This thought occurred to me moments ago and begged the question why had I not pondered it sooner.
In the model railroading world a pre order is free there is no upfront money, whereas in the video gaming world a pre order requires money up front.
If I had the chance to put money up front on some stuff I had pre ordered but cancelled due to complete lack of hours at my PoE, I may still have been able to get it if I had put money down up front.
Before there's a mass backlash to this thread atleast allow me to say that putting money down up front could be offered as an option for pre ordering model train stuff. Like say the upcoming F3's made by IM that I really wanted. they came in two tone green and would've been perfect on point of my Centralian set.
Another thing that would work is placing a small amount and paying it off as the release date nears, (Gaming companies do this).
SP&S modeler, 1960's give or take a decade or two for some equipment.
http://www.youtube.com/user/SGTDUPREY?feature=guide
Gary DuPrey
N scale model railroader
Gidday Gary, I'm just thinking out loud so don't take anything I say too seriously!!! and besides my thoughts are in no particular order.
Can video gaming and model railroading be compared when it comes to numbers of participants? With no basis of fact I would think that model railroaders would be a very small drop in the ocean of gamers. Does the disparity of numbers actually have any relevance in this discussion??
A deposit up front would be a good idea, far too many people are all keen at demanding that X is a must have item yet when if they have to put their money where their mouth is , they are suddenly missing in action. Strange that eh !!
What we model railroaders tend to forget is that a lot of the model railroad manufacturers are not large multi national corporations but fellow enthusiasts with the good ideas and desire to share them and perhaps make a few dollars on the side (?) and while complaints regarding dishonoured arrangements are thankfully very few and far between, I'm afraid I work far too hard to let my money possibly disappear into someones pockets.
Self discipline, perhaps an old fashioned concept but over the years if I've wanted an item badly enough I've put money aside, in the bank, and forgotten about it until I've got the purchase price, then Bingo!! Getting a Wife, kids and a mortgage tend to change priorities so at times that money put aside has become unforgotten.
To be fair I personally don't like the concept of pre-ordering, but understand why it happens, and so consider myself very lucky that I'm not hanging out on someone offering to perhaps manufacture the AlcoEMD GP109-262 Phase 190 in the autumn 1912 Union Burlington freight colour scheme, (with out the Mars light.)
Cheers, the Bear.
"One difference between pessimists and optimists is that while pessimists are more often right, optimists have far more fun."
This thread, like many many others like it will most likely be *locked* sooner than later as a flame war topic.
There is something in the business world called 'JIT,' standing for "just in time" in the manufacturing and business Sector. It means supplies/products, etc. Come "just at the right time they are wanted or need". Why? you ask? because space, stockpiling and warehousing supplies/parts/products COSTS money! So delivery will be "JIT".
The other business tactic is the "preorder" suppliers to make sure the 'JIT' is "perfect", with no more, no less than needed.This is supposed to guarantee a "sell out" and have none or few left over on the shelves anywhere.It also "guarantees' The manufacturer can produce enough for ther profits to happen. If not enouhg pre-orders,then not produced.
Here is the main reason you will get a backlash:
The problems early on in the MRRing field was that suppliers/LHS's/online etailers were requiring a full paid upfront or partial downpayment on Per-orders, and often the manufacturer would either shove off production so far into the future, or NOT produce the item at all. This meant retailers had to refund money they most likely had already SPENT and did not have then to refund, so ALL PRE-ORDER payments stoppped. Now payments SHOULD be charged/paid ONLY when the item is delivered or ships.
I pre-ordered ONCE, and will NEVER AGAIN.. I didn't have to pay up front, but ordered about a year in advance of it's intended delivery date. It Came in about 2 months late, and when they called me about them, to say they were in, My financial picuture had changed drastically. Whereas I could aford them when I ordered them and had the money then, I had major repair bills to house and vehicle that drained that cash option. They offered me a payment plan which I took, but still meant paying off the CC over time that I could not budget for. So never again for me. IT MIGHT, but that is a LOOSE MIGHT have been better if I pre-paid, but that would have ment less morning for the vehicle repair, the new furnace I had to have installed, etc. The money went where it was really needed, not on some "toys" for this "big boy"!
If the hobby fails, and I say IF {another flame topic} I say it will due to the pre-order, JIT, and failed production syndromes as people are getting tired of it. The waiting is the hardest part and the total cancellations of production is heartbreaking to many.
Look at the recent track supply problem. Many wanting to start in the hobby cannot because of lack of available track! WHe itr DOEs become avaiable, it is GONE quickly, a sucessfull sell-out!
I prefer items to be shelf-ready when I want what I want when i want it!!! I want to see, touch,feel smell, taste a product before I buy it. So do many others.
On the other hand, It MAY keep knuckle heads like me from spending too much money {like I should NOT have above}.
Some MRRers can preoreder and wait the up to 3 yearss for an item or not be upset if it gets cancelled. BUT, Mnay ALSO are severely disappointed when the product either gets further delayed or cancelled.
-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.
Let's let business 101 be business 101 and use common sense instead.
With the QC problems some manufacturers are having I would think long and hard about plunking down some hard cash for a unseen model.
At least when I buy a engine on line I've already read reviews and watch videos on you tube and have a general idea of what I'm buying or I will find out why the engine is to be avoid.
Larry
Conductor.
Summerset Ry.
"Stay Alert, Don't get hurt Safety First!"
I have no idea what I will want to buy six months from now.
I don't pre-order.
If that means a company doesn't want me as a customer that is their decision and I can live with it.
Dave
Lackawanna Route of the Phoebe Snow
I have experience in the retail business, buying and selling... nationally. The company, big or small, that does the best job of keeping inventories low and turnover high is the winner provided they make sound business decisions in other areas also. I don't know what type financial arrangements most mrr companies have to make with the actual manufacturer, how much money they have to put up front. Depends on how well they can negotiate a contract and what their past record is on orders/payments etc..... I suppose.
Could it be, with the advent of the internet, selling has gotten so competitive and actual profit margins so low that 'manufacturers' have no choice other than going to the pre-order business model?
As far as games go, I think I read somewhere that the video gaming industry makes more money annually that the Hollywood movie industry. The following quote is from the Seeking Alpha website..
"The one-day record holder for a movie premiere is Spiderman 3, which brought in $59 million in ticket sales on its opening day.Spring's opening blockbuster brought in $500 million in sales. It was the biggest entertainment opening ever. But it wasn't a movie…Grand Theft Auto IV, a video game, recorded sales of $310 million… on its first day."
That is a chunk o' change.
I don't pre-order because, like a couple posters above have already mentioned, I want to see, feel, touch, and more importantly READ about the item before I drop hard earned (and scarce) money down on the item. If it means I miss out on the item because to few were produced and those that were had already been spoken for via pre-order or whatever...oh well, such is life. I have read too many stories/posts where people have dropped a chunk of coin down on an unseen/unreviewed/untested product only to be disappointed...and slightly less wealthy . Hey, each to their own and if pre-ordering is your bag then have at it and enjoy. It's just not for me personally.
Happy modeling!
Don.
"Ladies and gentlemen, I have some good news and some bad news. The bad news is that both engines have failed, and we will be stuck here for some time. The good news is that you decided to take the train and not fly."
Well, it is, after all, just a hobby -- and I'm not going to suffer any pain if an item is never available for me because I didn't pre-order it.
cacole Well, it is, after all, just a hobby -- and I'm not going to suffer any pain if an item is never available for me because I didn't pre-order it.
There is a pain killer called on line stores that orders enough for store stock and of course e-bay and the local use market...
After reading reviews and watching videos of the new engine you can make a wiser decision on buying or if you should avoid the engine.
BRAKIE Let's let business 101 be business 101 and use common sense instead.
Common sense is often flawed and built on bad data. There's a reason Business 101 exists.
For example, I'm in the space business. Common sense would tell you that you should mass produce (or at least order more than two) probes, rovers, and what have you to take advantage of economies of scale. But, in practice, that fails because the demands of every mission are so unique that you have to build from scratch almost every time. Common sense says "build a Mars rover just like the one you just built, it'll be cheaper, but put life detection sensors on it!" Real Engineering says "You've changed the mass, center of gravity, and power demands. Swapping in a $250,000 sensor is going to cost us $9 million. And it still might not work."
In before the lock!!
Anyway, there is NO comparison between model railroading and video games. Pre-ordering a video game ensures you'll receive a copy when released, not left standing in line if sold out. Pre-ordering in the model railroading world is for manufacturer's to see if the demand is there to even make the product.
I have only pre-ordered one item. It is the Athearn SD70Ace NS Heritage in the Penn Central paint scheme (DCC with sound). I was hesitant because of the price and estimated delivery date. But since I WANTED one and didn't want to take a chance on them being sold out or getting bilked by other sellers, I pre-ordered. The delivery date has been moved up (from Feb 2014 to Oct 2013) and since they have been displayed on Athearn's web site, youtube channel and the National Train Show, I am EXTREMELY EXCITED about it.
I am not entirely enthused about pre-orders and would not be happy if the company went out of business before delivery or changed their mind and would have to fight to get a refund. Athearn is a large company and the chance of this happening was slim. When I pre-ordered, the final price was actually lower than advertised.
Inspired by Addiction
See more on my YouTube Channel
NittanyLion BRAKIE Let's let business 101 be business 101 and use common sense instead. Common sense is often flawed and built on bad data. There's a reason Business 101 exists. For example, I'm in the space business. Common sense would tell you that you should mass produce (or at least order more than two) probes, rovers, and what have you to take advantage of economies of scale. But, in practice, that fails because the demands of every mission are so unique that you have to build from scratch almost every time. Common sense says "build a Mars rover just like the one you just built, it'll be cheaper, but put life detection sensors on it!" Real Engineering says "You've changed the mass, center of gravity, and power demands. Swapping in a $250,000 sensor is going to cost us $9 million. And it still might not work."
What's that got to do with buying model trains?
The modern age bean counters has ruin a lot of things and some came up with terrible ideas such as requiring a deposit.Thankfully calmer heads with common sense prevailed in all but a few instances and no deposit is required..
Common sense in purchasing models today requires modelers look before commenting dollars and Business 101 isn't needed for that..
Far too many models today suffers defaults from wrong details to shoddy workmanship.
LION thinks that in many cases "pre-ordering" is nothing more than a poll to see what interest is out there. Once they get enough pre-orders they will design the molds and order the products to be made. If they do not get so many pre-orders they will quietly shelf the idea.
ROAR
The Route of the Broadway Lion The Largest Subway Layout in North Dakota.
Here there be cats. LIONS with CAMERAS
I have pre-ordered twice and paid in full at the pre-order.
In both cases it was for small run items that the importer was selling direct only, so I was fairly sure they would not be discounted after delivery (in both cases they have not been).
In both cases I got a significant discount.
In both cases I had high trust for the importer.
In both cases I really wanted the item and did not expect to see anything similar later on. In one case I have been correct, in the other a similar product was offered, but for a different prototype at roughly the same price, so I still preferred what I got.
I have a short of list of items in S scale (less than 10) that I will pre-order if they are ever offered - all motive power which I doubt I will ever have the time to scratchbuild. Otherwise I wait until it comes out.
In a perfect world, everything I want is sitting on the shelves at my LHS at what I think (and the dealer thinks) is a fair price. Until then we all have go with what is available and seems best for us at the time.
Good luck
Paul
Back in the dark ages, PFM made some decisions about which loco to produce at their captive factory in Japan on the basis of customer requests.
The customer had to take the initiative and send a letter to PFM expressing their desire to purchase (fillintheblank) When enough requests came in to justify a production run, they made it.
Note that they didn't say, "We're going to produce Podunk and Northern 4-6-6T #10. Preorder now to get one."
OTOH, I'm one of those who wants to see the actual model before the card gets swiped - and no North American importer is likely to produce anything I might have a desire for. So, to me, this is simply an academic exercise.
Chuck (Modeling Central Japan in September, 1964)
BRAKIE NittanyLion BRAKIE Let's let business 101 be business 101 and use common sense instead. Common sense is often flawed and built on bad data. There's a reason Business 101 exists. For example, I'm in the space business. Common sense would tell you that you should mass produce (or at least order more than two) probes, rovers, and what have you to take advantage of economies of scale. But, in practice, that fails because the demands of every mission are so unique that you have to build from scratch almost every time. Common sense says "build a Mars rover just like the one you just built, it'll be cheaper, but put life detection sensors on it!" Real Engineering says "You've changed the mass, center of gravity, and power demands. Swapping in a $250,000 sensor is going to cost us $9 million. And it still might not work." What's that got to do with buying model trains? The modern age bean counters has ruin a lot of things and some came up with terrible ideas such as requiring a deposit.Thankfully calmer heads with common sense prevailed in all but a few instances and no deposit is required.. Common sense in purchasing models today requires modelers look before commenting dollars and Business 101 isn't needed for that.. Far too many models today suffers defaults from wrong details to shoddy workmanship.
I'm looking at it from running a business. They can't run on common sense.
I don't mind pre-ordering advanced items. I prefer that the manufacturers keep the eta info as up to date as possible. When my stuff comes in at my LHS I try to pick it up asap so that he can pay his bill on time with my actual money. I don't order things that he has to pay c.o.d. when they arrive. There are some things that I want to actually see before I buy, about 35% of my total purchases and if I miss out on them it helps me control the budget.
Mine doesn't move.......it's at the station!!!
ah, I see that thus far the response to that thought has been negative. I was not trying to compare games and trains, I was comparing practices.
Ok, what if Model makers did have 5 sample locomotives for the one you'd like to pre order. Say a popular locomotive on your home road, 5 sample models of said loco for customers to see and one for MRR to do an early review way before to release(gaming companies do this, I.e Game Informer magazine).
My money was where my mouth was and still is there, but real life usually has other things in mind so MRRing has to take a backseat. I can see why some are hesitant to put money down though, a good example is atlas' Dash 8-32BWH that was supposed to be released in Jan. but remains as elusive as bigfoot.
Keep in mind though putting money down on the pre order is optional. Thank you for your contributions so far guys.
OK, even from a business standpoint here is the basic problem with preorders in this business.
A model train locomotive or rolling stock is not a "stand alone" product. You need track, structures, scenery, controls, etc, etc, to build a model railroad.
Part of the motivation to spend any of this money is based on a reasonable assumption that you will be able to get the parts as you need and can afford them - at least the major parts and pieces.
The groecery store does expect you to "preorder" milk, they just assume you will come in and buy when you need it.
If more and more of the pieces of the "Model Railroad Puzzle" become harder to obtain, fewer people will have the desire or confidence to invest any money or time in the first place.
And if the models of interest to them are seldom available, they will become more discouraged.
This leaves the sale of model trains to a smaller customer base, weeding out the more serious "modeler" types in favor of those who just radomly "collect" expensive RTR models of locomotives. To be VERY blunt - if this hobby was only about "COLLECTING" RTR model trains, I would not be in it, and the 3-4 thousand dollars I have spent nearly every year for 40 years would be in my bank, or in some other hobby.
A smart industry would want the largest possible customer base.
So from where I sit, the more product that is "in stock", the bigger the selection of roadnames, prototypes, etc, the more oppertunity there is to grow the hobby and the industry and thereby sell more.
"just in time" works in some industies, it is not working well in this one.
Right now it is locos and cars, but what if this preorder thing gets to structures, track, control systems?????
Personally, I'm glad I already have a large percentage of the locos, cars, track, controls, etc, etc, that I need. Because this type of market would be very discouraging to me otherwise.
Fact is model trains have ALWAYS been producted in small batches - the only difference now is the marketing. Today each production run is "unloaded", first at higher prices to willing takers, then at lower prices to the bargin hunters.
In the old days retailers and manufactuers held the line on prices, and always had good inventories of product for customers to choose from. Smart busiensses are not always run based on some fomula learned at Harvard Business School.
Truth is, you can't have your cake and eat it too. If you want selection, then the super low discounts will not work.
Many of you complain about the demise of the Local Hobby Shop - but this is what did it - heavy discounting, preorders, sold out production runs that leave nothing to "display" or "sell" on hobby shop shelves, and no profit margin to support inventory.
Personally, I partly blame companies like BLI and MTH for bringing the "highrail collector mentality" to HO, which plays on the "limited edition" idea to sell this years products.
Be careful what you wish for......you just might get it.
Sheldon
It's kind of interesting to see folks stand up, pound their chests, and declare they'll never pre-order anything. To each his own. If there's something I want, I usually pre-order through my dealer and get a substantial discount. In general, there's no reason for a deposit and they are rarely asked for in the industry, because of the negative reaction. People somehow think if they can't keep an eye on the hands of the supplier at all times, they'll get robbed.
It's been my experience that the vast majority of those in model railroading as a business are good honest folks, despite the fact that reactions on these lines we tend to read here treat everyone as if they came from the wrong side of the track via prison.
Obviously, some new outfit promises the sky for only a small downpayment, then I'd be leery. Most of my dealings with preorders are with established, reliable vendors. If I order the latest run of Genesis Rio Grande F-units, I know what I'll be getting. Who's kidding who about this being risky business and why, I'm just not sure.
That Blackstone thing worried me the first time around the block, but turned out well. Hundreds, if not thousands of narrowgaugers regularly preorder the next item from Blackstone to ensure we'll get it. We may not all be the sharpest knives in the drawer, but Blackstone delivers regardless, even if it's a new model no one has seen yet. Risky? Hardly, or maybe some folks lead sheltered lives and stuff like that going wrong suddenly keeps them up at night? Well, an asteroid could hit, too, I suppose.
Then there's the idea that we all get the lowest prices because we don't preorder and wait out the buyers to vulture over the remains in hope what we want is covered. Well, if you do only spend at deep discount and don't mind taking the leftovers or just doing without, that's cool. Your expectations are low and easily satisfied. But increasingly, calling the numbers for production has gotten tighter and tighter. Yep, for those item that are misjudged and ordered in excess, yes there will be some nice prices, but on a relatively small selection of items. If you're trying to build after a prototype along some rather specific lines, you may not live long enough for everything you need to eventually come up on the cheap.
I also suspect most of us that take the "good price" approach versus the all-too-often fallen short and unfulfilled anyway "best price" angle don't bother registering a contrary opinion on this topic. I suspect we're the silent majority, because if someone else didn't buy all those trains, how are you gonna end up with any remainders to pick over?
Mike Lehman
Urbana, IL
But Mike, almost everything you said "assumes" all the customers that will want a given product are:
Active in the hobby right now.
Know they want the product.
Can afford to buy the product now.
It is my view that these manufacturers miss TONS of sales because there is no standing inventory to shop from. And that this deminshes the quality of the hobby, and thereby shrinks the market.
ATLANTIC CENTRAL So from where I sit, the more product that is "in stock", the bigger the selection of roadnames, prototypes, etc, the more oppertunity there is to grow the hobby and the industry and thereby sell more. "just in time" works in some industies, it is not working well in this one.
Sheldon,
I have to disagree with you on this one. Product that is "in stock" is inventory sitting, costing money. Yes, smaller runs now, but if that's what's ordered that's what you build and a little more. But do you build stuff so that it's gonna sit if you want to make money? Probably not. Having been in a low margin business (food distribution) how does a grocer make money and earn a reasonable return on investment? By increasing turnover. But the same issue applies in higher margin lines like model RR products. Inventory that's sitting is capital not earning.
Your argument could just as easily cut the other way. The higher rate of return brought about by higher inventory turns of limited runs may in fact be what is sustaining the model railroad industry. Cut margins more be reducing inventory turn or otherwise letting stock sit and that's a recipe for making things even harder on an already struggling industry.
Personally, I agree with you on what I'd like to see, but I can't agree that's the most prudent business plan. The fact that we've had relatively few failures, despite all the gloom and dooming the last few years, is indicative of industry health. Is it healthy enough to renounce modern business practices and return to the past ways? I kind of doubt that myself. I'd rather they keep pumping out limited runs and staying alive than risk collapse by reverting to past practices. Of course it was reassuring that you could go to the LHS and buy that fat-bodied Athearn loco in the same road number it's borne for the last decade. But we all expect more than that nowadays and I don't think the slow inventory turn model addresses that except through the rose-colored glasses of nostalgia.
NittanyLionI'm looking at it from running a business. They can't run on common sense
And that's the problem with today's business..They get so wrap up in Business 101,102 and 103 they forgot the common sense business basics that mom and pop knew..
At any rate you just can't expect your customers to pre order or make a deposit if your QC is questionable.
Maybe businessmen need business common sense 101?
ATLANTIC CENTRAL But Mike, almost everything you said "assumes" all the customers that will want a given product are: Active in the hobby right now. Know they want the product. Can afford to buy the product now. It is my view that these manufacturers miss TONS of sales because there is no standing inventory to shop from. And that this deminshes the quality of the hobby, and thereby shrinks the market.
I suggest that is exactly what the preorder process is designed to ascertain. If someone doesn't order something now, there's unlikely to be a significant unsatisfied demand in the immediate future. Should that turn out not to be the case, and something becomes a hit as it sometimes does, then you order another run. BLI's California Zephyr is a good case of that. I ordered what I wanted for the first run based on info passed on through the historical society, got a 20% discount through my dealer, then had to listen to all the gnashing of teeth from those who took the "wait and see" local who couldn't comprehend that BLI would somehow overlook their anticipated demand.
mlehman I suggest that is exactly what the preorder process is designed to ascertain. If someone doesn't order something now, there's unlikely to be a significant unsatisfied demand in the immediate future.
I suggest that is exactly what the preorder process is designed to ascertain. If someone doesn't order something now, there's unlikely to be a significant unsatisfied demand in the immediate future.
There are several significant changes over the past 20 years that have probably changed the model locomotive market permanently.
- the initial upfront investment (mostly dies and tooling) to bring product to market has sky rocketed. This has a particularly adverse affect on under-capitalized importers. It means all possible revenue from a production run must be generated quickly so that the capital can be replaced (or paid off) via actual sales.
- the great proliferation of new models means each run sells in far smaller quantities than would have been true when there only 5-10 new models a year. With smaller quantities to amortize the tooling and die costs, sales predictions have to be more accurate. The proliferation of new product also means that most LHS no longer have the capital to buy substantial quantities to stock for shelf (speculation) sales. This is self-defeating in the long run because it is spec sales that make the profit for the LHS.
- model railroaders in general no longer have the patience to wait years and years for the locomotive they want to be produced (or build their own). If the engine they really want is not available, they will usually buy a substitute - to "have something to run". This encourages frequent, small production runs of new models.
- repainting and redetailing locomotives to get the desired model is rare. Just wait for the paint scheme and model you want to be produced. Which again puts the pressure on for a constant supply of "new product" - or at least new paint schemes and changed details.
- nobody wants to pay retail. A 20% discount from retail has become the new starting point for price. With LHS margins being squeezed, capital for deep stock is further reduced.
- the increasing costs of production, shortage of capital, and pressure on pricing means that misjudgements are far more deadly than they used to be. Produce too many models that don't sell for months or years, and there is no recovery for that importer/manufacturer.
The safer bet - even if you leave profit on the table from speculation sales - is to just produce what you know will sell. This is happens in housing downturns, too. The 1st thing to disappear from the market are new "spec" homes. Spec homes that don't sell quickly all too frequently take small builders under.
just my thoughts on a repeat subject
Fred W
Fred,
I think you've summed up the tensions between what we'd all like to see as modelers and the business realities of today's world. Model railroading may be a hobby to most of us, but everyone in the supply chain above us is captive to various market forces, good and bad. Those folks have to make a buck to keep the trains coming, pure and simple.
jmbjmb mlehman I suggest that is exactly what the preorder process is designed to ascertain. If someone doesn't order something now, there's unlikely to be a significant unsatisfied demand in the immediate future. Totally disagree with that statement. The idea that only those who are willing to preorder is the total market is false. Even on here there are many of us, myself included, who have been burned by the preorder concept and refuse to do it again. That doesn't even begin to include all the unknown number of people who would by something if it were on the shelf. When I was a kid, trains were on the shelf and readily accessible. Meaning kids wanted them, leading to some them growing up to be model railroaders. If kids today don't see product on the shelf, how will they even know the hobby of Model Railroading exists?
jmbjmb,
Well, those kids might have heard about trains on that internet thing. I hear it's all the rage these days. Then there's still the tracks on the way home from school or at the local grade crossing...
Yeah, I can remember all that stuff on the shelf. I couldn't afford most of it. Not much has changed for the kids of today, unless by luck of birth, you ended up in a particularly affluent household.
Seriously, I was not implying that only those who pre-order should get trains. This is not North Korea. Besides, I think sometimes the idea of pre-ordering as strictly something the consumer does or they miss out is a bit wrong to begin with.
True, you have folks like me who order something and will most likely pick it up when it arrives. We don't risk any money.
Then there are the folks who come through a shop and say they're ..."really looking forward to that new BLI CZ..." which the shopowner makes note of. Depending on what's known about that customer, they might show up after the shipment arrives fully expecting to find "his" CZ cars. The owner knows this and will often takes the risk of not disappointing the customer, even though there's no firm commitment.
What this really comes out of is the number of items ordered for spec, or speculation, as noted above. The store knows he has a handful of firm orders, a couple of maybes, and he's located in a suburb of Demver. I'd say it's a no-brainer, order a dozen CZ consists and see what happens.
Most of the time, the answer is not so clear. But shopowners know how much inventory they can afford to carry and how much of a special run he's likely to sell. His orders for spec are also preorders. In fact, if that storeowner didn't preorder, all you folks that really want to see it, hold it, before you buy would really be up a creek without a paddle.
But it's also a very important point about preorders. Many of those items preordered in every run are for store spec stock!
So what's that tell you? Stores are the ones making the choices about what they stock or don't stock. If you want to point fingers, there you go. It's not the importers, who are simply trying to turn their product so they can go back and build more.
So do we demonize the LHS owner? I don't think so. He's simply trying to keep his accountant happy about that bloated inventory. If you have a wall of kits and you don't care if any of them ever leave, then you might be a model railroader. If you have a wall of RTR you're hoping to sell, then you're in a position where you may be an over extended LHS owner.
LHS don't carry masses of inventory any more because it's a problematic business model, not because the manufacturers force them to preorder. In the old days they didn't either, but both distributor and LHS were glad to sit on mountains of stuff after the initial order. Nowadays, they can't afford that "luxury" disguised a a poor business model. The importer wants to cash out to start the outlay for the next run, not fill up a warehouse full of overstock.
I think pre-ordering depends on the company. I pre-ordered a BLI heavy pacific from their subsidiary Factory Direct Trains. I did this in good faith to increase the likelihood that the unit would be produced. I paid full price ~ $245 when the unit arrived. I had to send it back for a manufacturing defect and got it returned at no charge except for postage and my trouble. Now I see them on another internet seller for $159.95 and its not even a year later. I do not think I'll be pre-ordering from BLI again.
A few thoughts.
Tooling costs are actually down adjusted for inflation - BUT, the models today are way more sofisticated - so it kind of a wash. In the old days, regardless of money, tooling took time. Now with CAD operated CNC it is done instantly.
Agreed, the market for each product is smaller, for a long list of reasons, more prototypes to choose from as time marches on, more models offered, more informed/diverse customer base, etc.
When production was actually controlled by the companies who are now just importers, they could work on smaller, quicker turn around times for batches, tayloring supply to demand. Long lead times of overseas manufacturing do make that more dificuilt - and tie up more money.
The big question is, are you right about the changed attiude of the customer base? I'm not so sure. It seems to me that the "modeler" half of the customer base is more demanding than in the past, not less.
Now the "casual" market, the collectors, many of them just buy whatever their favorite manufacturers make this year - very strange from my view.
But, I am the guy who does not own a BIg Boy, K4, GG1, UP FEF, NYC Hudson, Challenger, or PRR anything.
I do agree about pricing - EXCEPT, we have generally cut out the middleman, so there is ample markup at least at the basic 20% to 25% discount level.
Bachmann, Walthers, Athearn, Bowser, Intermountain, and others are using the preorder to help measure demand, but are still generally making trains to stock shelves. But others are simply "order takers" for production yet to be funded or started.
Maybe stuff like "fancy name train passenger consists" should be made on a "preorder" basis, but I still think this is all bad for the future of the hobby.
As per my first post, these products do not exist in a vacuum. Without all the support products there is no demand. Without a sense of being able to reach some level of completion, many people will simply not risk investing in this hobby. Lack of product to buy will, and I suspect has, scared people off - new and experianced alike.
As for the working capital thing, I know I'm a hard nosed capitalist, but if you can't stand the heat, get out of the kitchen.
Looking at the Athearn business model, a product line with lots of depth and breath allows sales of one product to support slower moving products without giving up the profit when previously produced items sell to new customers later on. Horizon does not have "blowout sales", neither does Bachmann, and both companies have consistant pricing policies that allow dealers to buy direct at a good discount - not a discount that changes based on their cash flow needs that week.
But the BLI business model has so few products, just repeated over and over as demand builds back up, offers no cash flow cushion between "runs". BECAUSE, they sold off cheap the products that could have increased their depth of inventory, making their product line more interesting to more people more of the time. They needed more money in the first place and have not made any effort to change the way they do business.
This is an interesting view, because I know of shops who have large stocks of product, bought that the lowest available market price, sold at attractive discounts, but NEVER do they have the "blowout sales" of older product. They simply wait for it to become rare and still wanted, and they get their original FAIR price. One such shop in particular, not real far from me, has hundreds of Bachmann Spectrum locos in stock all the time. Some have been on the shelves for years, maybe a few even a decade. But all the new stuff is there too - waiting for those "spec sale" customers like me.
No pricing games, good selection, and obviously successful based on the constant flow of customers and new product on the shelves - next to that old product someone will want one day soon.
If they can do it, others can too.
What constitutes a massive inventory?
Have you ever run a hobby shop?
You can't sell what you don't have, and you don't need an expensive store front to take special orders.
PS - for as long as they last, I will keep shopping at the ones with the "massive inventories". I suspect they are the ones that will last. When I worked in this business in the 80's, we could see this coming - our view was that you would need to "go big or go home". And so it is.