By "self-ditrubute", do you mean like ScaleTrains, ExactRail, Wheels of Time, Tangent and a few others do? Pretty much all of those also sell via an online website and also vendors, so you can go either route. With Exactrail, their items cost more at MBK than their own website. Tangents are a couple dollars less at MBK vs. their direct sales. Each is a bit different.
Rio Grande. The Action Road - Focus 1977-1983
BRAKIE ATLANTIC CENTRAL BRAKIE Sheldon,Those big B&M on line hobby shops can afford to buy by the pallet lot because these shops learn the Internet is their friend not their enemy. If a shop would give a 10% discount at checkout they would see more of my hobby cash but,not to budge on the amount spent at check out is not the way to get my cash and in the end every business needs a constant flow of cash from happy customers to stay in business. Happy customers and cash flow mean nothing if you can't cover expenses. That 10% can easily be the difference been profit and loss, and while it will get some of the business lost to discount outlets, it will not get all of it. 25% - 30% off is very tempting to most people. Walmart only makes a 5% net profit........ Sheldon Sheldon,10% of a (say) $25.00 fright car sale is a whopping $2.50 and the shop still made money in the process and that's far better then that freight car collecting dust at full price for months or years. A hobby shop thast doesn't move stock in a timely manner is doom to fail.
ATLANTIC CENTRAL BRAKIE Sheldon,Those big B&M on line hobby shops can afford to buy by the pallet lot because these shops learn the Internet is their friend not their enemy. If a shop would give a 10% discount at checkout they would see more of my hobby cash but,not to budge on the amount spent at check out is not the way to get my cash and in the end every business needs a constant flow of cash from happy customers to stay in business. Happy customers and cash flow mean nothing if you can't cover expenses. That 10% can easily be the difference been profit and loss, and while it will get some of the business lost to discount outlets, it will not get all of it. 25% - 30% off is very tempting to most people. Walmart only makes a 5% net profit........ Sheldon
BRAKIE Sheldon,Those big B&M on line hobby shops can afford to buy by the pallet lot because these shops learn the Internet is their friend not their enemy. If a shop would give a 10% discount at checkout they would see more of my hobby cash but,not to budge on the amount spent at check out is not the way to get my cash and in the end every business needs a constant flow of cash from happy customers to stay in business.
Sheldon,Those big B&M on line hobby shops can afford to buy by the pallet lot because these shops learn the Internet is their friend not their enemy.
If a shop would give a 10% discount at checkout they would see more of my hobby cash but,not to budge on the amount spent at check out is not the way to get my cash and in the end every business needs a constant flow of cash from happy customers to stay in business.
Happy customers and cash flow mean nothing if you can't cover expenses.
That 10% can easily be the difference been profit and loss, and while it will get some of the business lost to discount outlets, it will not get all of it. 25% - 30% off is very tempting to most people.
Walmart only makes a 5% net profit........
Sheldon
Sheldon,10% of a (say) $25.00 fright car sale is a whopping $2.50 and the shop still made money in the process and that's far better then that freight car collecting dust at full price for months or years.
A hobby shop thast doesn't move stock in a timely manner is doom to fail.
In my experiance, he might be out of business either way. Those $2.50 discounts add up.
Gross sales - $1,000,000 (@ retail value)
Cost of goods - $600,000
Gross profit - $400,000
Operating costs
Rent, Batimore area, 5000 sq ft, $110,000/yr
Labor, 3 imployees, $150,000/yr
Utilities, insurance, misc, $30,000/yr
Owner salery, $75,000 (not a lot based on cost of living here)
Taxes, $10,000
Debt service, ?
Total expenses - $375,000
Net profit (before debt service) - $25,000
Net profit if all sales are discounted 10% - minus $75,000 - YOU ARE OUT OF BUSINESS.........
Even if the 10% discount boost sales 20%, and expenses stay the same, you are still minus $15,000
And all of that assumes the businss has no debt.
But what do I know?
riogrande5761 By "self-ditrubute", do you mean like ScaleTrains, ExactRail, Wheels of Time, Tangent and a few others do? Pretty much all of those also sell via an online website and also vendors, so you can go either route. With Exactrail, their items cost more at MBK than their own website. Tangents are a couple dollars less at MBK vs. their direct sales. Each is a bit different.
Yes, and like Athearn, all Athearn is distributed by their parent Horizon, or Walthers branded product sold by Walthers to a dealer.
Others include Bowser, Intermountain, ConCor, Campbell structures, Kadee, and many more who already sell directly to dealers of any size.
Even Bachmann sells direct to many "medium" sized dealers, not just to the big boys like Trainworld or Kleins.
Using the numbers supplied by the OP:
Retail price of loco = $410
Discount price offered at LHS, aprox 10% off = $369
Discount price from internet supplier, aprox 30% off = $275
Dealer cost for LHS from regional distributor = $246
Cost for internet outlet direct from manufacturer = $164
ATLANTIC CENTRAL Using the numbers supplied by the OP: Retail price of loco = $410 Discount price offered at LHS, aprox 10% off = $369 Discount price from internet supplier, aprox 30% off = $275 Dealer cost for LHS from regional distributor = $246 Cost for internet outlet direct from manufacturer = $164 Sheldon
As far as debt needed for "capital" investment in a shop, if a banker saw that the LHSs competition sold the exact same product for 75% of what his/her loan applicant sold it for, the banker couldn't deny the application fast enough.
And that, unfortunately, overrides any type of other factors, like how long the LHS has been in business or what kind of stellar payment history the shop has displayed. Those are facts based upon circumstances that existed in the past. Applications get approved by trying to see into the future, and those numbers look bleak for the shop trying to sell the items at a "premium" (aka the other shop selling it at a "discount"...its all relative).
That LHS will need to increase their geographic footprint of available customers beyond what his B&M shop can attract. He needs the higher volume of sales to be able to be more competitive on price. Probably a heavy internet presence depending upon how many employees will work for him or if he will be a one horse operation.
JMO of course.
- Douglas
I do not get that "I have to have it now" problem. There are things I would like and I wait until I find a deal on it. Usually, I just Google the item(s) from time to time and see what comes up.
Most of what I buy comes from the guy down the street as his inventory is huge and I think his computer system is great. I just pay whatever he charges for smaller items, knowing I will get a good deal on more expensive items. If I find a good deal on a higher priced item, I phone him up and see if he can match it. Sometimes he can, sometimes not and he says, "go for it". We have an open, honest friendly relationship and he does not expect me to pay his prices on a new locomotive if I can get a much better deal elsewhere. He has a business to run and that is first and foremost in deciding what he charges for things. Judging by all the courier and Post Office trucks loading up there at the end of the day, he is a long way from suffering.
I phone or E-Mail retailers all the time and make an offer on things and often they'll take it. I don't know how many of you walk into a car dealer and just pay the sticker price without offering a lower price first, it is no different with train stores. That being said, I do not waste a retailers or my time trying to get $2.00 off a boxcar, at that point, you are costing him time which is money and he will not do you any favours down the road.
I worked for the Federal Government in Transportation and Logistics for 36 years. We would often have to decide what vehicle(s) to buy for certain duty. We had three very large thick books that would give you an accurate cost to operate any vehicle in any configuration. People have no idea the true cost of driving a vehicle. The only honest way is to do it on a per KM/MILE basis. The tax department will give business owners amounts they can deduct on their income tax for mileage. They will not give you a penny more than what they consider fair. They use the same books I mentioned earlier to determine the rate.
So why does someone drive 30 miles round trip to save $2.50 on a boxcar, when buying something online and paying to ship is much cheaper?
In short, a business cannot and does not expect loyalty from its customers if it can't compete. In the end, a business is a piece of paper in a drawer in a Government office somewhere, whether it survives or not is not based on emotion.
Brent
"All of the world's problems are the result of the difference between how we think and how the world works."
BATMAN I don't know how many of you walk into a car dealer and just pay the sticker price without offering a lower price first, it is no different with train stores.
I don't know how many of you walk into a car dealer and just pay the sticker price without offering a lower price first, it is no different with train stores.
Brent,
I ageed with you whole post except this. Respectfully, where is the magic price point?
Sure, cars and houses have a history of negotiation, as do used items. But in a retail store, please tell me at what price level I should expect to be able to negotiate?
Like I said earlier, try to negotiate the price of a $600 power saw in Home Depot, why would you treat the hobby shop owner different on a $600 locomotive?
Because he is a small business and you can talk directly with the owner?
I've been in business for myself most of my life, and sometimes I offer customers incentives, but I never negotiate my basic fees - my work schedule is booked for the next year and a half, because my work is exceptional and my rates very fair.
Sheldon,Those hobby shops of yore would offer that 10% discount and they had big mail order houses like Long's,Trainland/Trainworld,AHC , M.B. Klein,First place hobbies,Hobbies for Men, and Standard Hobbies to contend with and the same cost of doing business.
I suppose stock sitting on shelves today makes better business sense then trying to sell it at 10% discount? I don't think Mom and Pop would agree.
Larry
Conductor.
Summerset Ry.
"Stay Alert, Don't get hurt Safety First!"
ATLANTIC CENTRAL BATMAN I don't know how many of you walk into a car dealer and just pay the sticker price without offering a lower price first, it is no different with train stores. Brent, I ageed with you whole post except this. Respectfully, where is the magic price point? Sure, cars and houses have a history of negotiation, as do used items. But in a retail store, please tell me at what price level I should expect to be able to negotiate? Like I said earlier, try to negotiate the price of a $600 power saw in Home Depot, why would you treat the hobby shop owner different on a $600 locomotive? Because he is a small business and you can talk directly with the owner? I've been in business for myself most of my life, and sometimes I offer customers incentives, but I never negotiate my basic fees - my work schedule is booked for the next year and a half, because my work is exceptional and my rates very fair. Sheldon
Mike
BRAKIEI suppose stock sitting on shelves today makes better business sense then trying to sell it at 10% discount? I don't think Mom and Pop would agree.
Sheldon, the magic price point for me is always in flux but usually starts in the $150.00 range. I have more respect for the business owner and myself than to haggle over $2.00 off a $40.00 boxcar. I got a BLI C&O 2-10-4 for a song as I knew it had been on the shelf for a while. I E-Mailed the owner with an offer and he bit. I have some other examples as well. It doesn't bother me in the least if they say no, however, if you don't ask..... There is no doubt in my mind that the shop took a loss on the BLI they sold me, but it was capital not earning its keep.
As a business owner, I am sure you should realize that the minute you let emotions dictate your decisions you are in trouble. I don't negotiate with the clerk in Home Depot because they cannot make decisions on price without going through the ranks. They will price match and that is as far as I will go with a chain store. Like I said above I am not a person that ever has an "I want it now" issue. That lets me make offers without losing sleep.
Googling things you want, instead of just checking prices at shops you frequent can get you some pretty good deals.
BRAKIE Sheldon,Those hobby shops of yore would offer that 10% discount and they had big mail order houses like Long's,Trainland/Trainworld,AHC , M.B. Klein,First place hobbies,Hobbies for Men, and Standard Hobbies to contend with and the same cost of doing business. I suppose stock sitting on shelves today makes better business sense then trying to sell it at 10% discount? I don't think Mom and Pop would agree.
Larry, you keep talking like shops are full of stuff people don't want?
Inventory management is a seperate issue from selling everything across the board at a margin that is not profitable.
Sure, any business lowers prices to move out products not selling, but if your inventory is current and not selling because all your prices are too high, selling at too small a margin will not make you successful, it will bankrupt you.
Bankrupt with shelves full of dusty stuff, and bankrupt with empty shelves from selling at not enough profit to pay the rent, is still bankrupt in either case.
BATMAN ATLANTIC CENTRAL BATMAN I don't know how many of you walk into a car dealer and just pay the sticker price without offering a lower price first, it is no different with train stores. Brent, I ageed with you whole post except this. Respectfully, where is the magic price point? Sure, cars and houses have a history of negotiation, as do used items. But in a retail store, please tell me at what price level I should expect to be able to negotiate? Like I said earlier, try to negotiate the price of a $600 power saw in Home Depot, why would you treat the hobby shop owner different on a $600 locomotive? Because he is a small business and you can talk directly with the owner? I've been in business for myself most of my life, and sometimes I offer customers incentives, but I never negotiate my basic fees - my work schedule is booked for the next year and a half, because my work is exceptional and my rates very fair. Sheldon Sheldon, the magic price point for me is always in flux but usually starts in the $150.00 range. I have more respect for the business owner and myself to haggle over $2.00 off a $40.00 boxcar. I got a BLI C&O 2-10-4 for a song as I knew it had been on the shelf for a while. I E-Mailed the owner with an offer and he bit. I have some other examples as well. It doesn't bother me in the least if they say no, however, if you don't ask..... There is no doubt in my mind that the shop took a loss on the BLI they sold me, but it was capital not earning its keep. As a business owner, I am sure you should realize that the minute you let emotions dictate your decisions you are in trouble. I don't negotiate with the clerk in Home Depot because they cannot make decisions on price without going through the ranks. They will price match and that is as far as I will go with a chain store. Like I said above I am not a person that ever has an "I want it now" issue. That lets me make offers without losing sleep. Googling things you want, instead of just checking prices at shops you frequent can get you some pretty good deals.
Sheldon, the magic price point for me is always in flux but usually starts in the $150.00 range. I have more respect for the business owner and myself to haggle over $2.00 off a $40.00 boxcar. I got a BLI C&O 2-10-4 for a song as I knew it had been on the shelf for a while. I E-Mailed the owner with an offer and he bit. I have some other examples as well. It doesn't bother me in the least if they say no, however, if you don't ask..... There is no doubt in my mind that the shop took a loss on the BLI they sold me, but it was capital not earning its keep.
I understand.
One last thought, and it may be semantics, or just who makes the first move.
But in your example of the BLI loco that had been sitting on the shelf, had you come into my shop, and that thing was getting shop worn, and you asked to see it, I may have been prompted to offer you a deal before you asked for one - that is inventory management, on the spot clearance sale, etc.
But, it is based on my willingness to sell for less, not your expression of a desire to pay less. It is understood that everyone wants to pay less........
My Daddy said "the value of anything is only determined by how badly you want it, and how badly I want to be rid of it".
In retail being too willing to get rid of stuff can be just as big a mistake as not being willing enough.
My LHS owner knows the hobby, he can give me advice, help, and good information on what I will or will not be happy with. He warned me that a LBF kit was overpriced -- and it was -- but as I told him, it was that or nothing. But he cared enough that he didn't want me to be unhappy with a purchase.Nobody on line is going to care.When the last brick and mortar store closes, the people who buy online to save 10% will be the ones crying the loudest.
Disclaimer: This post may contain humor, sarcasm, and/or flatulence.
Michael Mornard
Bringing the North Woods to South Dakota!
If it helps any: buy the cheaper engine. Keep the difference 'in escrow' and spend it on things you need or want from your LHS the next time you're there, in addition to the money you intend to spend when you go.
I grew up in Yankee culture where 'the price was the price' and if you didn't like it, you didn't buy it (or went elsewhere for a better offer). The fundamental idea of always negotiating something off or haggling to counteract excessive markup was alien to me; this in part is why I generally won't buy new cars at dealers.
On the other hand, if I see something I can't afford and wonder if a dealer would sell it to me for less, I'll ask. Same if I see OBO or equivalent in an asked price. It's up to them whether they want to take the offer or not, but it's done in the spirit of 'I don't have that much' rather than 'you're implicitly overpriced so I'm intentionally underpricing so we can dicker'.
One issue with LHS is that they have to support inventory of a wide range of products, all likely at full cost to acquire, and then wait for whatever profit they can keep as it sells in dribs and drabs over time. It's unsurprising that larger volume purchases might constitute a better incentive especially when some of the items or supplies are slow sellers...
riogrande5761With Exactrail, their items cost more at MBK than their own website
Russell
OvermodOn the other hand, if I see something I can't afford and wonder if a dealer would sell it to me for less, I'll ask. Same if I see OBO or equivalent in an asked price.
That's how I got my Genesis SCL GP9. This engine sit in his show case for several months and I jokingly made a low ball offer and he agreed since he said I was the only one interested.
That's the engine I had to rebuild from the frame up with a new Kato motor,new DCC/Sound system and l e d lights added.
Thankfully my brother in law did the rebuild work gratis. The L E D lights cost me $25.00 installation.
Bayfield Transfer RailwayWhen the last brick and mortar store closes, the people who buy online to save 10% will be the ones crying the loudest.
That 10% is more like 20-30% off and more importantly in stock. That age old "I can order it for you" no longer applies since I or anybody can do that straight from Walthers..
I owe no fealty to any hobby shop nor do I patronized one on a study bases.
I doubt if I would shed crocodile tears over a closure of a hobby shop filled with dusty merchandise and dried up paint at full price.
I think OverMod nailed it: if you find a big ticket item online at a price too good to pass up, buy it. Then go to the LHS and spend the money you saved. The thing people seem to forget (aside from those who live a significant time from a shop that qualifies as local) is yes, you can get everything cheaper than the LHS. But at what price? Pun fully intended. I like to go to the LHS to just browse. I usually buy something. Sometimes I don’t. But I like to have the option of physically browsing. I try to keep it 60/40 local vs online. Keeping one’s money in the local economy— as much as possible— often outweighs discounts in the grand scheme of things. Unfortunately in practice my spending has been 40/60.
It boils down to buisness is buisness. Most hobby shops are trying to make money, period. Those of you that chose to pay more, hey, it is your money but don't ask me to be so foolish. The hobby shops of old could survive because they were a meeting place for people of like mind, now we have the internet for that and I know people all over the world and the owners of many craftsman kit companys. The only way for a hobby shop to survive is to become really big online because the hobby is too diverse to fit in a store, period. As an example (this is a bit of a poll to used as an example of this for which I will use my own wants). So of those seeing this, how many are into HO, 1930's, finescale, standard gauge, west coast, 18" min curves (I will not even narrow it down to Southern Pacific).
And "Buy American" means, "The Other Guy Can Buy American, I'm Going to Buy The Cheap Asian Knockoff At Walmart And Then Bellyache About America Losing Jobs."
Bayfield Transfer Railway And "Buy American" means, "The Other Guy Can Buy American, I'm Going to Buy The Cheap Asian Knockoff At Walmart And Then Bellyache About America Losing Jobs."
So is buying Canadian buying American? After all, Canada is in America.
Just wondering.
csxns riogrande5761 With Exactrail, their items cost more at MBK than their own website Yes but i can get shipping cheaper at MBK on Exactrail stuff.
riogrande5761 With Exactrail, their items cost more at MBK than their own website
Yes but i can get shipping cheaper at MBK on Exactrail stuff.
Not if you only order one model. And even if you order 2, the mark up on MBK's price for ER models may still negate the cheaper shipping. Look at the total cost.
Shipping is surprisingly about the same for a single freight car ExactRail direct vs. MBK.
If I order one ER model from MBK it will definitely cost more due to the markup, but it's your money.
Example say I buy one of those PS 60' waffle box cars from MBK. Price is $50.39 plus about $6.7x shipping so total about $57 and change. If I order that same model from ExactRail website that same model os $44.99 + about $6.7x shipping if I chose USPS cheapest shipping - total is $51.7x roughly. Savings is about 5 and change. For more than one, shipping goes up however.
Now if I buy say, 3 or 4 models from ExactRail, shipping will be higher than if I buy 3 or 4 models from MBK, where it is similar or only slightly higher. But the mark-up on the MBK ER cars is such that it offsets the cheaper shipping and is probalby more total in the end. You do the math and see.
So for one model, definitely cheaper to order direct from ER. If you can order more than $200 in models direct, shipping is free, and that beats MBK, no contest because ER products are marked up on MBK's website.
I like the Exact Rail business model, I would buy direct from them..........but they have only made three models in my era, on which I am well stocked in other brands.....
Tangent seems to offer more early era models in their mix and you can order from them direct also. But I find I order my Tangent from MBK more often than direct.
riogrande5761 Tangent seems to offer more early era models in their mix and you can order from them direct also. But I find I order my Tangent from MBK more often than direct.
There too, most are not early enough. Just the tank cars and gons.
ATLANTIC CENTRAL Would you walk into Home Depot to buy a $600 DeWalt chop saw and try to negotiate the price? Good luck with that. But they can be bought cheaper elsewhere?
Would you walk into Home Depot to buy a $600 DeWalt chop saw and try to negotiate the price? Good luck with that. But they can be bought cheaper elsewhere?
Absolutely I would. In my country the competing big box retailers have a price guarantee "If you can buy better elsewhere we will better it by 15%". I use the promise where I can.
I don't have the OP's dilemma as there is no LHS. Mine are Modeltrainstuff, Trainworld, Favorite Spot, Micromark, and Walthers. If I do visit a LHS while visiting US I seldom buy anything as I know I can get it cheaper from one of tha above and don't pay state tax.
bagal ATLANTIC CENTRAL Would you walk into Home Depot to buy a $600 DeWalt chop saw and try to negotiate the price? Good luck with that. But they can be bought cheaper elsewhere? Absolutely I would. In my country the competing big box retailers have a price guarantee "If you can buy better elsewhere we will better it by 15%". I use the promise where I can. I don't have the OP's dilemma as there is no LHS. Mine are Modeltrainstuff, Trainworld, Favorite Spot, Micromark, and Walthers. If I do visit a LHS while visiting US I seldom buy anything as I know I can get it cheaper from one of tha above and don't pay state tax.
But again, in that case the retailer has already said he will consider a lower price based on proof of a competitors lower price. Not the same as simply challenging the posted price of an item.
ATLANTIC CENTRALBut again, in that case the retailer has already said he will consider a lower price based on proof of a competitors lower price. Not the same as simply challenging the posted price of an item. Sheldon
Thanks to Amazon,e-Bay,Wal-Mart and competing big box stores matching prices there's a lot of hungry big box lumber stores out there that will haggle prices up to the competitor's prices and maybe a tad lower.
Sears failed to see the importance of their competition and stayed with the old school business practices and is fading fast from the scene.