I'm a young guy fairly new to model railroading, and I have to be honest...the first thing I noticed about Walthers is they list everything at MSRP. I know they have sales from time to time, but they list everything newly released at MSRP and usually can't keep stocked up on items. I am also aware they make model railroad items such as cars, turntables, building kits, etc but as far as sales go how do they stay in business? I get a deal from my LHS and shop around for the best prices on items all the time. I just ordered 9 SD70ACe's for $209 each and free shipping from a website when Walthers wanted $249.99 plus they wanted to charge $40 shipping. I saved $400 on that purchase by shopping around. Is it catalog orders that sell this stuff out or what? I'm confused on who willingly pays MSRP?
P.S. If you pay MSRP don't take offense, I just won't do it if I can easily find a cheaper price (like a google search for the product)
To each his own. I will take a bargain if I run across one, but generally I pay the price to get things I want. I might mention I picked up several of the ADM grain elevator kits from Walthers and got a nice discount for doing so. So I am happy.
I don't understand the mentality that says everyone should discount as low as possible when you buy from them. Let me ask just one question: Do you discount what you do for a living, or do you except the stated salary, or union scale or whatever and go the bank on payday and cash it? Or do you say "I can't accept this check because it is more than I am worth?"
To me, a manufacturer, dealer, hobbyshop that discounts their merchandise is playing fast and loose with the books. If you sell for less than you pay for it you won't last in business very long.
Bob
I don't discount my work because it's impossible. But that's a long story. The problem is there is a load of overhead. I'm not saying sell it to me for what they bought it for, I'm saying instead of making $70 an engine make make $20 or $30. Look at MB Klein, they sell at a very fair discount and thier business is booming. Ok, they're obviously not the size of walthers but they are doing very well. Walthers had a foot in the door decades ago and MB Klein is fairly small and hasn't been around as long as Walthers and business for them is booming.
johngriffey18ca1I'm a young guy fairly new to model railroading, and I have to be honest...the first thing I noticed about Walthers is they list everything at MSRP. I know they have sales from time to time, but they list everything newly released at MSRP and usually can't keep stocked up on items.
They are the wholesaler for almost all of the LHS and online stores out there, so they don't care about selling full price to you. They make their money as a wholesaler. Most LHS get 40% discount from them,so many of them pass on the 20% discount to you.
Honestly I don't know why they even try to sell retail. I mean whats the point?
I don't know how it divides up, but I'm pretty sure that WKW's primary business is in being a distributor to other retailers, not in selling directly to us hobbyists, and wisely avoids undercutting the prices at which its wholesale customers sell the same merchandise at their local stores.
When WKW does have a sale, it probably makes a break for its retailer customers.
WKW isn't the cheapest place to buy retail, but it keeps a very broad inventory and does provide excellent customer service.
pastorbobTo me, a manufacturer, dealer, hobbyshop that discounts their merchandise is playing fast and loose with the books. If you sell for less than you pay for it you won't last in business very long. Bob
Wrong! You are way off base. Only a buffoon would pay full MSRP. Or people with more money than common sense.
My LHS has discounted 20% off for years and are very strong indeed. The Buffoon who recently bought another LHS near me a few years ago decided to charge FULL MSRP. Many of us tried to dissuade him from doing this, but he refused to budge and the poor slob only lasted a year.
Playing with the books sounds to me like doing something illegal or unethical...like cooking the books. On the other hand, reducing one's price(s), which are always voluntarily established anyway, sounds like smart business practice if one is to be competitive. It is often necessary to keep inventory turning over, to keep lines of credit open, to show a positive balance sheet (even if just a few hundred dollars after all costs), and so on.... Also, if one sells an item at or just below cost, it is usually the case that the customer becomes excited and will buy something else on a whim, often paying double what the cost to the seller was.
-Crandell
Service, integrity, honesty. Those go a long way with me. When someone provides a valuable service/product, they should be justly rewarded, even if it means paying them at a rate more than I earn. ... It is unbelievable the services/products we can purchase at such a low price. I can't imagine producing/creating the stuff we can buy. Like, creating a loaf of bread from the ground up, or producing nickel-silver rail from extraction of the ore and beyond.
Mark
There is an individual who has been trying to sell a Proto 2000 loco with sound for full MSRP for about a year now. After seeing this listing side by side with listings for the very same loco at half or less price, I sent him a message. I asked why he was listing the loco for full retail when the buying public had several of the exact loco at half the price to choose from. I seriously was trying to save him some listing fees. Well, as you might guess, he sent me a very terse message in return, saying," I paid full retail, why would I sell it for less than that?" That was about 6 months ago and its still for sale. I guess if he waits long enough, the supply of other locos might dry up a little, but I still dont see him getting $289 for a loco I paid $109 for.
First, like the man said Walthers is the wholesaler to most hobbyshops so their sales to individuals does not provide more than 10% of their income. They are obligated to not undercut their primary customers and when they have online sales my LHS matches their price and the LHS is credited by Walthers so the LHS doesn't lose money.
Normal markup is 40% which allows high volume retailers some leeway for discounting. Small low volume shops are disappearing because they just can't compete and make a living. Big ticket merchants will sometimes sell hobby products at a loss to get customers in the store and then sell them something else with a high profit margin such as furniture. The internet has totally changed the picture. Online hobbyshops don't have the overhead of your LHS and can therfore cut their profit margin to the bone and still make money. Walthers and other distributors have been trying to require businesses that get their full discount to prove they operate a legitimate physical store.
However many internet stores have found other sources to get their mechandise. And I have to admit that over the last few years more of my purchases are online. But I do try to give my LHS the first chance to satisfy my needs.
How does Walthers stay in business?
Three reasons:
One, their primarily customer base is hobby shops, both the brick and mortar type and the Internet type.
Two, a lot of their items go on and off sale, and a lot of merchandise is moved that way along with a lot of non-sale items bought at the same time, plus free shipping on larger orders, and no local sales tax.
Three, their inventory is second to none, so when you need something and you need it now, Walthers has it.
Trust me, they are not hurting, and they won't disappear anytime soon.
Rich
Alton Junction
I get the Walthers flyer every month. I check for discounts and just browse for interesting items. But, either way, I send an e-mail to my LHS to order the item. Then, I get either the discount price or a healthy store discount from my LHS. I pay sales tax, but no shipping charges. This is great when ordering only a few small items, like a set of figures or a vehicle. Shipping would eat my budget quickly paying 6-7 dollars to ship a $9 item.
But, last month I had to go another route. I found I was getting a larger tax refund than I'd expected, so I wanted to splurge on a Proto H10-44. Walthers generally had been keeping full MSRP on these. They had only discounted a few road names, but not the Milwaukee engine I was interested in. To my surprise, they listed this one as out of stock with no expected restocking date. So, I couldn't get one, either from them or my LHS.
That, of course, is a job for Trainworld. I've noticed that when items go out of stock at Walthers, they often show up a deeply discounted prices at Trainworld. So, neither Walthers nor my LHS got the sale, but I did get the engine. I would have been thrilled to get the engine for that price from Walthers, but instead I had to go outside the system. That's what I don't understand. I suppose it's a minimum inventory decision, but I'd imagine they lose a lot of sales by unloading their inventory to the large discounters rather than lowering their prices directly to their customers.
It takes an iron man to play with a toy iron horse.
johngriffey18ca1 I'm a young guy fairly new to model railroading, and I have to be honest...the first thing I noticed about Walthers is they list everything at MSRP. I know they have sales from time to time, but they list everything newly released at MSRP and usually can't keep stocked up on items. I am also aware they make model railroad items such as cars, turntables, building kits, etc but as far as sales go how do they stay in business? I get a deal from my LHS and shop around for the best prices on items all the time. I just ordered 9 SD70ACe's for $209 each and free shipping from a website when Walthers wanted $249.99 plus they wanted to charge $40 shipping. I saved $400 on that purchase by shopping around. Is it catalog orders that sell this stuff out or what? I'm confused on who willingly pays MSRP? P.S. If you pay MSRP don't take offense, I just won't do it if I can easily find a cheaper price (like a google search for the product)
No offense to the OP or any of the others rsponding, but to the OP specificly, it is clear you do not understand how this business, or most retail businesses work.
As someone else mentioned, Walthers is a wholesaler, who just happens to have a retail/mailorder outlet. They started that more than 60 years ago, before the internet and before discounting as a service to those who did not have a LHS. They stay at MSRP to protect the dealers who buy from them wholesale.
In the "hayday" of local hobby shops, back in the 60's, 70's and even early 80's, Walthers actually down played the fact that they would sell direct to customers at MSRP and did everything they could to get customers to support their LHS. But the market has changed.
Today, Walthers makes most of their money on products that say "Walthers" on the package. Products that they control the design, manufacture and pricing of. They still sell other brands, both retail and wholesale, but the wholesale business in this hobby is being cut out as more and more manufacturers are willing to sell direct to dealers.
It is this direct selling to dealers that allows large discounting. Any LHS buying from Walthers at 40% off and reselling at 20% off will not last any longer than someone trying to sell anf MSRP. You cannot run a retail business on 20% unless you are a part time basement/train show dealer.
If your LHS, or favorite internet/mailorder store is discounting 20%, he is buying most stuff at better than 40%.
Rather than bore everyone with lots of math, the fact is products like Athearn, Bachmann and others are sold direct to dealers at prices well below the traditional wholesale price of 40% off. That is how they can be sold, mailorder or in person, for prices that are 20-40% below MSRP.
Discounting is a fact nowdays, traditional distributors are dieing, Walthers started decades ago moving from being a distributor who made a few things to manufacturer/importer who distributes a few things.
Many product lines once big in the Walthers catalog are gone or now of little importance to them. Many of those product lines are now sold directly buy their manufacturer, and often ONLY buy their manufacturer - example - Athearn. ALL dealers buy Athearn from Horizon, their parent company. Horizon is a large distributor, but also makes or imports a lot of what they sell in other hobbies (model airplanes).
For hobby shops, or model train stores, to do well these days, they need to be large enough to buy direct from the major players, have enough inventory to keep customers interested and meet their needs, and sell at a low enough price to be competitive. That dose not mean always having the lowest price, but it also does not mean full MSRP.
A smart dealer will know what he needs to make and will base his prices on what he pays, so Bachmann bought direct can easily be sold for 30-35% of MSRP. Athearn, while wholesaled lower than the old 40% is not as heavily discounted to dealers as Bachmann, so it might only be 20% off in that same shop. Other products only available at the traditional 40% discount may only be discounted 10% in that shop.
By knowing and understanding these things, and by having a sense of fair play, you will know if you are getting a fair deal and if your dealer has a chance to stay in business to serve your needs.
I do specialized residential design and construction for a living. I don't "discount" my work, but I don't compare my prices to others. Some charge less, they know what their work is worth.
Sheldon
I know a LHS that is very unhappy with Walthers for selling items in their flyer for less than they sell the same item to the LHS. I think its called undercutting. Being a wholesaler and retailer....having your cake and eating it too.
MisterBeasleyThat's what I don't understand. I suppose it's a minimum inventory decision, but I'd imagine they lose a lot of sales by unloading their inventory to the large discounters rather than lowering their prices directly to their customers.
This is not the case, manufacturers, at least most of them, seldom if ever "dump" product at lower prices (Bradway Limited seems to be the exception here).
They do offer big customers like Train World or MB Klein, slightly bigger discounts because of volume. But such discounts are typically in the single digit range, an extra 2%, 4% off.
Big dealers like Train World simply buy up lots of product at the lowest GOING rate (see comment above) and sell it at lowest markup that is profitable for them and make their money on volume.
Walthers, as a "manufacturer" in the case Proto2000 is simply not going to "hold back" inventory on the off chance you want to buy one from them retail. If Train World, or some other dealer they sell to orders the stuff, its going out the door - period. First come, first served.
So lots of stuff, especially stuff they import, sells out at Walthers and then is available form other dealers for months, years.
Walthers is not going to call Train World and say "send one of those back, we have a retail sale for it", and Train World would not send it back anyway.
Look forward to the Walthers sales fliers {be sure to sign up for it}, there they will have price often lower than a LHS can sell it at. {which makes the LHS's mad}.
My local {small} LHS also will order/sell any item in the Walthers catalog for at least a 20% discount off the Walthers MSRP. Other online dealers may even offer a bigger discount than the 20% LHS's offer.
Third, If you really want something, and only find Walthers carrying it, you may very well pay their MSRP to get it, much like overbidding on a very popular car at the car dealer.
Also, according to one LHS I have here, Walthers sells "packages" based on a $ amount the hobby shop wants to spend {say a $5k "package" or a $10k "package" } and will send them several items {from Wlthers choices } at a 20-40% discount off MSRP in the catalog, so the LHS can mark it up the 20-40% to resell to the public. That is one reason LHS get so upset when a Walthers flyer comes out offering a item say at 50% of MSRP that the LHS can not compete with!
Another Larger wholesaling LHS to me about 45 mins away will sell Walthers Items at the 40% discount as they order so much from Walthers as to cut a better deal.
Just all in the name of business and business practices no different form any other retailer/wholesaler/maufacturer of any type of goods. Often buying form the factory may mean you pay MSRP, but a wholesaler/discounter will sell it for less.
Funny how the business world works, isn't it?
-G .
Just my thoughts, ideas, opinions and experiences. Others may vary.
HO and N Scale.
After long and careful thought, they have convinced me. I have come to the conclusion that they are right. The aliens did it.
It's a quick turn money now, space available now thing.
I know we all want to think some items are great sellers especially if we model it. I can't understand myself why the Texas and Pacific isn't easier to find. They'd make a fortune in my opinion. But the fact is, in most cases (most), if an item actually did sell well, they would not remove the item from the ranks. They would continue to stock and sell it as long as it can be supplied and people buy it at a rate worthy of retaining inventory. When sales drop to a certain point they feel it's time to replace that item and try another. That means they have to do something with the remaining inventory. Keep it or unload it. Believe it or not it's cheaper to unload it to places like Trainworld than keep it. If they did lower their prices there is still is no guarantee they would sell enough to clear the shelves for the new inventory. Therefore costing them. Getting something is better than losing. So they sell off to these places, get the cash, get the floor space, and let someone else worry about moving the stuff.
I agree, it sounds as if it makes sense to pass these deep cuts and savings on to the customers. But as said before, Walthers would not, should not, no can not, undercut their main customer base. And unless they have all the LHS's order these items up to clear the shelves, which I highly doubt would happen otherwise the LHS's would still be ordering them if they sold (they don't want their shelves filled with non sellers either) They have to do it the way they do.
Really it's a win win win situation all around if you think about it. Walthers gets some profit or at least their money back on the inventory (loosely speaking), it opens the way for another business to make some money on a product, and, it puts some items in the hands of those who don't have the budget for full or even discounted items. They can get pretty expensive. You may have to wait, but it's the patient cat that gets the mouse.
Todd
Central Illinoyz
In order to keep my position as Master and Supreme Ruler of the House, I don't argue with my wife.
I'm a small town boy. A product of two people from even smaller towns. I don’t talk on topic….. I just talk.
Hi,
I have not read all the previous posts so this may have been brought up already....
Walthers is and has been primarily a middleman - a necessary function that funnels all (most all) the various MR items from manufacturers to the Walthers' giant warehouse, where they then fill orders for most of the hobby shops. To my knowledge, Walthers has only sold retail for a relatively short time.
Without them, your hobby shop would have to order direct from each of the many, many manufacturers - and the paperwork alone would swamp them.
This distributor/wholesaler concept has been around for a long time, and is used in pretty much all types of businesses. In example, my parents had a grocery store (1948-1958) and each week the reps from the two grocery distributors (Holleb & Uptown) would visit and take our order.
Walthers also is not in the business of competing pricewise with their prime customers - the hobby shops, which is the main reason everything is msrp. That being said, there are two reasons I have bought directly from them. The first is that they have items the LHS didn't stock, and occasionally they have sales on overstock items.
Mobilman44
ENJOY !
Living in southeast Texas, formerly modeling the "postwar" Santa Fe and Illinois Central
mobilman44Walthers is and has been primarily a middleman - a necessary function that funnels all (most all) the various MR items from manufacturers to the Walthers' giant warehouse, where they then fill orders for most of the hobby shops. To my knowledge, Walthers has only sold retail for a relatively short time.
Walthers has sold direct to the public at MSRP by mail since they started in business. In fact the business started with the first product being sold mail order from a small ad.
mobilman44Without them, your hobby shop would have to order direct from each of the many, many manufacturers - and the paperwork alone would swamp them.
Stop and read my post, all the big outlests buy the major brands direct now so do many "medium sized" outlets. The distriibutor network is dieing/changing quickly in this hobby and in many other businesses.
mobilman44Walthers also is not in the business of competing pricewise with their prime customers - the hobby shops, which is the main reason everything is msrp. That being said, there are two reasons I have bought directly from them. The first is that they have items the LHS didn't stock, and occasionally they have sales on overstock items.
This is true to an extent, and I made that point, but their prime customers today are those shops/mailorder outlets buying cases products that say "Walthers" on the package, not those buying one or two of products made by other manufacturers.
One more simple point to all, if you are in business selling hobbies, and you are not making 30% or more, you will not be around long.
Regardless of MSRP you pay $70 for it, you need to sell it for $100. It's that simple.
So, do the math.
MSRP = $100
Walther price to local hbby shop = $60
lowest price you should sell it for = $85 or 15% off
Same item bought direct from manufacturer (price Walthers paid) = $40
now as a dealer, only paying $40, you can sell it for $57 and make the same percentage as you did sellng it for $85 - sell the same dollar volume and you have made the same profit.
Extra discounts for volume and quick pay are small, less than 10% for sure. So that does not explain heavy discounting, only direct purchasing and new lower discount structures direct from manufactuers explain the low prices we see compaired to MSRP.
Athearn is about 50% off to dealers, Bachmann about 70% to dealers, both sold direct, Athearn ONLY sold direct.
Walthers has increased its "standard" discount on lines like Bachmann because of this. And, has similar policies with their own "branded" products.
Santa Fe all the way! I know a LHS that is very unhappy with Walthers for selling items in their flyer for less than they sell the same item to the LHS. I think its called undercutting. Being a wholesaler and retailer....having your cake and eating it too.
A few years ago Walthers invited some long-time customers (including me) to come to a meeting with company representatives to ask about what we liked and disliked about Walthers. We brought up the issue of everything being listed at MSRP in the catalogue, and they mentioned about the sales flyers discounts. When we noted that the flyer sale/discount prices were about the same as what you'd generally find at say an online store, they seemed truly surprised. They seemed to think their prices were a real steal.
Still, in getting their flyer I have sometimes gotten some really good deals that I wouldn't have gotten otherwise. They recently had some Life-Like dead/winter trees on sale for like 80% off from MSRP and I grabbed a bunch of them.
ATLANTIC CENTRALAny LHS buying from Walthers at 40% off and reselling at 20% off will not last any longer than someone trying to sell anf MSRP. You cannot run a retail business on 20% unless you are a part time basement/train show dealer.
???
ATLANTIC CENTRALAthearn, while wholesaled lower than the old 40% is not as heavily discounted to dealers as Bachmann, so it might only be 20% off in that same shop.
Tsk tsk tsk.....Sheldon. Arn't you contradicting yourself here? My LHS buys most of their stuff from Walthers at a 40% discount, and some items a bit more. They've offered 20% discount for over 20 years now and are in a NEW building and going strong.
ATLANTIC CENTRALOne more simple point to all, if you are in business selling hobbies, and you are not making 30% or more, you will not be around long.
And how do you know? Did you pull that number out of a hat?
Okay,
I've been spending the last day or so tarring and feathering Walther's over their N scale caboose, but I'm going to step in in their defense on this one.
They are, as has been noted here, first and foremost a distributor. They are a very good distributor. The do make a pretty broad range of products, too, as well as maintain a presence as a retailer. This is called "Vertical Integration" in business school. They can control the flow of product from the factory to the consumer. While this can make for some awkward situations, they do handle it pretty well.
When Walther's sends out the flier with all those MSRP listings, they do that so as not to undercut their bread and butter customers, the local dealers. When they have an overstock and offer a special in the fliers, they encourage you to contact your local first, and they pass along the discount through the dealers as well. This keeps the relationship strong and healthy.
Dealers aren't afraid of keeping items in stock that might be price cut later, since they can participate in the sale as well, which increases traffic in their store.
Compare this to Broadway Limited, which sells direct to dealers, then when things get backed up, they turn around and sell direct to the public through Factory Direct Trains at a price the regular dealers can't compete with. As a result, dealers get angry, and are leary of ordering anything from BLI in any kind of quantity. That kills pre-orders, and in some cases, whole projects. Dealers are left holding the bag on over-priced inventory, while FDT steals customers and blows out BLI products.
I think Walthers has the distributor/local dealer relationship idea down to a science, and they're very good at that.
Now, if I could just get them to make a better looking NE steel caboose in N scale...
Lee
Route of the Alpha Jets www.wmrywesternlines.net
My to the issue.
Aside from being a wholesaler/distributor, Walthers is also an importer. A number of materials would not be around without Walthers. A lot of the scenic stuff we use comes from Busch, Noch, Faller, Silflor - all of them made outside of the US. Those companies would never be able to build up an own distribution network in the US. Nor would online stores be willing to handle that business.
Sir Madog My to the issue. Aside from being a wholesaler/distributor, Walthers is also an importer. A number of materials would not be around without Walthers. A lot of the scenic stuff we use comes from Busch, Noch, Faller, Silflor - all of them made outside of the US. Those companies would never be able to build up an own distribution network in the US. Nor would online stores be willing to handle that business.
Actually, Scenic Express handles all those products and a lot more, has them in stock at all times, sells direct and is a lot more hassle free than Walthers. Scenic Express is always my first choice, with Walthers being considered only as a last resort! If Walthers were gone tomorrow, I wouldn't shed a single tear.
CNJ831
Driline Wrong! You are way off base. Only a buffoon would pay full MSRP. Or people with more money than common sense.
I've been in this hobby 50 years now and broad-brushing Walther's customers as "baffoon" or "with more money than common sense" is ill-informed at best. My first Walther's catalog dates from 1968, and their catalogs have prompted lots of planning, dreaming, and building over the years.
I do not have a local hobby shop - there simply is nothing close. This past spring I got enthused about doing the scenery in the log-loading area of my HO layout. Although I thought I had stockpiled enough ground foam for "flocking" trees, I found that I was quickly running low as I was making several hundred trees. I clicked "purchase" to Walthers on a Thursday and the supplies arrived the next Monday.
Curteous, efficient, dependable, and well-stocked is hard to beat. I didn't have to stop my project or have my enthusiasm wind down while waiting for the next trip to a train show or city with a decent hobby shop. I don't feel foolish about supporting a business that has strongly supported the hobby for so long.
Bill
Beach BillI've been in this hobby 50 years now and broad-brushing Walther's customers as "baffoon" or "with more money than common sense" is ill-informed at best.
You could have saved yourself some dough and purchased it through M.B.Klein or any other reputable online dealer. Way to not support our dealers and LHS (most of the onliners have a brick and mortar store) out there....
Guys,I have discovered a truth recently.I ordered several odds and ends and by the time I paid shipping I saved a grand total of-get this-a whooping $7.67..Of course there was no sales tax or the need to make a 52 mile round trip but,wait!
On the way I could railfan in Crestline and on the return trip stop at Galion and watch CSX there.Of course there is Barnes and Nobles where I buy my Western novels..I can have lunch at Coney Island or SkyLine Chili (Yumm-o!)..
Now,I decided since I don't need to buy that much more and can't justify large orders(this helps off set the shipping costs) I will help simulate the local economy and buy at the LHS..
Larry
Conductor.
Summerset Ry.
"Stay Alert, Don't get hurt Safety First!"
Everyone seems to be missing the point here. Walthers, or any other business (except the financial firms and a few unnamed automotive giants), stays in business by taking in more money than they have to shell out.
It's called profit.
Tom
Life is simple - eat, drink, play with trains!
Go Big Red!
PA&ERR "If you think you are doing something stupid, you're probably right!"