Personally, I am not a big fan of pre-order/advance reservation. I did preorder and prepay once - and that was for 2 steam locomotives in S scale (not hi rail) which are hard to come by and these happened to be for a railroad that I was interested in modeling. I got a discount and they were only sold by the manufacturer/importer.
Otherwise I buy stuff when it becomes available. I also buy NIB older items at train shows.
Several items that I would have bought had they been made, were canceled because there were not enough pre-orders. Other items I would have bought, were so limited run that they were gone before I decided to buy them - in some cases before I even knew about them. But that really doesn't bother me - there's enough stuff to buy at train shows and truth be told I have more stuff than I'll every use.
Paul
mlehmanrichhotrain The pre-order concept is a sign of decay in the model railroading hobby.
Pre-order has been a round for a good while now, but as for decay, we seem to have the most choices that ever have had. If this is "decay", then it doesn't seem too bad.
I generally don't pre-order; I just wait for items to comeout and if it's popular, I try to be on top of it. Generally I've been able to get what I need.
Rio Grande. The Action Road - Focus 1977-1983
lastspikemike,Actually, running plastic through injection mold tooling in North America is doable and economic, even with our relatively low production runs in our hobby. Kadee, Accurail and Bowser prove that. The expensive thing is assembly due to labor costs. Kadee's innovative snap-together models and Accurail's kits don't have a ton of labor costs, and Bowser shoots the plastic in the US and ships it to China for assembly and painting.Back in 2008 during the economic crisis we had, Atlas had posted on their old forum that it cost them $8000 to ship a 40' container from China to New Jersey. The year before, it had only cost $4000. If that $8k cost is still the same today, and you have a production run of 3000 to 5000 units, then yeah, it's only a buck or two per unit for shipping costs to the East Coast.York1,You know that shipping a container of model trains from China to North America has absolutely nothing to do with any postal organization, right?tin can,A company spending $4 per unit to ship something to China and then ship it back fits in with the numbers that Atlas talked about 12 years ago.Sheldon,FYI, Atlas was kind of late to the game with high-detailed loco models. IIRC, it was well into the late-1990's before they started putting grab irons on locos. I think the U23B was the first and that was in the 1999 Atlas Catalog.Production runs are much smaller today. 3000 to 5000 are more common.DAVID FORTNEY,The problem is with the market, not the manufacturers. In yon olden days, you could make a loco model and it would continue to sell well for years afterwards. Today, you make a loco model and after 6 months on the shelf you might as well throw them away for all the sales you'll get. The market only wants the new stuff (with rare exceptions on eBay).Sheldon,Huh? People can't buy an entire passenger train & matching locos all at once and that's why "the hobby is dying"? Walthers does a complete new passenger train with matching locos every year. Rapido is bringing out Horizon/Comet passenger cars in 3-car sets (with add-on coaches available), and matching locos will also come out at the same time. Now if your point is that a newbie should be able to walk into a hobby shop and buy any passenger train they want, then that's on the hobby shop not the manufacturer. A hobby shop could have ordered 50 or 100 of each passenger car for the last 20 years of Walthers train sets so a newbie could buy them years later. Of course the hobby shop will never do that because it would ruin them financially.Did you buy 1000 freight cars, 300 passenger cars, 130 locomotives, 1400 feet of track in less than a month? Of course you didn't. It took years to acquire that, so why should any newbie think they can get everything they want when they want it instantly? No one in this hobby ever has. Like any hobby, you have to work for it.You worked for a hobby shop many years ago. How many FL9's did you sell back then? How many EF-4's? How many C-430's? How many I-5 4-6-4's or I-4 4-6-2's? How many HH660's? I can tell you that you never sold any of them because they didn't exist. I prefer a sales method where I can get these things vs. one where I couldn't.richhotrain,If this is decay, I want more of it.And yes, manufacturers take a lack of pre-orders as a lack of interest. Because that's exactly what it means. If you really want it, you'll pre-order it. If you don't really want it, you won't.I'm enjoying every one of my pre-ordered NH models that I've received over the years. FL9, FB-2, 8600 coach, parlor, diner, I-5, I-4, RDC-1, RDC-2, RDC-3, RS-11, GP9, NE-5 caboose, 8200 coach, 8500 smoker, SW1200, etc. And these aren't generic models painted NH, these are actual NH models customized by the factory for the New Haven Railroad. And I will patiently wait for my new Rapido PA-1 and my NH "County" combine when they come out next year. Almost every NH diesel has been made in HO scale in the past 20 years, along with 4 major steam classes and even an electric (with an EP-5 on the way).It's a great time to be a NH fan. You can actually model the NH today vs. buying ATSF cars and generic diesels painted in foobie NH colors.
gregc,From what I understand, a high end car could cost ~$80k in tooling. However, every car and every loco is different depending on complexity and variations.
lastspikemike,Shipping a container of model trains from China to North American has nothing to do with the United States Postal Service, Canada Post, the Universal Postal Union, or anything postal. At all. It's not parcel post, it's cargo which is shipped by a private contract. When Rapido ships their pallets of NH passenger cars to the NHRHTA here in the States, it arrives by a trucking company, not the USPS or even UPS or FedEx.tin can,Yes, today if you want six CF7's you might have trouble finding them. In the 1980s (before pre-orders) you wouldn't be able to find any because they did not exist. I prefer a system where I merely have trouble finding the models I want vs. one where I cannot find any models I want.
Paul3lastspikemike, Actually, running plastic through injection mold tooling in North America is doable and economic, even with our relatively low production runs in our hobby.
Also, Games Workshop manufacturers most of their product in the UK with their own injection molding machines. Very doable, but no assembly.
When I watch those videos (not necessarily model trains) of Chinese workers accurately assembling amazing models out of tiny parts, I am breath taken. Are there even workers in North America that could do that? It is an incredible thing to see.
-Kevin
Living the dream.
Paul3York1, You know that shipping a container of model trains from China to North America has absolutely nothing to do with any postal organization, right?
Yes.
York1 John
Paul3,
I knew you would take the passenger train analogy too literally.
Altas was slow in the detail department, but early with the much better driveline.
Things I would buy that we will likely never see, even with preorders:
Accurate detailed early piggyback flat cars, like the 40' cars the B&O built from wagon top box car frames, or the ones the New Haven built.
B&O heavyweight passenger cars that were rebuilt into "smooth side streamliners".
A WESTERN MARYAND Pacific, heck, we can't even get a reasonable B&O P7, as built or as modernized. I would by a couple modernized P7's. But we a tripping over K4's?
Like Kevin, I was all in for some undecorated ALCO PA's, I placed my preorder with a major retailer.........but the Proto2000 ones I have are plenty nice enough. Some more of them will show up on Ebay.....
Sheldon
Paul3 richhotrain,If this is decay, I want more of it.And yes, manufacturers take a lack of pre-orders as a lack of interest. Because that's exactly what it means. If you really want it, you'll pre-order it. If you don't really want it, you won't.
richhotrain,If this is decay, I want more of it.And yes, manufacturers take a lack of pre-orders as a lack of interest. Because that's exactly what it means. If you really want it, you'll pre-order it. If you don't really want it, you won't.
Manufacturers may take a lack of pre-orders as a lack of interest, but what is really means is a lack of interest in pre-orders. As I said earlier, build it and we will buy it.
Rich
Alton Junction
Yes, it thrived for 50 years without pre-order but it was also a world of "here's your 40 boxcar" that didn't depend on incredibly granular market research and a customer base that will sink all of their claws in you over the most minute flaws.
York1,If you know that shipping a container of model trains from China to North America has absolutely nothing to do with any postal organization, then why did you bring it up?Sheldon,Um, of course I took it literally as you wrote it that way. "But as the grumpy old men sit around and talk about the hobby dieing, and a handful of them ask "how can we get new people interested?", I would submit this one simple fact. Be it online or in a store, the fact that a beginner cannot easily buy a locomotive and a matching set of passenger cars all at the same time in the same place, is a discouragement to new people." What else can that mean? The hobby is dying because newbies can't buy entire passenger trains with matching engines all at once is what it sounds like to me.Yep, Atlas sold the first real quality drive. The updated Atlas Roco drive and the Atlas Kato drive are superb even today. But I still wouldn't say they were leaders in detailing like Bachmann or Life-Like. Atlas models of the 1970's, 1980's and 1990's were, other than their drives, not much different from Athearn BB's in part count.Early TOFC cars are unlikely in today's market, but possible. At Springfield this year, I bought a resin NH 17200-class cast steel flat from Speedwitch Media that I plan to convert to TOFC service just like the NH did (I even have the plans). 30 years ago, it was impossible to get any early TOFC (well, other than Athearn's).B&O converted heavyweights will be a problem, but they could happen. After all, the NHRHTA partnered up with Rapido to make the totally unique-to-NH stainless steel passenger cars. We're making the 4th car type with Rapido right now. Why not get the B&O historical guys to make the same deal as the NHRHTA did? I assume they have more members than we do. It's possible. 30 years ago it would have been impossible.For more (accurate) B&O engines, group pressure works best. NH fans campaigned a long time for NH steam, diesel and electric locos. And better yet we put our money where our mouth was by buying the NH models once they came out. Convince B&O fans to support their railroad and campaign for models and stuff will get done. We in the NHRHTA are proof of that.richhotrain,Sorry, but pre-orders are not a sign of decay. It's a sign of change, sure. But decay? Explain Rapido then. They started with limited runs in 2004 and hired their first employee (Bill Schnieder) in 2009. They now have 15 employees not named Schron and right now are looking to hire two more. Or explain Tangent, Moloco, ExactRail, Arrowhead, and the other high end, strictly limited run companies that continue to grow and expand their product lines. If it was decay, why are they thriving?Build it and they will buy it is not true. If you make the wrong thing or too much of the right thing, you'll lose money, I promise you. For example, the NHRHTA ordered 1200 stainless steel diners to get the best deal from Rapido but we only had pre-orders for 800. In the last 8 months, we have sold maybe another 100 or so. We still have ~300 stainless steel diners to go at $140 MSRP each (and we're selling them at $120). When are "they" going to buy the rest? Because we have around $42,000 worth of inventory sitting in a storage locker just waiting for them...
Paul3York1, If you know that shipping a container of model trains from China to North America has absolutely nothing to do with any postal organization, then why did you bring it up?
I'm not sure what the problem is. If you'll go back to my posts, you'll notice I didn't discuss containers. I talked about shipping and mailing packages.
First post:
York1Years ago, industrialized countries agreed to subsidize shipping costs from under-industrialized countries. In effect, U.S. and Canadian taxpayers subsidize Chinese companies' shipping costs. This is part of the Universal Postal Union. The U.S. tried to end this last year, but as far as I know, we still are doing it. However, rates are supposedly being adjusted to correct this. It costs more to mail a package from one U.S. city to another U.S. city than it costs a Chinese company to mail the same package from China to that city.
Second post:
York1I'm not sure I understand what you're saying. A Chinese package is carried by the Post Office in the U.S. or Canada at a rate that is lower than the actual cost. https://en.wikipedia.org/wiki/Universal_Postal_Union
Maybe the confusion is that I mentioned "shipping". By "shipping", I meant the mailing of packages.
I believe it was Seneca who said, "Qui non proficit deficit."
"Who does not advance falls behind."
It's very true in a hobby where other entities are part of a wide negotiation of 'quid pro quo', also known as 'the market place'. I agree with Paul that a hobby has to advance, or to evolve, if it is to continue calling itself successful. If it has bankers and private investors, they'll want a return on what they put into it, and that means profit, or dividends at the very least. No model company of any description will be able to do that unless they keep their ears to the ground and adapt to new wants from their customers, investors. AND their suppliers/assemblers. If there are no investors, and it's a small enterprise, then just the customers and suppliers.
The companies that seem to be getting the nods and the attention, not to mention the patronage, are those who insist that they need pre-orders before they do the cash outlay for tooling and assembly. That is part of the 'quid pro quo' process between prospective customers and them, the importers. It seems to be working.
I don't know how much longer Bachmann, Athearn, and Atlas will continue to do bulk purchases on a whim and on a prayer. And Intermountain, Accurail, Scale Models,... I suspect they might have to tighten up quite a bit over the next 12 months, given what this year has been like.
York1,This thread is about the production cost of model trains and how many units does it take to make production worth it. Lastspikemike brought up shipping as an added cost to making model trains, which while true, is about $1.00 or $2.00 per unit no matter if it's a $50 boxcar or a $600 steam engine. Then he talks about mailing individual items from Rapido in Canada to addresses in Canada. That has nothing to do with production costs, either, but rather it is an end-user cost which is off-topic for this discussion about manufacturer costs.Then you brought up the Universal Postal Union and how nations like the US and Canada are subsidizing mail delivery from China. The reason why that doesn't make any sense is that Chinese-made model trains are not mailedfrom China. They are shipped by private cargo companies by either boat or air freight. They always have been. Bringing up the cost of mailing something from China in relation to the production costs of model trains makes no sense because no model train production run has ever been mailed to North America. They are shipped, not mailed.
Paul3 richhotrain,Sorry, but pre-orders are not a sign of decay. It's a sign of change, sure. But decay? Explain Rapido then. They started with limited runs in 2004 and hired their first employee (Bill Schnieder) in 2009. They now have 15 employees not named Schron and right now are looking to hire two more. Or explain Tangent, Moloco, ExactRail, Arrowhead, and the other high end, strictly limited run companies that continue to grow and expand their product lines. If it was decay, why are they thriving?Build it and they will buy it is not true. If you make the wrong thing or too much of the right thing, you'll lose money, I promise you. For example, the NHRHTA ordered 1200 stainless steel diners to get the best deal from Rapido but we only had pre-orders for 800. In the last 8 months, we have sold maybe another 100 or so. We still have ~300 stainless steel diners to go at $140 MSRP each (and we're selling them at $120). When are "they" going to buy the rest? Because we have around $42,000 worth of inventory sitting in a storage locker just waiting for them...
richhotrain,Sorry, but pre-orders are not a sign of decay. It's a sign of change, sure. But decay? Explain Rapido then. They started with limited runs in 2004 and hired their first employee (Bill Schnieder) in 2009. They now have 15 employees not named Schron and right now are looking to hire two more. Or explain Tangent, Moloco, ExactRail, Arrowhead, and the other high end, strictly limited run companies that continue to grow and expand their product lines. If it was decay, why are they thriving?Build it and they will buy it is not true. If you make the wrong thing or too much of the right thing, you'll lose money, I promise you. For example, the NHRHTA ordered 1200 stainless steel diners to get the best deal from Rapido but we only had pre-orders for 800. In the last 8 months, we have sold maybe another 100 or so. We still have ~300 stainless steel diners to go at $140 MSRP each (and we're selling them at $120). When are "they" going to buy the rest? Because we have around $42,000 worth of inventory sitting in a storage locker just waiting for them...
If high end, strictly limited run companies continue to grow and expand their product lines and are thriving, then so be it. But if that were the future of model railroading, then all manufacturers would do it. The hobby would be totally pre-order.
The fact that one or more strictly limited run companies may be thriving is a sign of decay in the overall model railroad hobby because it signals a turn to niche markets which reduces the overall interest in the hobby by the vast number of model railroaders who just want to shop based upon what is available.
Your example of the 1200 stainless steel diners, of which 300 went unsold, is a good example of the problem with pre-orders. By definition you can infer that the manufacturer went out on a limb and chose a risky venture. At a $140 MSRP, you automatically rule out probably around 90% to 95% of potential buyers. At that rate, Rapido would hardly thrive if it kept on manufacturing such risky products.
I think you answered your own question.
richhotrain Paul3 richhotrain,Sorry, but pre-orders are not a sign of decay. It's a sign of change, sure. But decay? Explain Rapido then. They started with limited runs in 2004 and hired their first employee (Bill Schnieder) in 2009. They now have 15 employees not named Schron and right now are looking to hire two more. Or explain Tangent, Moloco, ExactRail, Arrowhead, and the other high end, strictly limited run companies that continue to grow and expand their product lines. If it was decay, why are they thriving?Build it and they will buy it is not true. If you make the wrong thing or too much of the right thing, you'll lose money, I promise you. For example, the NHRHTA ordered 1200 stainless steel diners to get the best deal from Rapido but we only had pre-orders for 800. In the last 8 months, we have sold maybe another 100 or so. We still have ~300 stainless steel diners to go at $140 MSRP each (and we're selling them at $120). When are "they" going to buy the rest? Because we have around $42,000 worth of inventory sitting in a storage locker just waiting for them... Paul, If high end, strictly limited run companies continue to grow and expand their product lines and are thriving, then so be it. But if that were the future of model railroading, then all manufacturers would do it. The hobby would be totally pre-order. The fact that one or more strictly limited run companies may be thriving is a sign of decay in the overall model railroad hobby because it signals a turn to niche markets which reduces the overall interest in the hobby by the vast number of model railroaders who just want to shop based upon what is available. Your example of the 1200 stainless steel diners, of which 300 went unsold, is a good example of the problem with pre-orders. By definition you can infer that the manufacturer went out on a limb and chose a risky venture. At a $140 MSRP, you automatically rule out probably around 90% to 95% of potential buyers. At that rate, Rapido would hardly thrive if it kept on manufacturing such risky products. I think you answered your own question. Rich
Paul,
Well said Rich.
I have lots of money to spend on trains, but I don't CHOOSE to buy $140 passenger cars.
Or $2400 brass locomotives, and not all that many $50 or $75 freight cars.
The new "elite" is this hobby seems to be "I don't have a big roaster, and that roaster may have holes in its plausablity, but what do have is PERFECT".
That's not my idea of model railroading.
I think missing from the discussion so far is the question: How quickly does the company need to sell-out the product?
Seems to me that pre-orders are merely capturing an interest a buyer might have for a product during a short window, and the company wants to capture, produce , and sell the product during that short window.
Interests change. Not with standing the fact that most purchases are probably made simply because the customer likes the product...not because he needs the product. So the company who produces enough stock to sit in inventory a number of years is able to sell product to the buyers who change interests or happen across the product and see it simply for being attractive.
Maybe more capital is needed to produce and hold the inventory?
Just seems like the current preorder process is limiting the product to capture buyers' interests that exist only during the short pre-order window.
- Douglas
Naturally the company wants to 'sell out' as quickly as possible; that's obvious good business if that can be done at satisfactory margins. The pre-ordering serves as a gauge of general interest; it fails somewhat if a large and relatively 'connected' interest group ... let's say the old B&O Yahoo Group ... gets every one of its members to pre-order a locomotive with front-firing stoker, because they have the interest, but no one else really wants one. Not only might you have a slow-moving time with 'the rest' but the opportunity cost of making that locomotive instead of something else can also be counted as 'lost'.
Abother way to use pre-orders is in a sort of DMM sense. Many Ronco-style 'teleproducts' are entirely paid for by the down payment plus S&H, so even if the customer makes none of the time payments you've at least broken even on your direct costs. I wouldn't be surprised if the pre-order accounted for much of the out-of-pocket cost right up to shipping the first batch. If anyone remembers the Monorail model of contract-manufacturing 'custom' computers... it's applicable, too.
As a note, manufacturers seldom profit directly from any appreciation due to scarcity. No author benefits in the least when his railroad book on the steam locomotive goes to $850 a copy from 'rare book' dealers who smell fan blood. What does work is the artificial element of perceived exclusivity that goes with a certain kind of scarcity: no availability at a sellout or fire-sale price. Mass marketers have a fairly fixed schedule to discount products sequentially to recover the TVM of the 'investment' in inventory, and often rational expectations makes price-makers wait for the big sale to get the most for their money. If a company can weather this trend they may get more absolute return on their investment, particularly when as now the opportunity cost of capital is comparatively low and alternative uses for rapid settlement comparatively restricted.
Doughless I think missing from the discussion so far is the question: How quickly does the company need to sell-out the product? Seems to me that pre-orders are merely capturing an interest a buyer might have for a product during a short window, and the company wants to capture, produce , and sell the product during that short window. Interests change. Not with standing the fact that most purchases are probably made simply because the customer likes the product...not because he needs the product. So the company who produces enough stock to sit in inventory a number of years is able to sell product to the buyers who change interests or happen across the product and see it simply for being attractive. Maybe more capital is needed to produce and hold the inventory? Just seems like the current preorder process is limiting the product to capture buyers' interests that exist only during the short pre-order window.
You are correct, they miss lots of sales because they make no effort to keep product available for when people want it. Does it take more capital? Yes. Should they work toward higher margins to support this? Yes.
Is this necessary for every product, No.
I hate the product hunt, just like I have no interest in buying/selling as a secondary part of the hobby.
Overmod Naturally the company wants to 'sell out' as quickly as possible; that's obvious good business if that can be done at satisfactory margins. The pre-ordering serves as a gauge of general interest; it fails somewhat if a large and relatively 'connected' interest group ... let's say the old B&O Yahoo Group ... gets every one of its members to pre-order a locomotive with front-firing stoker, because they have the interest, but no one else really wants one. Not only might you have a slow-moving time with 'the rest' but the opportunity cost of making that locomotive instead of something else can also be counted as 'lost'.
I simply think that the preorder process is a reflection of companies that are thinly capitalized, IOW, they don't want to put too much of their own money at risk. I get it. Its not a complaint, its reality.
If we're talking about a specifically featured item in a specific roadname, the issue isn't really about pre-order, the issue is that the producer is considering making something that has an inherently narrow market. A risky item. Sure, gauging how narrow that market is by allocating it to pre-order process is way to avoid producing something that relatively nobody cares about.
OTOH, Athearn seems to produce diesel locomotives that have many specific road name details. They even produced the GP40P-2 (passenger service GP40-2) which was about 4 locomotives ordered by the SP for commuter service in CA, and then inherited by the UP. Athearn produced the steam generator equipped original version in SP paint, the de-steamed freight conversion version in SP paint (which is a faded paint color to reflect non as-built years of service), and the modern freight version with ditchlights in UP paint. I don't recall a huge pre-order marketing survey. They just designed and built them, IIRC. Some are still available, but they seem to sell quickly because they are simply a pretty cool and unique loco, IMO. Maybe Athearn is a big enough company to build and sell products this way.
PRR8259 BLI now has the pre-orders for the ATSF 2-8-2 to move forward and is planning a new announcement of it to generate more sales. Model due "early 2021" so I was told on recent inquiry.
BLI now has the pre-orders for the ATSF 2-8-2 to move forward and is planning a new announcement of it to generate more sales. Model due "early 2021" so I was told on recent inquiry.
I've only been in model railroading for two years, so I've never yet myself pre-ordered anything. I have an excellent model railroad store less than an hour away which has a huge selection of N Scale. So far, I have gotten everything I've needed or wanted there.
There was a certain BNSF Kato locomotive I wanted. The store said they had pre-ordered several, so they put my name on one of them. I didn't pay anything up front. I probably would have been able to just purchase it when it came in, but this made sure they didn't sell all of them before I got there.
Several months later, I noticed they still had two of that locomotive on the shelf.
I always believed Kato wanted preorders to know how many to produce. I didn't realize they may be considering if they would even produce that model based on demand.
York1 . I always believed Kato wanted preorders to know how many to produce. I didn't realize they may be considering if they would even produce that model based on demand.
.
John, I think that is an important distinction. There is a difference in placing an order with a company to ensure you get a copy of a model that they are going to produce anyway.....quantity maybe undefined...as opposed to ordering something that may not be produced at all if they don't get enough orders. I think the latter is the frustrating example.
LastspikemikeFor the record, I did not mention shipping by mail. I pointed out that it can cost a lot to send one unit between two cities in Canada
I was the one who got off topic, not you. I believed I was making an addition to the issue of shipping, but obviously I upset some by getting off topic. I need to watch myself.
ATLANTIC CENTRALYou are correct, they miss lots of sales because they make no effort to keep product available for when people want it. Does it take more capital? Yes. Should they work toward higher margins to support this? Yes.
I think it's pretty optimitic to think that after the initial sales demand is met, there is enough unmet need to cover the costs of stocking items long term. This would assume there is a group of modelers of a specific prototype who aren't paying attention to product announcements or who will be joining the hobby to model that specific prototype.
It's not that this might amount to a few dozen units. It might. But that's a justification for running a close-out sale more than it is to stocking that item for several years. With ebay, etc, there's little incentive to warehouse for this niche demand that could more affordably in most cases still provide the model for those who either were asleep at the wheel or not present during the briefing the first time around.
And that's just for ONE product. The fact of the matter is the mfg's want to clear out old stock constantly to make way for the new. That's where the capital comes from to build the future stocks. Inventory turns are what bring profits, not warehouses full of product with little remaining interest from buyers.
Mike Lehman
Urbana, IL
mlehman ATLANTIC CENTRAL You are correct, they miss lots of sales because they make no effort to keep product available for when people want it. Does it take more capital? Yes. Should they work toward higher margins to support this? Yes. I think it's pretty optimitic to think that after the initial sales demand is met, there is enough unmet need to cover the costs of stocking items long term. This would assume there is a group of modelers of a specific prototype who aren't paying attention to product announcements or who will be joining the hobby to model that specific prototype. It's not that this might amount to a few dozen units. It might. But that's a justification for running a close-out sale more than it is to stocking that item for several years. With ebay, etc, there's little incentive to warehouse for this niche demand that could more affordably in most cases still provide the model for those who either were asleep at the wheel or not present during the briefing the first time around. And that's just for ONE product. The fact of the matter is the mfg's want to clear out old stock constantly to make way for the new. That's where the capital comes from to build the future stocks. Inventory turns are what bring profits, not warehouses full of product with little remaining interest from buyers.
ATLANTIC CENTRAL You are correct, they miss lots of sales because they make no effort to keep product available for when people want it. Does it take more capital? Yes. Should they work toward higher margins to support this? Yes.
I wouldn't think that astute and experienced companies would end up with "warehouses" full of unwanted products. They would really not understand their business very well if they missed the market that badly.
I think that interests change over a period of, say, three years, and people run stuff on their layouts that don't necessarily belong on their railroad. I bought 2 of the faded paint not-as built SP GP40P-2s I mentioned only because I saw a pic of the actual model and thought they are really cool. Any announcement from Athearn or production drawing wouldn't have captured my interest.
I think that simply using the level of preorders during a short window doesn't sufficiently capture the potential market, which I would think would be measured over a three-year sell out period, not a three month investment recapture period.
Not that it a bad thing, but its a business model that is a bit sketchy and unexpected to last the long term, IMO.
Question: How do companies approach products like structures and track? Do they wait for pre orders from consumers, or LHS orders, before they produce another batch?
Ok, these importers now have entire staffs of experienced model railroaders working for them in house. Discussions can and do get animated or even heated regarding which products to produce--which roadnames will sell. Nobody has a good enough crystal ball to know for sure how they will do. If you guess wrong--which is easy to do--you end up with a lot of unsold inventory that costs you money.
If you miss the boat with just 100 locomotives here and 50 of that there, it adds up, a lot faster than most of us would think!
Suggesting that they should have a few for future demand is ludicrous. They want to have just enough to cover any defects, shipping damage, etc. That percentage varies from company to company.
Also, what many fail to appreciate is this: when company A sells out or retires and company B takes over the product line, even after thorough analysis by the bankers who have to finance the deal, company B literally ends up with a monthy payment of $10,000 or more. This is literally true in the case of one merger or buyout that occurred some years back when company A was actually valued at $3,000,000. Now $10,000 a month is a lot of trains you HAVE to sell every month. Then company B still has to fix any issues with tooling and get what they can updated and back into production as efficiently as they can.
So having a few of this and a few of that laying around eating up your available free cash is bad news when we are talking about real money and real bank interest.
This is WHY nobody wants any inventory after 3 weeks in country.
John
Random_Idea_Poster_6263 PRR8259 BLI now has the pre-orders for the ATSF 2-8-2 to move forward and is planning a new announcement of it to generate more sales. Model due "early 2021" so I was told on recent inquiry. Now that you say this, what aout the Northern Pacific 4-8-4 that is due in the fall?
Now that you say this, what aout the Northern Pacific 4-8-4 that is due in the fall?
Please check their website. I don't know any better than that. Their website already has estimated arrival dates for the 4-8-4. The Santa Fe engine is "after" that. No dates are given for the Santa Fe engine. I'm sure they want more orders before final production, but they say the tooling has been "started", whatever that means. Santa Fe fans should be happy it's in the actual pipeline.
This thread is still going on?
What John said is how it is. As for want, your expectations have to be tempered with reality. For the past 20 years I've seen people crying for certain engines that were uncommon and of course, we see big boy after big boy manufactured. Manufacturers are going to offer what THEY believe will sell and in numbers they estimate will live them hopefully with little or no leftover inventory.
PRR8259 Ok, these importers now have entire staffs of experienced model railroaders working for them in house. Discussions can and do get animated or even heated regarding which products to produce--which roadnames will sell. Nobody has a good enough crystal ball to know for sure how they will do. If you guess wrong--which is easy to do--you end up with a lot of unsold inventory that costs you money. If you miss the boat with just 100 locomotives here and 50 of that there, it adds up, a lot faster than most of us would think! Suggesting that they should have a few for future demand is ludicrous. They want to have just enough to cover any defects, shipping damage, etc. That percentage varies from company to company. John
The bottom line is that they need to understand the market by whatever means possible.
If they are using a pre-order process that captures demand that exists only during that pre-order window it seems to me they are leaving profit on the table...since most profit is made during the time when the last units are sold, because those units have the lowest production costs.
One importer has told me straight out they'd much rather leave profit on the table than have unsold inventory tying up their money.
The facts are that sales after initial pre-orders are usually miniscule. As in we are talking a percent or two.
What most of us fail to realize is that once Walthers and the other big distributors see a new product is a "go" they tend to place large volumes of pre-orders based upon what their sales people think they can sell, and often late--at nearly the last minute. The number of orders that come in later, after the cutoff date, or after the product is in country, is truly miniscule by comparison.
A product has to be a huge hit to generate a second round of orders from the big distributors, so practically speaking, it doesn't happen.
The pre-orders really do drive the market.
ATLANTIC CENTRALI hate the product hunt, just like I have no interest in buying/selling as a secondary part of the hobby.
Sheldon, I started a thread about newcomers based on your post about the passenger trains. My scope of model railroading is much smaller than yours, but I think we are very similar.
I have also already collected everything I need for my model railroad layout. I really do not need anything else to build my dream. I pretty much have a "lifetime supply" of everything I need hobby wise. I can buy the rest of the layout at Home Depot.
There are a lot of items I would love to replace/upgrade, like my aging Athearn set of PA-1s, but I now know that my market cannot support manufacturing.
If I were starting out today, I could not imagine building the Fleet Of Nonsense from what is on the market and readily available. I cannot remember the last time I walked into a hobby shop and found a SELECTION of undecorated freight car kits. And those that read my posts know I walk into a LOT of hobby shops.
Go to Model Train Stuff and type "undecorated" into the search box. You cannot build a train suitable for 1954.
The hobby shop John mentioned, which I believe is Spring Creek Models in Deshler, Nebraska, is the best stocked hobby shop I have been inside of in ten years. It reminded me of Orange Blossom Hobbies in Miami in the 1970s.
Still, since they are a well run hobby shop, the inventory turns rapidly, and most of what they have on the shelf was released in the past 12 months, and it would be difficult to find that complete passenger train.
As I type this there is a side-bar-advertisement for Walthers new Super Chief/El Capitan train. Wow is it beautiful. I am sure it will be wildly popular and sell out. If you wanted one of these, you must be very excited.
I would love to get a Walthers name train model set undecorated. I would settle for ANY of the name trains just so the STRATTON AND GILLETTE could have a nice model of a complete matching train. I contacted Walthers to find out how to get this done. I asked them to pull a train off the line with no paint. I did not need packaging or fully assembled, I just wanted to buy a full train. I even offered to pay a premium for this special service.
Their nice response was that it is impossible to disrupt the assembly line for any reason. I cannot have my passenger train.
I think the hobby has passed us by, and it is fortunate that we already have everything we need.
I am in a good place. All future freight cars I buy will be Funaro & Camerlengo, Speedwich, Sunshine, Westerfield, or similar. I have two passenger trains, one heavyweight Rivarossi and one smooth side IHC set. I guess detailing and weathering these will become a major project when I am in my sixties.
It will be very interesting to see where scale model railroading goes to in the next 30 years. I know I am a dinosaur and except for weird one-off randomness like the Rapido X31-A boxcars, the manufacturers will produce nothing I will buy.
This is sad. Now that I have real buying power, I have nothing to buy.
I have become irrelevant in the marketplace of my favorite hobby.