Exactly right. Back in the early days, it was people like Rollin Lobaugh and Fred Icken on the high end. Take a look at the prices on Lobaugh locomotives and then hit up an inflation calculator. The prices on those make today's Overland brass seem cheap. It's no coincidence that many of the people back then with 'complete' layouts were professions like doctors and lawyers. The lest well to do had a string of cars and a loco or two built completely or mostly from scratch.
It's all a trade off in time and money. If you have loads of time, you ca scratchbuild with basic tools and do so very inexpensively. If you want to fill a basement up and have enough locos and cars to handle multiple operators, and do so in a couple of years, you're going to either need more expensive specialty tools to speed the scratchbuilding, or buy kits or RTR.
In general, this is not exactly a cheap hobby to be inManufacturers have tried cheap over the years. Some are still out there. Always with devestating results, as often as not driving peopel away as bringing in new blood. Oh sure, a Blue Box loco might have been $15 - but there were entire train sets for that price, with a loco, 4-5 cars, track, and a power pack. No question the BB was a far better product, but people bought those train sets. And promptly shelved them when they failed to run reliably as often was the case.
It's all relative, really.
--Randy
simon1966 There will always be a high end. Fortunately as has been discussed ad-nauseum on this forum there are many manufacturers catering to a more budget conscious modeller. IMO Exactrail did not go direct initially because they discovered that you can significantly increase volume when you sign up a bunch of retailers and sell them inventory for their shelves. Once you have established a market presence and have hoisted yourself up on the back of the retailer then you can drop them and go direct. This happens all the time in many industries. It is very hard indeed to build a market presence on your own with nothing but a web retail site and a monthly advertisement in the hobby press.
There will always be a high end. Fortunately as has been discussed ad-nauseum on this forum there are many manufacturers catering to a more budget conscious modeller.
IMO Exactrail did not go direct initially because they discovered that you can significantly increase volume when you sign up a bunch of retailers and sell them inventory for their shelves. Once you have established a market presence and have hoisted yourself up on the back of the retailer then you can drop them and go direct. This happens all the time in many industries. It is very hard indeed to build a market presence on your own with nothing but a web retail site and a monthly advertisement in the hobby press.
Modeling the Reading Railroad in the 1950's
Visit my web site at www.readingeastpenn.com for construction updates, DCC Info, and more.
Well I really hope ExactRail does well, but as of yet I don't have even one piece of their product.
At this point they only have one piece that is even in my modeling era - the B&O wagon top box car, and I have a bunch of those from F&C kits and from Fox Valley. I only buy models that fit my layout theme and era.
I can't say I like the direct marketing move, or the direction the industry seems to be headed in, but I do understand it - if that means I have it "all figured out", well maybe I do. I had family in the hobby business when I was growing up, then I worked in this business from teen to young adult, and have maintained contact with a number of people on the "business" side of this hobby.
That combined with spending most of my life self employed does give me a natural interest in the business side of this hobby and useful knowledge of how it works.
Model trains have ALWAYS been manufactured in short run, "limited" batches. The only difference now is the manufacturers tell us that and use it to prompt sales. Back in the day Athearn would have NEVER told the general public what was in stock or sold out at the factory and relied on the distributor and dealer network to actually "keep it in stock" hopefully until the next batch was made so as to provide a sense that the product was always available.
Now everyone want to "sell out" with no regard for that customer who comes along between production runs. Dealers can't aford big standing inventories, distributors are dieing, manufacturers are trying to "sell out" quickly on each run. Not a good business model in my view - as I have discussed on here before.
So if direct marketing means that the excess product sits at a SINGLE distribution point - the manufacturer - waiting for those "in between the run" customers, that might be better - then having to hunt down the dealer who still has what you are looking for. The big question may be pricing - single point distribution tends to level off pricing and direct to consumer marketing tends to raise prices to the highest price the market will bear. We will see.
I have seen some of their product, it is very nice. Again, hope they do well.
Sheldon
Yes, actually the Southern Waffle is on my list to find and acquire still. It's unique and very recognizable and yes, I've seen them in D&RGW freight trains so have to have at least one!
Rio Grande. The Action Road - Focus 1977-1983
riogrande5761 ExactRail does make nice stuff, and in my opinion, it's among the best of the current makers. The guys that went into and formed ER had years of experience with Athearn and others and were able to take all that experience and design equal or better cars. What I like is ExactRail is offering a lot of 1970's and 1980's freight cars such as the PC&F beer cars, the 5200 50' double door box cars, the 3-bay grain hoppers, the Vert-a-pac's. I've gotten 2 or more of most of those so far and am planning on adding more while I can and before this Direct Order thing kicks in. So far things I'm interested has all come out from them and I still need catching up. If ER does something going forward I really really want, I'll probably get one or two but mostly things they've already run.
ExactRail does make nice stuff, and in my opinion, it's among the best of the current makers. The guys that went into and formed ER had years of experience with Athearn and others and were able to take all that experience and design equal or better cars.
What I like is ExactRail is offering a lot of 1970's and 1980's freight cars such as the PC&F beer cars, the 5200 50' double door box cars, the 3-bay grain hoppers, the Vert-a-pac's. I've gotten 2 or more of most of those so far and am planning on adding more while I can and before this Direct Order thing kicks in. So far things I'm interested has all come out from them and I still need catching up. If ER does something going forward I really really want, I'll probably get one or two but mostly things they've already run.
Then there's the Southern PS waffle side boxcar nobody else makes..
Then that Louisiana Midland was a first...I don't recollect that road name being produce before.
If they would release a blue Aberdeen & Rockfish boxcar I'm good for two.
Larry
Conductor.
Summerset Ry.
"Stay Alert, Don't get hurt Safety First!"
Exactrail's cars are very good. I have a large number. But I don't like it when I need or want an item and find out it is all sold out. But then I go to a dealers list (currently) and find exactly what I want at a lower price. That is the story to date. Exactrail seems to be trying to now take it all back under their control, but I for one will not order when the item I want is "out of stock".
Bob
Exactrail is trying to survive in an industry that is evolving. They are employing a proven business strategy that should allow them to remain in business.
Is it a popular strategy? Probably not if you own a hobby shop. But if you enjoy owning/operating Exactrail equipment, the chances are you will like their direct-to-consumer strategy.
None of us like the disappearance of LHSs. But if we are to remain active consumers in the hobby, we may have to adjust our personal preferences.
I don't think I own any Exactrail equipment. But it has made me look at their website; and I must say that I like their 4427 covered hoppers. So, an unintended consequence of their action has gotten them a potential customer.
Richard,ExactRail does make undecorated kits for few dollars less then a decorate car.
As a example.
The undec kit.
http://www.exactrail.com/p-s-5344-box-car-undecorated-kit
The decorated RTR.
http://www.exactrail.com/p-s-5344-box-car-tm
A $6.00 difference in price-just about enough to cover the decals but,not the needed paint..
Would the decorated kits sell? Probably if there was more then $6.00 in price between the kit and RTR..
Marketing costs can run as high as 50% to 70% particularly when you include packaging, freight from China, sales, returns, customer service, advertising, instructions, etc. The price of oil is driving a lot of this. I work with Chinese companies and their costs are going up a lot from labor and oil. Oil is used in the production of plastic, transportation--touches a lot of areas in mfg and distribution.
The idea of kit vs complete unit is valid and so if Exactrail offered a kit, they could cut prices to the end users--Proto and many others have done this as pointed out earlier. So, this is not ONLY a cost driven decision, it has to reflect their customer base which has been willing to pay a pretty high price already for a complete unit. It would be surprising if they didn't do customer research before the announcement. Ebay and other online sites have been threatening LHSs for a while. Just look at Best Buy and how they are restructuring to fight the same kind of issues from a consumer point of view.
They will need to advertise more however since there won't be anything to see when I walk through the aisles of the many LHSs I visit in a year.
Richard
Simon Modelling CB&Q and Wabash See my slowly evolving layout on my picturetrail site http://www.picturetrail.com/simontrains and our videos at http://www.youtube.com/user/MrCrispybake?feature=mhum
CP5415The costs have risen for this hobby because of all the RTR items we allegedly wanted.
pastorbob I feel fortunate that having been in this hobby (HO) that is since 1957, I have about all the trains and related "stuff" secure in my basement, and at my age I will just enjoy it. I even have unopened kits that I can pull out and build, the railroad is running well, I have track supplies, extra decoders, life is good. So I can disregard the Sheldons who have the world of business all figured out and locked up. I do feel sorry for the newbies in the hobby who will not have the access that my generation has had to materials. Back to the days of only a few companies controlling the hobby. I can be honest and I don't care or I can be compassionate and feel sorry for those who will never enjoy the hobby the way I have. Life ain't so good some of the time. Bob
I feel fortunate that having been in this hobby (HO) that is since 1957, I have about all the trains and related "stuff" secure in my basement, and at my age I will just enjoy it. I even have unopened kits that I can pull out and build, the railroad is running well, I have track supplies, extra decoders, life is good. So I can disregard the Sheldons who have the world of business all figured out and locked up.
I do feel sorry for the newbies in the hobby who will not have the access that my generation has had to materials. Back to the days of only a few companies controlling the hobby. I can be honest and I don't care or I can be compassionate and feel sorry for those who will never enjoy the hobby the way I have.
Life ain't so good some of the time.
Bob,Old dogs like us has seen the many changes in the hobby over the years from the death of cheap brass locomotives and locomotive kits to the end of the BB kits and this direct sales is the next coming thing we are going to witness either that or a $100.00 RTR flat car and a $299.99 DCC ready diesel locomotive will soon be on the horizon since manufacturers are in the business to make money for the owner(s)..At those prices there won't be that many newbies entering the hobby.
I fully believe the manufacturers needs to find a way to hold prices and still make a profit so that mythical $100.00 RTR flat car or $299.99 DCC ready diesel locomotive doesn't become a reality..
ATLANTIC CENTRAL I think they will go out of business within a year. All the skeptics said that about Athearn when Horizon bought them and pulled Athearn from all the distributors, including Walthers - Athearn is doing better now than they have in 15 years. Sheldon
I think they will go out of business within a year.
All the skeptics said that about Athearn when Horizon bought them and pulled Athearn from all the distributors, including Walthers - Athearn is doing better now than they have in 15 years.
ATLANTIC CENTRAL Motley: I think they will go out of business within a year. All the skeptics said that about Athearn when Horizon bought them and pulled Athearn from all the distributors, including Walthers - Athearn is doing better now than they have in 15 years. Sheldon
Motley: I think they will go out of business within a year.
I think the huge number of releases over the last five years says all you need to know about the success or failure of Athearn under Horizon. If they hadn't been able to make a go of it, they would have discontinued or sold the line.
When you stop and think about it, you almost have to wonder why Exactrail didn't go direct sales only from the very beginning.
pastorbob I do feel sorry for the newbies in the hobby who will not have the access that my generation has had to materials.
I do feel sorry for the newbies in the hobby who will not have the access that my generation has had to materials.
I would not feel too bad......Superb looking models, an array of manufacturers that did not exist, bells and whistles, DCC, PC control, many excellent small business servicing the hobby, wonderful laser kits, internet forums and electronic media, there is a ton of very neat stuff going on in the hobby. With companies like Bachmann producing decent lower cost models with many higher end features, it does not even have to be hideously expensive either. Even with all the changes that are going on in the hobby there is a huge amount to like and be excited about.
Odie Apples to oranges Sheldon, Horizon has a ton of horsepower backing Athearn. Athearn is still in hobby shops because a distributor owns them. Not even a close comparison.
Apples to oranges Sheldon, Horizon has a ton of horsepower backing Athearn. Athearn is still in hobby shops because a distributor owns them. Not even a close comparison.
Not apples to Oranges at all. Horizon is also a company making the shift away from being a distributor of other peoples products and selling more and more of their own products. That is why they bought Athearn and MDC in the first place, to move from distribution only to combined manufacturing with single point distribution. AND they sell direct to consumers on their web site. They have done the same in model airplanes as well.
Broadway Limited is not much different - Factory Direct Trains is an "in house" direct operation only using the sale of other brands to broaden their customer base.
Admittedly, my info comes from a few hobby shop owners I know, but they are selling lots of Athearn, and at a reasonable profit - volume and margin makes for happy retailers who then have as much product as they can to make for happy customers.
If you read my first post, I indicated two business models I expect to see continue and grow - manufacturer direct to consumer:
Walthers, Bowser, Horizon, Campbell, BLI, ConCor, now ExactRail and a long list of others are doing it.
The other business model: Many of these also sell the products they manufacture/import direct to retailers and almost EVERY manufacturer in this business sells direct to retailers now - not so in the old days.
Yes a few distributors are still around, and many of these companies are still in the distribution business for now - but I can asure you most of the bigger retailers are NOT buying mainly from distributors - they are buying direct from the manufacturer.
Buying Athearn from its single source is not buying it from a distributor just because the building says Horizon any more than buying a Walthers passenger car from Walthers is buying that from a distributor because they also sell other brands - they orginate and control that product - they are the manufacturer and as such dealers, or retail web/mail customers are buying direct. And the current pricing structure to dealers, especially at Athearn/Horizon reflects that when compared to the "old days" when most of this stuff was sold through "distributors".
.
ATLANTIC CENTRAL Athearn is doing better now than they have in 15 years.
Athearn is doing better now than they have in 15 years.
Horizon is a privately held company, which does not publish financial statements of the over-all business, let alone one of its subsidiaries. I know you seem pretty well connected, but is this just speculation on your part, or is there some evidence that they are doing better than at any time in the past 15 years? Are they selling more product? Generating more revenue? More profitable?
Motley I think they will go out of business within a year.
It could be worse. They could have started a discount website where they undercut dealers, essentially driving them away from the product.
I imagine this is a way to hold the price down. A couple of years ago, Blackstone Models (Soundtraxx's HOn3 division) increased prices 40% across the board because of increased manufacturing costs. Wholesale was higher than the old retail price. Would you have preferred that? Even choking dealers out of half their profit, the cars would still cost more than they do now.
ATLANTIC CENTRAL This is surely bad for hobby shops/retailers - of all sizes and methods of sale - but it may not be bad for ExactRail at all. For all you "young people" out there, there has always been a core of small, direct to the public manufacturers in this hobby. And a few fairly large by model railroad industry standards have gone to direct sales and done just fine - Campbell Scale Models - maker of wood craftsman structure kits since the 60's, is now sold only direct. For the longest time they did not even have a web site, yet they are still in business. http://www.campbellscalemodelsonline.com/Default.asp Now I know for many of you, a wood structure kit is not on your radar - but yet they are still in business some 50 years later. Over the decades the pages of MR and RMC have been full of small ads for special products sold directly by small manufacturers - and that was BEFORE the internet. MARK MY WORDS, I have been saying this for years on here - distributors are all but dead, most products in this hobby will be sold directly to retailers by the manufacturers and/or directly to the public by the manufacturers in the future. It is already happening with a large amount of product, the trend will only continue. Athearn has single point distribution direct to retailers, Walthers is more about their own products rather than being a distributor, Bowser is the same, ConCor as well. The last three just mentioned use to be big DISTRIBUTORS - now they import/manufacturert and sell mainly their own stuff. Dozens of smaller companies are selling direct to retailers and/or consumers with e-commerce web sites. You the public demanded "discounts", and apparently also demanded high detail, RTR, proto specific products which require much higher developement and production costs - you cannot have your cake and eat it too. Manufacturers, distributors and retailers can not do all this, put inventory on shelves to have it available when you are ready to buy, and still have margins that allow for constant 20% to 40% "discounts" off "retail" prices. Get ready for more: Direct marketing Limited production Higher prices OR - maybe consider actually returning to building some of this stuff yourself? Sheldon
This is surely bad for hobby shops/retailers - of all sizes and methods of sale - but it may not be bad for ExactRail at all.
For all you "young people" out there, there has always been a core of small, direct to the public manufacturers in this hobby. And a few fairly large by model railroad industry standards have gone to direct sales and done just fine -
Campbell Scale Models - maker of wood craftsman structure kits since the 60's, is now sold only direct. For the longest time they did not even have a web site, yet they are still in business.
http://www.campbellscalemodelsonline.com/Default.asp
Now I know for many of you, a wood structure kit is not on your radar - but yet they are still in business some 50 years later.
Over the decades the pages of MR and RMC have been full of small ads for special products sold directly by small manufacturers - and that was BEFORE the internet.
MARK MY WORDS, I have been saying this for years on here - distributors are all but dead, most products in this hobby will be sold directly to retailers by the manufacturers and/or directly to the public by the manufacturers in the future. It is already happening with a large amount of product, the trend will only continue.
Athearn has single point distribution direct to retailers, Walthers is more about their own products rather than being a distributor, Bowser is the same, ConCor as well. The last three just mentioned use to be big DISTRIBUTORS - now they import/manufacturert and sell mainly their own stuff.
Dozens of smaller companies are selling direct to retailers and/or consumers with e-commerce web sites.
You the public demanded "discounts", and apparently also demanded high detail, RTR, proto specific products which require much higher developement and production costs - you cannot have your cake and eat it too.
Manufacturers, distributors and retailers can not do all this, put inventory on shelves to have it available when you are ready to buy, and still have margins that allow for constant 20% to 40% "discounts" off "retail" prices.
Get ready for more:
Direct marketing
Limited production
Higher prices
OR - maybe consider actually returning to building some of this stuff yourself?
What I was about to say is pretty much summed up here, thats the future. Just this week a large scale manufacturer, Aristocraft just announced that they too are going to direct sales. I wonder how many other mfrs will follow in the coming years. I can only hope my local train shop survives, as it is the only other LHS is already absolutley useless when it comes to trains.
Have fun with your trains
I only purchase things I can see and touch from the shelves at my LHS. Unless it's a preorder, and I know the product I'm getting.
So you guys in Canada, know that you will have to pay some high shipping costs if you order direct from ExactRail.
Michael
CEO- Mile-HI-RailroadPrototype: D&RGW Moffat Line 1989
A distribution chain is a wonderful buffer from the sharp end of business.
The distribution chain absorbs a lot of product as it takes inventory to stock shelves.
A distribution chain is a great place to un-load excess stock of items that have been built as a result of poor forecasting and the reading of the market.
A distribution chain can handle many thousands of transactions that would be hard to do from a single source.
The retailer markets your products, changes market perceptions, and introduces uninformed modellers to your product. How many respected hobby shop owners and employees have made a point of showing these fine models to customers that come into the store browsing?
But there is a cost. The cost is lower margins, But these are easy sales, as a manufacturer you don't have to work hard to get this business compared to the direct sale.
No doubt the folks at Exactrail understand all this and have decided that there is no value in what the dealer network has to offer? No doubt they understand the ramifications of climbing on the back of a dealer network to get market traction and then walk away?
We have no access to hard numbers, so everything is speculation. Only the folks at Exactrail know for sure what the math is. How much must they increase direct sales to compensate for the lost margin for sales to the dealer network? How these projections will impact volumes and the cost of production?
Audrey keeps telling me to remember my apoplexy....
Any argument carried far enough will end up in Semantics--Hartz's law of rhetoric Emerald. Leemer and Southern The route of the Sceptre Express Barry
I just started my blog site...more stuff to come...
http://modeltrainswithmusic.blogspot.ca/
I must admit being "addicted" to some of the offerings from Exactrail and being able to purchase them RTR. Now before someone wise person starts lecturing me about "building kits or scratch building my own from a chopped down tree" so I can be a real model railroader, let me simply state I have been in this hobby for a lot more years than most of you, I have scratchbuild, earned my MMR #138 in the NMRA, and actually know how to use tools. But, time marches on, when Exactrail announced the 4427 covered hoppers in Santa Fe, I started buy RTR wherever I could find them and now have a total of 139 of those covered hoppers for my grain train oriented layout. No way could I have put together that many kits in my lifetime. I am 75 years old, have arthritis affecting my hands, my scratch build days are over. Even kits are tougher now.
I was able to accumulate those covered hoppers through two major shops that carried ExactRail, and worked their tails off helping me accumulate the cars, and at less cost than if I had ordered from Exactrail direct. By the way I bought the first cars direct from ExactRail and when I went to re order, they were out of stock, but these other guys had them on the shelves and that is where I bought them.
My wife is ready to divorce me, the hobby shops declared dividends, but I got my cars so I can enjoy them before I die. I also purchased other Exactrail cars from those two shops and never ordered again direct from Exactrail. After all, they charged more and usually didn't have the cars I wanted.
So yes, I am grumpy, I am grumpy that I got old and can't scratchbuild, I am grumpy that some company has to build the backbone of my car fleet, I am grumpy because I actually saved a lot of bucks buying from the two shops, I am grumpy because I haven't had my morning coffee, so will sign off and get some.
Grumpy Bob
Imagine ... together we can totally resolve this age-old model railroading issue in just one thread
.....
My sense, and it is just one guy's experience, is that the combination of the relatively high price of ExactRail and the present day's world of "just in time" minimal inventory control meant that most hobby shops at best carried a rather incomplete selection from the line. So I suspect ExactRail was doing plenty of direct sales anyway. They do make beautiful stuff. But the only time I saw a significant sampling from their line was at the very large train shows such as TrainFest or Mad City, and at that, I had to go to various tables. Nobody had it all, or even very much.
Dave Nelson
Branchline old RTR versions of their Blueprint kits before they sold to Atlas, I have several. 4 road numbers offered as kits, and another 4 offered as RTR of the same car. Nothign new here, really.
ANd it's all "back tot he future" - back in the early days of the hobby EVERYTHING was direct sale. There were other distributors gathering up the small mom & pop shops besides Walthers in those days.
I think this change will greatly reduce sales. I understand their desire to not increase prices, especially considering they're high already. But I don't think they'll survive this change.
I don't think the problem is with RTR, but with highly accurate, highly detail models. You can still buy RTR for a lot less if you will accept less accuracy/detail.
I have a Mantua 1860's Boxcar decorated for the Maryland and Pennsylvania railroad. The details are mostly cast on - even the stirrup steps are not open. The door guides and end ladders are unpainted black plastic with the end ladder applied over the lettering. The wheels are plastic and the couplers are horn hook. And of course it's an 1860 boxcar for a railroad formed in 1901. Sill the list price is $10.99 and I bought it at a train show for $5.
But the rising prices are also a sign of another trend. Overseas cheap labor started with Japan, shifted to Korea to Taiwan to China. In each case labor starts cheap and then rises with the increase in the standard of living. Some production has now shifted to Vietnam, but I don't think they are big enough to absorb it all.
As others have pointed you still can find BB kits and MDC kits as well. I just bought a MDC old timers kit at an antique store last week for $4.95.
Enjoy
Paul