Seriously, what is Rapido thinking

[fwright]

Fastball

richhotrain:

Just out of curiosity, I have to ask, why is Rapido only going to produce 2,000 trains?  Is the train intended to be a collector's item?

Here is what Rapido has posted on its web site:

The production run will be strictly limited to 2000 trains or less, divided into six consists. Once we have orders for 2000 trains, the order desk will close. So even if we sell out in a month, we will not make more than 2000 sets.

Rich

 

My memory is a little fuzzy on this, it's been a long time since I had an economics class, but I seem to remember something called like the economies of scale or some such thing, that the more things are produced the cheaper it becomes.  Producing one roof shingle could cost a million dollars but producing a million roof shingles would cost a dollar a piece.  A little simplistic I know but you get what I mean.  When I shop at Sam's Club the 200 ounce catsup bottle costs less per ounce than the 100 ounce, and even less than the 50 ounce bottle.  And isn't it the goal of a company to produce as many of an item as it possibly can to make as much money as it can?  Henry Ford did this when he perfected the assembly line.  Costs went down as he produced more.

So then why is Rapido limiting itself to just 2,000 sets?  If 3,000 customers place an order the cost per unit goes down and they should, according to some economic law, make more money.  Is there a hole in their business plan?  2,000 sets is a goal that needs to be achieved to produce the thing but if 3,000 sets are sold, then great, look at how much more cash flow I have.  And if I sell double my original goal, then all the better.  Makes sense to me.

-Paul       

Paul

If you owned the entire supply and distribution chain, and cost of capital (or inventory) is no object, then what you say is true.

However, as we have seen Rapido is a 3 man planning and import shop.  They do not own their production facilities, they rent them for a short duration.  Components and supplies (motors, gears, wheels, shafts, couplers, electronics, boxes, packaging, paint, etc) to be assembled after the plastic parts are cast must be acquired and drop shipped to the assembly facility.  Tooling and masters and paint masks must be commissioned.

For all these reasons, a pretty good idea of how many units are going to be produced is necessary when you negotiate space at the Chinese casting and assembly factory. In the end, batch-procured things like the number of motors or gears or PC boards ordered are going to put a ceiling on a given production run.  You just can't hold the production line open waiting for additional motors and gears - the owner of the factory needs to keep the facility working to keep his prices down, and you only paid for a specific time frame for the facility in the 1st place.

Selling 2,000 train sets at over $1K each is a breath-taking million dollar gamble for Rapido.  By limiting the production run, Rapido limits their potential losses, but also limits the potential profit from impulse sales at retailers.  But really, how many impulse sales of a $1K+ train are likely to be seen at your LHS?  Of a Canadian prototype?  How many months does it take before the cost of carrying the inventory destroys the profit for the retailer or Rapido (depending on who owns the inventory, usually the retailer)?

Because of the cost of money and inventory, selling out a first run, and then producing a smaller 2nd (and possibly 3rd) at 6 month intervals if demand is high enough, is today's method to maximize sales in the face of limited demand.

In this specific case, Rapido gets the initial orders quicker and in larger quantity than if the door were left open for more future production.  Rapido obviously did not believe it would be easy to get the initial 2K orders.

just my understanding of business

Fred W

[galaxy]

Motley

I'm not going ballistic at all.

Some people have said on here,that Rapido is a stand up company, and has been in complete communication with everybody about the deposit.

Apparantly, there was a notice to the US distributers about 6 weeks ago, and it was buried in a long and lengthy newsletter. So not only do the distributers like Walthers even know about it, but none of the consumers or hobby shops who are placing the preorders even know. Walthers didn't even receive a phone call from Rapido explaining the deposits. How do I know this? The owner of DMW called and asked his Walthers rep to see if he knew anything about it.

That to me sounds very sketchy, like it was a "oh by the way, we are demanding deposits now, you should have read our newsletter". And just hope that people won't have a problem with it.

I suppose they have the right to change their policies "subject to change without notice" as lots of fine print for various things, legal and practical or common do.

I would say it is VERy sketchy if Walthers, the revered leader in the MRRIng industry has declined to participate in this practice. That should send up red flags, surely.

I DO have to agree though, that you either: pay up and shut up, or don't pay and don't get. The choice, apparently, is yours.

COntact RAPIDO over your frustration. You've made your point here. WE can do nothing but boycott RApido if we are of a mind to but if there are people out there who want the product, adn are willing to take the chance and prepay, and are willing to pay the balance to get this train, they will do so. They apparently have decided this is how they will operate, and expect in the future for Rapido {and perhaps other manufacturers} to do so again.

[tatans]

The big mystery @ the "Canadian' is the massive interest in this train from the U.S.  What is the interest in this foreign train?    Nice train, I've been lucky to ride it a few times and the greed of the C.P.R. not to continue passenger service to Canada when they were given untold vast amounts of land in promise of passenger service,  we want our land back.

[BATMAN]

I think most modelers tend to model a railroad that is home grown, or something that is remembered from their childhood. I remember a good thread on this subject a couple of years back.

This got me to wondering how many of the 2000 units will be sold to Canadians and how many units will be sold elsewhere. If Rapido thinks most of the units will be sold to Canadians and 2000 units is the production benchmark then that explains the number. If the train was an American passenger train icon, the number would possibly be 20,000 as the United States has ten times the population of Canada.

If the majority of the sets are to be sold to Canadians then it becomes even more of a niche item and the risk is larger. It is kind of like making T-shirts for the local club. If at least 30 people don't order a shirt it ain't going to be made, and deposits will be required.

I think most Canadian modelers understand the situation Rapido is in as far as commitment goes and are willing to come to the table cash in hand. That being said if I thought I would lose a wink of sleep over losing the deposit that tells me I can't afford the train and wouldn't order it.

Last year I ripped up a $300.00 tire on my annual railfanning trip into the Rockies. Guess what I'm going back in a couple of weeks for this years trip. I am not staying home in fear of losing another tire.

Rapido guys. Any numbers on how many units are expected to be sold in Canada vs: elsewhere?

 

                                                                   Brent

[BATMAN]

TA462

Oh and just for the record, the guys that are actually buying these things don't shop at Walthers so they can go jump off a bridge (you know what I mean) too.  

TA.  What's a Walther's? I have five excellent train only stores within a fortyfive minute drive and non of them are called Walthers. Are they related to Walmart?

 

                                                                 Brent

[andrechapelon]

tatans

The big mystery @ the "Canadian' is the massive interest in this train from the U.S.  What is the interest in this foreign train?    Nice train, I've been lucky to ride it a few times and the greed of the C.P.R. not to continue passenger service to Canada when they were given untold vast amounts of land in promise of passenger service,  we want our land back.

Service "TO" Canada???? The route of the "Canadian" was entirely WITHIN Canada.

Canadian rail passenger service was taken over by Via some years ago, much as US passenger service was taken over by Amtrak, so what's the big deal? Should the UP return land because it no longer runs the "City of <fill in name>", not to mention MP, Katy, WP, and SP trains.

Andre

[Motley]

TA462

Oh and just for the record, the guys that are actually buying these things don't shop at Walthers so they can go jump off a bridge (you know what I mean) too.  

TQ462, there you go again with the jumping off a bridge thing.

All I can say is... good luck, and you're new train should be arriving by 2015. HHAHAHAHAHAHA

[blownout cylinder]

Good Grief...

What is it with you fine people???  

You don't like the way that they are doing business? No one is holding a knife under your'n throat ordering you to buy the thing.

It is primarily geared to those who 'collect' limited editio n sets like this..there is no economy od scale here.

It is also a large set...http://www.rapidotrains.com/telegraph_current.html..READ the thing!!   Who else is going to go through ALL that work? You? Doubt it....and I am sure that the people actually making this are going to be paid a little pin money.......the detail on this thing is going to be something to behold, I tell you...

So, give it a rest...

[blownout cylinder]

Motley

 

TA462:

 

Oh and just for the record, the guys that are actually buying these things don't shop at Walthers so they can go jump off a bridge (you know what I mean) too.  

 

 

TQ462, there you go again with the jumping off a bridge thing.

All I can say is... good luck, and you're new train should be arriving by 2015. HHAHAHAHAHAHA

Did you even bother to contact them about your concerns?

Sheesh.

[Comrad_Durandal]

All I can say is $1,500 is a lot of model train money...  serious bank.

[Motley]

What's my problem? (You are obviously talking to me, because I started this crazy thread.)

My problem is, I was interested in the train, and was looking forward to getting it. But then I was notified that I had to pay a deposit by next week.

And once again, you guys keep saying it was clearly communicated with people a long time ago? Really? Who exaclty, is this a secret society in Canada? Why is this information not even on their website? Why do I have to place an order, and then find out about the deposit after the fact?

[Motley]

blownout cylinder

 

Motley:

 

 

TA462:

 

Oh and just for the record, the guys that are actually buying these things don't shop at Walthers so they can go jump off a bridge (you know what I mean) too.  

 

 

TQ462, there you go again with the jumping off a bridge thing.

All I can say is... good luck, and you're new train should be arriving by 2015. HHAHAHAHAHAHA

 

 

Did you even bother to contact them about your concerns?

Sheesh.

Yes I fired off an email to them, as soon as I received the notice from Dallas Model Works. I have not received any communication back.

[andrechapelon]

blownout cylinder

Good Grief...

What is it with you fine people???  

You don't like the way that they are doing business? No one is holding a knife under your'n throat ordering you to buy the thing.

It is primarily geared to those who 'collect' limited editio n sets like this..there is no economy od scale here.

It is also a large set...http://www.rapidotrains.com/telegraph_current.html..READ the thing!!   Who else is going to go through ALL that work? You? Doubt it....and I am sure that the people actually making this are going to be paid a little pin money.......the detail on this thing is going to be something to behold, I tell you...

So, give it a rest...

It's really funny. All the people hyperventilating about this project haven't the foggiest idea what's involved. That a 3 employee company would attempt a project of this magnitude in a country with a population slightly less than the state of California is downright amazing. People should be kissing Jason Shron's tuchas for having the cojones to see this project to fruition and take the financial risk.

Andre

 

[BATMAN]

andrechapelon

 

 

 

It's really funny. All the people hyperventilating about this project haven't the foggiest idea what's involved. That a 3 employee company would attempt a project of this magnitude in a country with a population slightly less than the state of California is downright amazing. People should be kissing Jason Shron's tuchas for having the cojones to see this project to fruition and take the financial risk.

Andre

 

[andrechapelon]

Yes I fired off an email to them, as soon as I received the notice from Dallas Model Works. I have not received any communication back.

It's a 3 person operation. There's not a big back room with "operators standing by to take your call" so it may be a while before you get a reply.

In any case, Jason Shron did appear on this forum and address some of the issues raised. Effectively, you've got your reply even if it wasn't personal and private.

Andre

[blownout cylinder]

Motley

What's my problem? (You are obviously talking to me, because I started this crazy thread.)

My problem is, I was interested in the train, and was looking forward to getting it. But then I was notified that I had to pay a deposit by next week.

And once again, you guys keep saying it was clearly communicated with people a long time ago? Really? Who exaclty, is this a secret society in Canada? Why is this information not even on their website? Why do I have to place an order, and then find out about the deposit after the fact?

 I just noticed that you already did..

[blownout cylinder]

RapidoBill

I've been following this with... some interest. Jason has already cleared up a couple of issues, but I want to address one more. There are several posts that go on about "What if they don't make it?" This, of course, is a legitimate concern from anybody who has not been following the development of this train for any period of time. I could of course mention that I have two years' worth of pay checks to show for the company's commitment to the design process and production requirements, but I doubt that that would convince anybody. So...

Let me quote from the September 6, 2010 Telegraph newsletter (available on line at http://www.rapidotrains.com/telegraph27.html "Only after everyone has seen the actual model will we close the order desk for The Canadian and take deposits from dealers." Two things to note here. First, the date of the mention of deposits - September, 2010 - not 6 weeks ago as others have claimed. Second, the statement that we would show actual models before requiring firm deposits. For anybody who has been following along, Jason just spent the last month or more touring dealers in Canada with the samples and Dan and I had them at the National Train Show in Sacramento.

So, what can we all take away from this? First, the notion of our asking for deposits is not a new announcment. Second, we have invested a ton (tonne for those north of the border) of cash already in this project which is evidenced by having complete samples of all cars and locomotives that are complete to a point that we are willing to show them publically. Which means, in a nutshell, that we WILL be producing the train. We have invested this much into the train already that it woud make NO sense NOT to make it. We don't need that many expensive paperweights around our offices.

Finally, to the perceived issue of quality on the samples. These samples were hand decorated and assembled at our factory at the end of what was a very long three week visit there by Jason and myself. See http://www.rapidotrains.com/telegraph30.html and http://www.rapidotrains.com/tt_13.html. At the time of the NMRA show they already had several thousand miles of travel on them. Given these factors (hand assembly and travel and display damage), it should be entirley understandable that they show a few imperfections. This, of course, is the danger of showing pre-production samples. We will let the quality of the rest of our recent releases speak for what can be expected.

As I told a friend on e-mail the other night, we won't force you to buy the train, and in order to get it to market we can't change the terms. It is up to you (each) to decide whether it is worth the investment.

Bill Schneider
Product Design
Rapido Trains

From page 2 of this ridiculous thread...try to READ the post....

[Caso.Sub]

I thought I would weigh in on this thread being a fellow Canuck and Rapido purchaser.

Rapido is trying to produce a once in  a lifetime model, probably more challenging in sales than the Turbo( due to the ability to tap into US sales). So I give them props for this, no doubt a tough task. There is other Canadian projects which will never see the light of day, even some smaller US projects.

Jason noted, they are a small company, just 3 staff, with an offshore factory in China. Most companies of this size would be considered a mom and pop shop in most business sectors, retail, service or other.

So Rapido is requesting 25% deposist for each pre-order. So we will assume $375 per units. So on the need 2,000 piece run that equates to $750k. A fairly large amount of money. So as people have noted and pictures on the net indicate, the tooling is down or close (less minor revisions). So this money  is not being used for R&D or toolling, but simply just a line of credit financed interest free for Rapido to buy materials, and potentially labour based on the cost of goods manfactured margin of selling price 25% of the list.

So in theory all deposists would be financing the project and allowing additional finances to meet expenses.

As for the practice of the deposists. Some Canadian hobby shops which are very reputable take deposists, some have credit cards on file, again that the LHS practices.

This deposist is not going to the dealer but Rapido. So here is where the tricky part begins. As Rapido is most likely an Incorporated business, they have little to no legal liability to creditors, banks and even consumers who place deposists. So in theory if Rapido becomes insolvent, your deposist would not be refunded. Also as your not a preimer creditor, your claim would be close to last. Banks, governments, loans and personal loans would supercede your deposist. I have seen it happen for first hand to a older client of mine who had deposists on a production of products, only to learn from the Bankruptcy in Trustee that her deposist was lost, as the company had more liabilities than assets, as would not considered a secure creditor on the list. Since then all clients have been advised to have legal letter to protect their deposist, in some cases in a trust account.

To answer the main topic, end of the day its upto the modeller to place the deposist in good faith, and hope to recieve product and a reasonable delivery date.

Frankly, I have moderate interest in a Canadian, the more current version. However I do not support deposists to a company ( due to noted client issue). I wish everyone luck, hopefully it will not end up like the Northern. And if anyone thinks I am a Rapido basher I am not. I have close to 8 cabooses, a few ONR cars and all the LRC cars.

Regards,

CASO

[Rapido]

Hi all,

It's been very interesting reading everyone's opinions on this subject.  I'm not going to reply to all of the posts, but I think Brent's question warrants a reply to put things in perspective.

BATMAN

Rapido guys. Any numbers on how many units are expected to be sold in Canada vs: elsewhere?

Based on our current orders for the train and based on what I have been told by our US distributors, the projected split is 92% Canadian orders and 8% rest of the world.  

Best regards,

Jason

[Motley]

I think it's time the admin closes this thread please.

[blownout cylinder]

Let me quote from the September 6, 2010 Telegraph newsletter (available on line at http://www.rapidotrains.com/telegraph27.html "Only after everyone has seen the actual model will we close the order desk for The Canadian and take deposits from dealers." Two things to note here. First, the date of the mention of deposits - September, 2010 - not 6 weeks ago as others have claimed. Second, the statement that we would show actual models before requiring firm deposits. For anybody who has been following along, Jason just spent the last month or more touring dealers in Canada with the samples and Dan and I had them at the National Train Show in Sacramento

Just wanted to make this a little plainer...September 2010...NOT 6 weeks ago.

[blownout cylinder]

Actually the question should be asked why some dealers...Walthers(?)..felt the need to throw that clanger into the machinery to begin with....

[wjstix]

Motley

And once again, you guys keep saying it was clearly communicated with people a long time ago? Really? Who exaclty, is this a secret society in Canada? Why is this information not even on their website? Why do I have to place an order, and then find out about the deposit after the fact?

I may be wrong, but I think the need for the deposit was mentioned in the Rapido ads in Canadian Railway Modeller when it was first announced??

FWIW, if you shop around you might be able to get Intermountain FP's and a set of Con-Cor 85' fluted-side passenger cars in Canadian Pacific, CP Rail, or VIA lettering (including the Canadian's somewhat unusual  vistadome-observation car), for about what you'd have to pay Rapido for the downpayment for their train....certainly not the quality of Rapido but perhaps "good enough" for many folks. You'd have to add interiors but that's part of the "fun" of model railroading (isn't it?)

[tatans]

andrechapelon

tatans:

The big mystery @ the "Canadian' is the massive interest in this train from the U.S.  What is the interest in this foreign train?    Nice train, I've been lucky to ride it a few times and the greed of the C.P.R. not to continue passenger service to Canada when they were given untold vast amounts of land in promise of passenger service,  we want our land back.

 

Service "TO" Canada???? The route of the "Canadian" was entirely WITHIN Canada.

Canadian rail passenger service was taken over by Via some years ago, much as US passenger service was taken over by Amtrak, so what's the big deal? Should the UP return land because it no longer runs the "City of <fill in name>", not to mention MP, Katy, WP, and SP trains.

Andre

Sorry---Service IN Canada--- And "yes''  Railways that were given massive tracts of land ( and  the mineral rights) for free and were obligated to provide passenger service and did not fulfill their obligations should give it back,, they let passenger train equipment  deteriorate then pleaded poor boy to the Governments to let them disband rail travel, (strange, now people are thinking train travel isn't such a bad idea) I wonder if railway companies think the same?

Try and get on a passenger train on the prairies if you live south of the C.N.R. lines, no  passenger rail service on C.P.R. lines except the millionaire line to the Rockies.

[Motley]

blownout cylinder

Let me quote from the September 6, 2010 Telegraph newsletter (available on line at http://www.rapidotrains.com/telegraph27.html "Only after everyone has seen the actual model will we close the order desk for The Canadian and take deposits from dealers." Two things to note here. First, the date of the mention of deposits - September, 2010 - not 6 weeks ago as others have claimed. Second, the statement that we would show actual models before requiring firm deposits. For anybody who has been following along, Jason just spent the last month or more touring dealers in Canada with the samples and Dan and I had them at the National Train Show in Sacramento

Just wanted to make this a little plainer...September 2010...NOT 6 weeks ago.

What? I went and read that entire telegraph, and NO WHERE does it state this? Is it written in clear type?

[don7]

Why has this thread not been locked. Discussion is simply repeating itself. This post must be the record for unfounded assumptions.

Mediators, where are you?

[blownout cylinder]

I will personally be taking these pre-production samples of The Canadian on a cross-Canada tour (by train, of course!) from Halifax to Vancouver in late spring/early summer 2011. Only after everyone has seen the actual model will we close the order desk for The Canadian and take deposits from dealers.

Obviously since they were taking deposits from dealers who do you think the dealers are going to go to?

Oh...BTW...taken from the timeline subsection...only took me about 2 minutes to find it...

[Motley]

And why is it not on their website?, where people actually go to get information about the train? (like me)

Once again with this secrete society that only you fellas belong to.

[blownout cylinder]

Motley

And why is it not on their website?, where people actually go to get information about the train? (like me)

Once again with this secrete society that only you fellas belong to.

Yes...there was a deep dark conspiracy to keep you in the dark....

Your just mad that you missed the part where they said this..oh..and BTW...there seems to be a lot more people who knew this as well..they must all be a part of this deep dark conspiracy as well....

[galaxy]

Boy.

Hmm.

It seems to me that this thread WOULD DIE OUT if TA462 and blownout cylinder would "quietly retreat from thier keyboards" and SHUT UP.