Well as one poster stated don’t take offense but being admittedly new to the hobby you really don’t understand the pecking order if you will when it comes to model railroading whole sale distribution. It’s like this if you want to be in the model train business there are two places who are the major distributors of all things model railroading. #1 W.K. Walthers the unarguable giant of the industry and #2 Horizon Hobby,they are the two big dogs and then come all the little mom & pop suppliers some who deal through Walthers and some who deal directly with train stores and retail customers.
If you want to be in the model train retail business those are the people you have to deal with no question about it. Their main business is supplying their customers (the train/hobby stores) not the individual customer.
You are also obviously a newbie when you ask a question such as "I’m confused on who willingly pays MSRP?"
The “El Cheapo” mentality is not only confined to US consumer behavior, it has reached the entire western world. The hunt for bargains has led to the deterioration of the MSRP, which long has shed its guiding function. The Walthers catalogue has been my guide to model railroading for years. I used it to calculate my shopping list, knowing, that my LHS can get the items of my desire for me, sometimes even with a slight discount. The most important issue was, that I did not have to shop around to get what I wanted, I knew, it was available in short order.
Times have changed. I do have to spend a lot of time chasing the product I want to buy in the internet - not always to get the best deal, but just to get it. Limited runs force me to buy at a time I may not want to buy yet. More than once I missed to get something I wanted. And even if I am able to buy, is it really a bargain? None of us knows, how the MSRP is actually calculated, whether those fantastic discounts have not already been considered. What does that DCC equipped sound loco with a MSRP of $ 399 actually cost, landed in the US? Maybe $ 60 - 80? Even with a discount of 30 - 40 %, there is a lot of money to be earned. Would Walthers, Horizon and the likes be still in business, if there wasn´t any money in it? I doubt that.
I am not bashing Walthers or anybody else for that - it is finally our own behavior, which has fostered this change. But it has led to the demise of the LHS as a stable source of product for our hobby and hinders the entrance of new players into the market. And finally, it costs a lot of jobs, local jobs, not Chinese jobs, as the Chinese by far are not buying products from us to the same extent. Do we really want to deplete our own economy in the long run?
Ok maybe I phrased my original post incorrectly. I realize that MSRP or greater can be paid from time to time with rare or hard to find items. It’s done in every other aspect of life. Anyone who has purchased a hard to get new car off the showroom floor knows this. However, I didn’t understand how walthers stayed afloat until I found out from you all that they are the largest distributer. Now I know. To those of you who are rude and grumpy saying I’m obviously new, uh I stated that in my post so there is no need for you to look down on me. [Edited for content by selector.] Attitudes and criticizing just scare people away. As for shopping for bargains, this is not going to kill america. If MB Klein can chop 20% off on average, maintain great customer service and pay employees and their own rent/light bill then other companies should be able to as well. I’m not asking for 50 or 60 percent off an item, I’m just looking for a decent deal. I am an overpaid employee of the U.S Government who gets money thrown at me all the time in the form of bonuses, etc. But no one can do what I do without the years of experience I have and the training I have. Therefore, I have no competition so I feel no remorse when my fat bonuses drop into my account. However, Walthers does have competition in the sales market. So if they wanted to excel there they should lower their prices. If they are ok with just kicking butt as a distributer than fine. I understand how they stay afloat now, distributing. But if it wasn’t for that, I think they would be out of business.
no need to shout at us “old Farts” by typing in bold. I don´t see, that anyone responding to your post intended to be patronizing, just passing on information you may not have had before.
Just going for bargains is detrimental to an economy in the long run. The effects of such a deflationary process is, that investments into the growth of local businesses are no longer made, as margins shrink. This kills jobs by moving production to seemingly “cheaper” countries, which would not be a problem, if we were able to develop new opportunities at the same rate - which we are not. It is all about a balanced give and take - I am afraid that the “global” economy has left the state of balance.
I am in the process of gutting a hobby store in NJ that has just closed its doors after 57 years. Mail order definitely has killed the Mom & Pop stores. Nothing like sitting at a computer and looking at thousands of items at once, purchasing all from one easy spot. I prefer dealing with a hobby shop. Go in, talk about the product. Actually see the product. Get one on one service. But if you are at a hobby shop you can’t be somewhere else at the same time. Walther’s may be high, there are other, cheaper sites. But the fact of the matter is people will pay more for convenience. So here is to your local hobby shop. It may be here today but gone tomorrow. One has complete freedom of choice how they want to deal and purchase equipment. Enjoy it and take advantage while you can. (By the way, we used to get our inventory from Horizon & Walther’s.)
Did you read any of my posts? MB Klein sells at 20% of buying almost everything direct from the manufacturers just like a wholesale house, as do all the other big discounters, Train World, etc.
Small shops buying from distributors have a hard time or need REALLY low overhead to make it if they are selling at 20% and buying from Distributors like Walthers.
So you need big sales volume to buy enough to buy direct from the manufacturers. They will not sell a small shop one of this, two of that. You must buy larger quanitities, usually case lots or at least a larger dollar value on each order.
I like MB Klein, but they are not really a LHS anymore. They are an internet business, that has a couple of small sales rooms on site. They are not located in a shopping center, but in an industrial park. The last time I went there, I had to use one of their in-store computers to order over the internet with in store pick up - keeps their on line inventory up-to-date. Their prices are discounted and their service is great - my favorite place to order.
What is going on with hobby shops is no different than other types of businesses. Either you find a way to compete on other than price or you discount. Most small shops can’t compete either way and disappear. It happens with grocery stores, bookstores, hardware stores, etc. Fairfax County, VA where I used to live has had the highest or second highest household income for years (they trade back and forth with Loudoun County next door), and even there the hobby shops keep disappearing - the few that are left with trains are mostly Lionel dealers.
I wonder about how the search for the lowest cost item affects quality control in the long run. Look at what just happened in the auto sector–JDPower released figures showing Ford at the top. The lowest cost is not necessarily the best in terms of quality build. It has always been a bone of contention amongst many people in the electronics field as well.
This is one of many reasons why there is a lot of scepticism about the “global” economy
In 1991 FORD was supposed to be building cars “as good as the Japanese”. It was a lie back then. It’s been 19 years now and I am supposed to believe that FORD is once again building cars as good as the Japanese? I’ll give them 10 years from now. If the cars they build today in 2010 have a reliablity track record as good as Toyota, or Honda, then I’ll buy. But it will be 2020 before I throw $30,000 at a FORD again.
Oh Please: Do not start on autos. This is MR.[8D] As for Walthers. It’s the same as anything. You pays your money and you takes your choice. If you Gov’t employees are so overpaid, why wasn’t I? I’m retired Gov’t Emp and am just barely making it. My MR budget is so low, it takes me 6 months to save enough to buy something for my hobby. And with all the competition for our $.!! Look at grocery prices. Enough! As for buying from Walthers. I have never done so. I buy from LHS & online & mail order. I can call my LHS and if they have it in stock or order it, and ship to me. Any way we shop is good. I also never shop eBay, Craig’s List, or whatever.But y’all can do so if you desire. It’s called free market. It’s also “el caveat emptor”! Finally, it is Not true that you get what you pay for. A BLI engine is a BLI engine whether you pay $399.95 plus shipping plus tax OR $350.00 including tax & shipping. The loco is the same. One source is not going to open the box & ruin your purchase. Some years ago I purchased an Athearn Mike with DCC/sound for $200 or so. It had a bad axle/wheel. The purchased source said “Call Athearn”. And after that, I had to pay the shipping to send to Athearn. That was the last Athearn product I’ve ever bought. They produced an inferior product and didn’t even have the decency to send me my shipping cost. Was that because I didn’t buy it direct from Athearn? Duh! They didn’t care where I bought it from, and they did replace the broken/bad parts and returned it to me. Sorry I rambled on here. All IMHO of course.
I’m sorry, but I’m having just a bit of trouble believing that Klein gets “almost everything” direct from the manufacturer. Maybe a few things direct, but I think they must get a lot of their items from a distributor (or distributors) just like everyone else. It just does not make business sense to me, especially in this day and age, to have a person who’s sole job would be to issue multiple small orders to multiple small vendors when it would be much more convenient to sit down and place one large order with a distributor, WKW for example. I looked at Klein’s vendor list and I think I counted almost 100 of them. Of course, some had no items listed. But others had one or two items, and others had multiple pages of items.
So far as the 20% off goes, I did a random calculation on random items. Bachmann engines seem to be the percent off champ - around 40%. But there did not seem to be a great selection. Proto 2000 items seemed to be 30% off and Athearn engines seemed to be 25% to 30% off. And since these items are from Walthers and Athearn, I guess that qualifies them as coming from distributors. Atlas engines were around 30% off. I have no idea if Klein deals direct with Atlas or goes through a distributor.
The remaining items I looked at, which were in the 20% off range, were from Cannon and Company (a brakewheel); Faller (brickpaper); Kibri (a structure), and a MV lens. It just does not seem likely that Klein would have someone dedicated to purchasing from all these little vendors.
I will concede that Kleins buys direct in some cases. But then if they are selling new Athearn or Walthers items, they would almost have to do thei
Athearn/Horizon and Walthers are the SOLE source of their products, they distribute them themselves. No other wholesalers sell them. That makes it different because they do sell THEIR OWN PRODUCTS at a discount that is lower than the traditional dealer discount from other multi line distributors. Example - Walthers no longer distributes Athearn and Athearn/Horizon sells Athearn at a discount lower than the traditional 40%, it is actually 55% off IIRC.
Kleins is doing EXACTLY what I discribed in one of my other posts, stuff is priced based on cost, Bachmann which has a big discount direct form Bachmann is discounted 40%, Athearn which has an in between discount is discounted accordingly. The fact that Walthers brand products like Proto are discounted more than 20% shows clearly that Walthers is giving a big dealer like Kleins more than the standard 40% off - Why, because they can as both the manufacturer and distributor in one and dealers the size of Kleins buy enough to make that a good deal for Walthers.
Atlas, I’m sure they buy it direct, as does Train World and many others.
Kadee - anyone in this business can but it direct if they buy enough.
Sure they fill in some types of products and some lines from distributors, but in terms of dollars, 80-90% is likely bought direct by dealers like Kleins.
And, the whole point of buying direct is to buy in larg
Well, I wouldn’t reply with a ‘snorey’, maxman [:)] but I do believe that the middle man of yesteryear is soon to be as plentiful as the dodo. I wouldn’t look for any national conventions to attend ifyaknowhaddamean? Seriously, they are unnecessary these days, and just another leach/mouth-to-feed in the network that hobby businesses can do without.
Having said that, though, my local hobby shop (closed since the summer of '07) did order from his ‘supplier(s)’, and in some cases it was a middle person. Usually it was direct from Walthers or Digitrax…whatever.
Stopping in long enough to mention to those folks who might need a reminder, don’t believe everything you read on the internet. There are some statements and figures in this thread that are not correct. Just sayin’… carry on.
Seems to be that there are a lot of middle men out there though to feed----[:-^] Now—if’n we got the LHS’s together to actually buy lock stock and pickle barrel from the mfg’s en mass as it were then you just might be on to something-----[swg]