A while later I saw one on their shelf, for $215.00.  Since I had a $50.00 credit at the shop, I got it.  With the credit and the tax I paid around the original quoted price.   Then I saw the very same set at Micro-Mark for US$99.00.  I could have saved a bunch if I had ordered it from them.

So "patronise your LHS" is fine, up to a point.

 

 

 

[IRONROOSTER]

The problem is that retailing is changing, but wholesalers like Walthers are trying maintain the old system.  And by allowing small dealers to make small purchases they have distorted the system.  If they sold at retail to everyone on small orders with a sliding discount rate up to their max wholesale rate for large orders for everyone there wouldn't be a problem.  You would pay retail for your onesy order but could get a discount for large orders.  Most of us as individuals don't want a case of Great Northern Athearn F7's so we pay more for the individual engine in order to buy just one. Or we don't order $10,000 worth of stuff at one time, so we pay more to buy just a $100 worth. Dealers should make their money on the difference between what they paid for buying in bulk and what they sold it for individually. The ones that figure out how to keep costs down can sell for less markup and higher volume or make more money on each of fewer sales; those that figure out the best intersection of the two will be around next year.

Buying from your LHS store or any other venue at a higher price should be because it provides something to you that the online/show discount dealer doesn't and that you want. If there isn't enough market for what the LHS offers extra (or he doesn't offer anything extra) he goes out of business.  

I like to poke around hobby shops too, but they are a business not a museum. 

Enjoy

Paul 

[TheK4Kid]

Yes the LHS scene is changing everywhere.

Brick and mortar stores have more expense. 

So let me pose a question here.What would be anyones opinion of a LHS that sold trains, RC cars and model aiplanes,helicopters etc?

But let's do things a little differently.You walk through the LHS door and inside you find anywhere from one to maybe several train layouts built and maintained and run by a local model train club or clubs, and these layouts in various scales, let's say for example, "O" scale, "HO" scale, "N" scale.

Now not only yourself but the general public can see what a finsihed layout looks like, and how it operates.The club has a place to keep their layout, and run their trains.But they also can help the LHS dealer by showcasing some of his equipment, and hopefully draw a larger number of customers through the door, and people would hopefully be more willing to purchase from this LHS, and if its sales volume stayed high, it could afford to offer lower prices.

Perhaps the club could work out a low cost rental deal with the LHS, because at the same time, the LHS has a layout or layouts his customers can see, watch, and possibly participate in. 

Hopefully the LHS would increase his  sales through such a plan. 

But not just that, the personal service that internets sales lacks.

If you purchase on the internet, plus shipping, and if something is wrong with the product, you have to send it back. More shipping costs plus the time involved , and you are without this piece of equipment until a replacement arrives.

A LHS can handle this kind of service more effectively, and usually quicker, if they have another unit in stock.

Now let's also say that the dealer offers the club a lower price on what they but,but by being able to "show and tell" the public , the LHS sales volume goes up.

People that come through the door can now see more than just trains in display cases or in boxes, and maybe the train club will be able to effectively recruit more members into it's ranks.

But at the same time this LHS also has internet sales, and does an effective business.

But at the same time, this LHS also stays up with the latest changes in RC airplanes, cars, helis, etc.

 

I think my approach might just work.

 I welcome other opinions and ideas.

TheK4Kid 

[R. T. POTEET]

Some years back I worked the railroad department at a hobby shop; the owner of this hobby shop also had a distributorship and shipped nationwide. He was always ranting and raving about 'discounters' and how they cut into his retail business but . . . . . . . . . . and I think you can guess what that 'but' is. This guy dealt only in cash when dealing with 'discounters' who did not threaten his retail business.

He did have to order certain items from wholesalers and I ran into one of these salesmen in a coffee shop some time after I had moved on to other pursuits. My querries came around to what it would take to set up a discount business and he informed me that these wholesalers required two years of cash-on-the-barrelhead purchases before extending an account to anyone conducting business across the table at a Dennys.

Why? There have been numerous postings here on the forum about locals going out of business but discounters have a sinister reputation of being fly-by-nighters who suddenly disappear along with thousands of dollars of stock into the netherworld of bankruptcy- when the owner of Hobbies For Men got prosecuted for mail-order fraud - he was advertising merchandise which he did not have and which he had never ordered - he took distributors to town for about half-a-million smackers, at least according to this salesman. I, most certainly, am not accusing you of being a fly-by-nighter; some distributors may extend to you a limited credit account - say something on the nature of a thousand dollars - but if you want to purchase more merchandise than that you're going to either lay out cash for it or open numerous accounts with numerous distributors - and once that fact becomes known you are likely to find yourself cut out of the account game!.

Now, you might find a small distributor who will be willing to take risks knowing that he really has little to loose if you turn out to be a scofflaw. I know, you aren't a risk; you haven't been late on a payment for thirty-five years but most distributors are going to say that they don't give a hoot about what has happened in the previous thirty-five years; they want to see if you can stay in business for two years.

It has been mentioned that if you are on good terms with a retailer you could get him to order merchandise for you and he will give you a discount off of his discount price. Then again you could put a roof over your head but you aren't likely to be able to discount from that environment.

[Repairman87]

The irony is that so many of the brick and morter stores have closed or are closing because of the difficulty in making it.  The hobby dealers that do survive have to use mail order and internet sales to survive.

There's at least one bricks and mortar place in this town that is doing very well without mailorder or internet sales, and it is not a hobby store, just a train store.  It will honor Walther's sales prices and gives a 10% discount for every 100$ spent at the place.  18 months ago it tripled it's floor space, so business can't be too bad.

 Is that "An affair with trains" on Bethany Home rd?  I have been there several times it is a nice shop.

[on30francisco]

I feel that I am under no obligation to support a LHS or any other type of business that is incapable of supporting my needs. I try to go to the LHSs to purchace paint and other small items but they seem to be perpetually out of stock or have no knowledge of the product I'm looking for - and the many arts & crafts stores in this area now carry a huge stock of styrene, stripwood, paints and other supplies at a discount. True, the LHSs offer to get it from Walthers, but heck, I can do that myself from the many discount hobby shops online - and many products I use are proprietary and aren't distributed by Walthers. I only try to utilize the LHS and pay MSRP when I need a product right away. Since I model minority scales and gauges, I usually order online or use mail order - and quite a few of these hobby shops are brick and mortar establishments. Besides the discounts which are important to me, these firms treat me as if I'm the only customer they have.

[Anonymous]

Support your LHS? That is a great idea, but in reality, it isn't a wise choice. Although internet shopping and mail order have there drawbacks, especially for enticing new people to the hobby, the facts can't be ignored, either.

Where I live (in Canada), the LHS is a WASTE OF MONEY. My entire experience with Canadian hobby shops has been a big rip-off in comparison to U.S. vendors, even after figuring in currency exchange, shipping, and customs charges. I am not talking about prices from the big U.S. discount stores, either.

A while back, a U.S. modeler (in Ohio) had asked if I could get any of the out of production Ertl H.O. freight cars locally. I said sure, at regular price $20 CAN each, plus 14% tax. He laughed, and said even the local gougers with old stock in his area were only asking $7 U.S.! So, I started listing some common product (atlas track, athearn cars, etc...) prices at the local stores, and comparing them to his LHS prices. Typically, I was paying two or three times what he was. When I asked the local shop owners why, they got defensive and downright nasty. In other words - the reason is basic greed. One shop tried to explain their ridiclously high prices by saying they had to mark up 50% over (addvertised) U.S. prices so they could make a profit! Like as if I didn't know they get a minimum 20% discount on product already! I even had one shop owner try to charge an additional 25% fee for ordering from the Walther's catalogue, above his already inflated prices! With policies like that, they won't be getting much business from me.

[scottychaos]

Another thing to consider is that many "brick and morter" hobby shops are ALSO internet retailers! One of my favorite small local shops has a giant internet store that probably accounts for 90% of their buisness!

So this "great evil" (the internet retailer) that is "killing the LHS" is also keeping many LHS's alive!

if they choose to take advantage of it..

Scot

[jeffrey-wimberly]

The LHS I go to in Alexandria does more than half it's business over the internet with the MR stuff coming almost exclusively from Walther's.

[joe-daddy]

Oh sage and wisest of all the forum worms, tell me true and tell me quick.  Just how does any internet hobby shop exist without a brick nor mortar too?  Oh wise and intelligent one, please tell me quick, for I must really know this secret of the perverse.  How does one do something with nothing? 

Oh, and wise one, please, oh please, tell me quick, where are all the bargains to be found?  Where is that golden fleece iShop that sells all for 40% off and free shipping?  

Oh and sage, dare not to inform me that it be the e of Bay, for I know then though to be a false sage, that one we call oh dim of witt.

Will the net kill the LHS? Just my opine!

 

Joe 

 

 

[BRAKIE]

When I became a part time Train Show dealer all I needed was:

1.A small business license

2.Ohio Tax number

3.Cash.

You see all I had to do was to go to a hobby distributor sign up and commence shopping.I suppose that was to easy since anybody can get a small business license and tax ID and buy their models at discount.

[One Track Mind]

The internet is not going to kill all LHSs, just the weaker shops that will not adjust a little.

I will not sell on the internet. I'm a "small" one person shop. I do one thing and try to do it well, and that is to have a good local shop. You can't serve two masters. I can't devote the time to keeping my brick-and-mortar shop in decent shape if I am also selling on the net. And these idiots selling new products on the net from a "real" shop for slightly over cost are shooting themselves in the head in the long run.

I also applaud the distributors who will not sell to basement operators.

And when I find out that a distributor IS selling to a basement operator, then they get no more business from me.

About a year or so ago, a distributor made a mistake. They sent my box to another account. They sent me the other account's invoice.

I noted on the invoice that this guy was receiving a better wholesale discount than me...kinda ticked me off a little. But when my box arrived and the other account's address came from a UPS residential zone....well that was it for that distributor. I was doing 20 - 25,000 dollars a year with them. (I know, in the greater scheme of things, that's not much business.)

So this guy is selling out of his basement and he gets a better discount than me???

There's some hobby shop rage from the other side of the counter.

 

[joe-daddy]

The internet is not going to kill all LHSs, just the weaker shops that will not adjust a little.

I will not sell on the internet. I'm a "small" one person shop. I do one thing and try to do it well, and that is to have a good local shop. You can't serve two masters. I can't devote the time to keeping my brick-and-mortar shop in decent shape if I am also selling on the net. And these idiots selling new products on the net from a "real" shop for slightly over cost are shooting themselves in the head in the long run.

I also applaud the distributors who will not sell to basement operators.

And when I find out that a distributor IS selling to a basement operator, then they get no more business from me.

About a year or so ago, a distributor made a mistake. They sent my box to another account. They sent me the other account's invoice.

I noted on the invoice that this guy was receiving a better wholesale discount than me...kinda ticked me off a little. But when my box arrived and the other account's address came from a UPS residential zone....well that was it for that distributor. I was doing 20 - 25,000 dollars a year with them. (I know, in the greater scheme of things, that's not much business.)

So this guy is selling out of his basement and he gets a better discount than me???

There's some hobby shop rage from the other side of the counter.

One Track,

I'd be a regular if I still lived in LR. (moved out in 1969). And for the record, I COMPLETELY agree with your points.  I am a regular customer of Mizell's and the Caboose here in Denver. They get 80% of my hobby dollar.

Joe 

  

[Anonymous]

I shop where I get what I want, when I want it, at the price I want. All venues are open to me. LHS,  wholesaler, Ebay, train shows, any and all venues. I buy the "best" without any artificial rules about "who to support" where it is made or nonsense like that. Just find what I want, wherever it is, and buy it.

[on30francisco]

I shop where I get what I want, when I want it, at the price I want. All venues are open to me. LHS,  wholesaler, Ebay, train shows, any and all venues. I buy the "best" without any artificial rules about "who to support" where it is made or nonsense like that. Just find what I want, wherever it is, and buy it.

RIGHT ON!  As I stated in an earlier post "I feel that I am under no obligation to support a LHS or any other business that is incapable of supporting my needs."

[IRONROOSTER]

One of the interesting things about the model railroading market is the way wholesaleing seems to work. 

I had always thought that wholesale prices were given because the retailer bought a lot and the more he bought the better his wholesale price. 

But apparently many distributors are willing to sell at wholesale prices in very small quantities. Then to "protect the LHS" they turn around and demand that the buyer be a certain type of retail operation.

Frankly, if a wholesaler is willing to deal in very small quantities then he should go retail.

Enjoy

Paul 

[joe-daddy]

I shop where I get what I want, when I want it, at the price I want. All venues are open to me. LHS,  wholesaler, Ebay, train shows, any and all venues. I buy the "best" without any artificial rules about "who to support" where it is made or nonsense like that. Just find what I want, wherever it is, and buy it.

RIGHT ON!  As I stated in an earlier post "I feel that I am under no obligation to support a LHS or any other business that is incapable of supporting my needs."

The above best read with the Star Spangle Banner playing loudly on your iPod.

And no matter how outrageous the claim, nor how eloquent the plea, do I feel any sense of need to support some faceless, nameless, serviceless website.  As for me, I consider my local hobby shops a destination; one worthy of my loyalty and business.  Just because I can save 3 or 4% on the internet is not enough justification for me to miss seeing or experiencing the joy of visiting my local hobby shop.  After all, line for line, item for item, my LHS is one of the most competitive sites on the web too.  

But then, I live in Colorado, where we are blessed to see the Rocky Mountains to the west and live among such a large collection of superior hobby shops.

So to those who live in those other parts of the world.  Where the only local hobby shop is some guy like you or me who is trying to make a living by providing a service  and access to quality railroading supplies.  Treat him like you will and by all means place your bid on eBay so you can complain when you get sniped.   

As for me, if I happen to travel through your town, I'm going to stop at your LHS and take a look see, even visit with the guys.  Seems I learn new stuff that way, and might even find a bargain there on the shelf. It is sad sometimes, when the lonely shop owner tells me that I am the only customer he has seen all day. There is always room for a little something in my bag, if I can get by the TSA!

just my 2 cents, certainly worth not a penny more!

 

Joe