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
jktrains wrote: As a group we need to continue patronize the LHS.
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.
Bob Boudreau
CANADA
Visit my model railroad photography website: http://sites.google.com/site/railphotog/
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
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 $2 but will spend far more on shipping and handling. Plus, you'll wait a week to get it when you could go to the LHS and have it today. Oh yeah, except the LHS went out of business because everyone was buying things online. I'll freely admit to buying things online or on eBay, usually things that my LHS doesn't stock or carry or are OOP. One LHS will honor the prices in Walthers monthly sale catalog. And you end up saving the shipping costs.
From the business side, depending on how you set-up and run the business you run the risk of it being call a hobby by the IRS and not a business. If it is a 'hobby' then any losses you incur are non-deductible. Don't forget about collecting and remitting sales tax. The new Streamline Sales Tax Project, of which Ohio is a member I believe, which would require you to collect sales tax on non-Ohio sales. Add to that Ohio CAT. This are all things the bricks and mortar stores must deal with which the basement seller usually tends to ignore.
riogrande5761 wrote:The irony is that so many of the brick and morter stores have closed or are closing because of the difficulty in making it. The hobby dealers that do survive have to use mail order and internet sales to survive.
There's at least one bricks and mortar place in this town that is doing very well without mailorder or internet sales, and it is not a hobby store, just a train store. It will honor Walther's sales prices and gives a 10% discount for every 100$ spent at the place. 18 months ago it tripled it's floor space, so business can't be too bad.
Bear "It's all about having fun."
Rio Grande. The Action Road - Focus 1977-1983
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.
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.
This isn't anything new, they've had the same policy for decades.
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, (914) 737 6633, 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.
Jay
C-415 Build: https://imageshack.com/a/tShC/1
Other builds: https://imageshack.com/my/albums
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
Chip
Building the Rock Ridge Railroad with the slowest construction crew west of the Pecos.
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?
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?