How vendors lose sales

Model Railroader General Discussion (Model Railroader)
1

I misplaced my MicroMark truck tuner several months ago. I put off buying a replacement hoping it would turn up but I’ve reached the point where I have several pieces of new rolling stock that need it. MicroMark has a minimum shipping charge of $9.95 which seems exorbitant when it is almost half the cost of an item. A week ago I bought an item that I needed to have from another vendor with the same $9.95 minimum shipping charge which was almost 4 times the price of the item. I bit the bullet because I needed the item but vowed never to buy from that company again. I was about to do the same with the truck tuner but before I did, I decided to check ebay and Amazon to see if I could get a better deal. I found an ebay seller offering what looked to be the same truck tuner as MicroMark plus a second smaller tuner for less than MicroMark charged for the one AND offered free shipping. It was a no brainer to buy from that vendor.

Had MicroMark not charged such a high shipping cost, I would never have even looked at ebay so their shipping charge cost them this sale. All vendors, whether online or brick and mortar, charge for shipping. With brick and mortar stores, the shipping charge is factored into the price of the item. I have an Amazon Prime membership. This doesn’t give me free shipping. It means I pay a flat rate for shippiing for an entire year no matter how much I buy from them. I don’t have to pay shipping on each individual purchase which makes me more inclined to buy from them rather than make a trip to a brick and mortar store. When I shop on ebay, I always check the shipping charge and add that into either the asking price or the bid price to figure what an item is going to actually cost me. In this recent purchase, there was no additional shipping charge. The vendor had factored his shipping cost into his asking price for the item. I ended up saving about $13 from what I would have paid MicroMark for a like item and got a second smaller tuner on top of it. Another vendor was off

2

John,

When a brick and mortar store buys stuff, products come in boxes containing many items, from a distributor or manufacturer, and the incoming shipping cost per item is VERY low.

Back in the day, when lots of regional distributors sold to local hobby shops, many of those distrubutors had their own delivery trucks and offered free delivery for orders over a specific amount.

The brick and mortar store has no outgoing shipping cost if you pick the item up in the store…

A $23 item likely costs the retailer $14. How exactly are they supposed to ship that to you for free and make money at current postal/UPS rates after factoring in packing supplies and labor?

It takes considerably more labor to pack and ship one small item like that than to sell it to you “in store” or pack up a large order and send it to you.

On Ebay, you never know how the seller came to have the merchandise, or why he is selling it. So his costs may not be “conventional” and he may be making all he needs to make - which may be nothing.

Amazon has a complex deal with vendors - and much that comes directly from AMAZON warehouses is sold at VERY small profit margins, like Walmart, because with their volume they make it up elsewhere. They are busy getting you to always shop there.

MicroMark is a little bitty company compared to AMAZON - they can’t do that.

Buy from whomever suits you, but you are wrong if you think they are “ripping you off” on the minimum shipping cost.

They likely still don’t make a fair markup selling a single truck turner with the $9.95 shipping. Their hope is you will place larger orders that they can fill efficiently and the shipping charges will be a much smaller percentage of the cost.

Even for retailers who are now buying most hobby products direct from the manufacturers, margins are slim.

Nobody is getting rich selling model trains.

My comments come from 10 years

3

Amazon can only afford this by aggregating deliveries. This is what your LHS does for you. Plus, they give you lots of free advice. Amazon gives you nothing.

Up here in our (quite literally for half the year) benighted country we also pay brokerage fees unrelated to the value of the imported item. This exorbitant fee is said to guarantee our money wasters get their 5 cents in the dollar of tax ($35 is the usual minimum charge). Our LHS absorbs that but also reverse aggregates it by using a customs broker more efficiently, cents per thousand dollars rather than dollars for every tiny purchase.

I buy at my LHS even if it appears to be cheaper “on line”. Because it often isn’t.

4

So the product you bought on Ebay, made by DCCconcepts, who is British a company, only sells for L10.79 over there, or about $14.00 US.

If that guy bought a batch wholesale from them, waited for them to be shipped the cheapest way, and now he is selling them on Ebay for $23 he is just barely making a reasonable margin - for someone likely working out of his basement.

Sheldon

5

Shipping charges are the least of my problems.

I haven’t had a LHS for better than 10 years now whereas I had 3 to choose from within a 10 to 15 minute drive from my home way back when. The closest one now it a minimum of 30 minutes away, up the Interstate and tolls to boot.

Another problem for me is trying to find what I want or need. This past Friday, I drove to Hobby Lobby, Michaels, and Hobbytown USA looking for modeling paint. Total joke. I will no longer bother with Hobby Lobby or Michaels. Hobbytown USA was poorly stocked. I wound up mixing various shades of the colors that I needed from half filled (or less) bottles of old Pollyscale paint.

Then, there is eBay. I am a big fan of eBay, but lately the prices that are being asked for locomotives and passenger cars are outrageous, not only New items but also Used items. I won’t overpay and apparently neither will anyone else because those items just sit there day after day after day.

So, as I say, shipping charges are the least of my problems. Availability and pricing top my list of complaints.

Rich

6

Sheldon really hit the nail on the head on this one. Couldn’t of said it better myself.

I will only add this please:

There is a joke in the restaurant business - we lose money on every plate but we make up for it in volume.

I have owned and operated a bakery cafe for the last 22 years and when we do ship product we have to pass those costs on to the customer. We simply don’t have the kind of relationship with USPS or UPS that giants like Amazon have. If we ate the shipping our already small profit margin would virtually dissapear.

So I will kindly ask that you give brick and mortar’s the benefit of the doubt and continue to patronize them as nothing would make Jeff B happier than you stopped and bought from him exclusively!

There is no such thing as a free lunch.

  • charles
7

Don’t know what kind of paint you want, but I use Scalecoat and buy it direct.

https://minutemanscalemodels.com/

For new locos and rolling stock, ToyTrainHeaven, Trainworld, ModelTrainStuff.

Used stuff - Ebay, but not as much any more.

Big train show here three or four times a year - picked up some goodies at the last one in Feb, next one in three weeks.

I order direct from manufacturers who sell that way (even Walthers for some things). Companies like Spring Mills Depot, Kadee, Campbell Scale Models, and a list of others.

We have a number of good train shops in this region, none of them “close” to me.

All are an hour or more, but are worth the drive once in a while. Most of them will ship,

8

I would wager that the vendor I bought the item from on ebay is much smaller than MicroMark yet he doesn’t find it necessary to charge $9.95 to ship the item and presumably he is still making a profit.

I never accused MicroMark of ripping me off. Had I bought the item from them, it would have been a transaction at a price agreeable to both parties so no one would have been ripped off. The title of the thread is how vendors lose sales. In this case, MicroMark lost this sale because they choose to charge an exorbitant minimum shipping charge. If they think it is in their interest to discourage customers from buying single items, that is their choice. My choice is to buy those items elsewhere.

9

When I lived in Columbus, OH, I too had 3 hobby shops within a 10 minute drive. After I retired, I moved out of the city and now it’s almost a mile drive to those same stores and one of them has cut way back on their model railroading selection. I still frequent my main hobby shop when I am in town but since the pandemic began, I find myself going into Columbus far less often. It would have to be an item I needed immediately and very badly before I would make a special drive into town. I figure even with my economy car it costs me at least 3 gallons of gas not to mention over an hour and a half of additional time out of my day.

10

I explained above in a separate response EXACTLY how that Ebay vendor could sell you that product for that price. I took a look at his little Ebay store. I assure you he is one guy, working out of his basement

11

Perspective is an interesting thing.

I am 65, still working, and have lived in Maryland my whole life.

I have never lived “in a city”, did spend some of my young adulthood in an old builtup suburb of Baltimore, but grew up in the “rural suburbs” south of Baltimore and now live in the really rural suburbs to the north betw

12

MicroMark’s profit is not my concern. That is their concern. My concern is getting the best value for my money. I wouldn’t have gotten that if I had bought this item from MicroMark. If another vendor can undercut them by 40%, I would be crazy to buy from MicroMark. All vendors are in competition with other vendors, large and small. MicroMark lost this sale because a little guy offered me better value for my money. This is just one sale out of millions each year. MicroMark has to decide if they can afford to lose the market share these small time vendors are taking from them.

13

My old LHS was a Walthers dealer, in the catalog and the small-print pages of MR as well. I could order through him from Walthers and get the catalog price or the monthly flyer sale price, with no shipping charge. So, I could get lots of small stuff for quite cheap. Yeah, he never made big profits, and when the landlord jacked up the rent, he retired.

I have ordered a few power supplies from China. They are fine, basically the same as what I could get here from brick-and-mortar places for a third the price, and no shipping charge. I figured the Chinese government was subsidizing the shipping. When watching the progress of shipping, I saw the package arrive in L.A. about two days after I ordered it, and then take a week or more to get to my house via USPS.

And I can’t be without my truck tuner. I have one in my workshop, and another upstairs at the layout.

14

Agreed, and the next time MicroMark might have the right item at the right price, even with the shipping.

It pays to shop around - everytime.

Point is, they did not loose business that was of any value to them. If they don’t make money they will not be there to sell anyone anything. If they are truly charging too much others will put them out of business. But truth is, in the big picture, they are as competitive as anyone in this business.

Sheldon

15

I purchase the majority of my decoders & DCC supplies from Litchfield Station; not only for the good prices but also because they only charge $4 for S&H. To me that’s very reasonable for a padded envelope that only weighs a few ounces.

Other well-known vendors may have comparable pricing but charge $10 for S&H for the same items. And “MSRP Walthers” charges a flat $13 so I only purchase from them via my LHS when things are on sale.

Tom

16

I mainly paint structures, and I use a brush. Strictly acrylics. For years, I used only Pollyscale. Then, Testors dropped the entire line. So, I switched to Model Master, but then Testors dropped that entire line. After much research, I decided to try Vallejo, but the selection at Hobby Town USA was extremely limited. Isn’t Scalecoat an enamel, intended only for spraying?

Rich

17

It seems like the bigger retailers have fixed price shipping. Isn’t Micro Mark basically a fixed charge shipper?

Rich

18

Micromark won’t give retailers a sufficient discount. They are stuck in the old mail order model which is a very costly business model nowadays.

19

My LHS is about a half hour away during a blinding snow storm and sometimes an hour and a half on a nice sunny day. Years ago they were fantastic and had a ton of MR stuff in all the major scales. The past few years it seems more models and RC stuff is encroaching in the MR isles. Don’t get me wrong, they are still fantastic and will order in anything I want but at retail price. Track, ballast, and cork roadbed is still twenty percent off in stock and they keep that stuff stocked up.

My online ordering for decoders and electronic stuff is either Lichfield station or Tonys. But lately Tonys has gotten rid of the minimum shipping and charges at least $12.95 just for a decoder and small things. Lichfield station last month shipped a partial order and sent the backordered item later with no additional shipping.

My ebay purchases are hit or miss with the MR hobby. My RC helicopter parts have awesome prices and usually free shipping or just a couple bucks, but most of them come from overseas.

Pete.

20

I agree, Rich. The fixed price shipping is a convenience for the vendor so they can ship the item/items quicker in the same-sized shipping container and don’t have to spend time calculating shipping costs (time & money). With that being the case, those located farthest from the vendor get a more fair deal on the S&H costs.

Tom