This was posted on the CanModelTrains Yahoo Group by the owner of Rapido Trains:
"Hi all,
We are concerned about this guy. Selling a $50 car for $33 is going to hurt
a lot of honest business owners, and it reduces the perceived value of our cars. They are not $33 cars, as anyone who has seen the test photos will agree.
We can’t control the price at which someone sells our models, but we can
control our supply of cars. Our distributors have been instructed not to sell to Eastern Classic.
So I welcome all of you to place your order with Eastern Classic for these
$33 cars. As to whether you will actually get them… that is another story.
By the time you realize that they aren’t coming, your LHS will be sold out.
Doesn’t sound like a very good business practice to me, especially for a new manufacturer? I guess I will not be getting any of these cars as I don’t
want to worry about whether the dealer I choose to purchase from is going to be cut off at the whim of the manufacturer.
Believe it or not, this is not an uncommon practice. When I owned my sport store, many of the items had to be sold at certain price. I could have occasional sales, but not an everyday mark down. If I did, the manufacturer wouldn’t sell to me anymore. It’s the same in some other circles, especially collectables like Precious Moments and Dept 56.
And its not about greed. The manufacturer makes the same amount, pretty much per unit. This guy is trying to protect the retailers that have signed up to sell his product. He probably offered some sort of pricing protection in return for their orders, and now he’s making good on his promise.
The details look nice but really do we need every hose and valve on the ender carrage? I can say I do like the interior detail.
I just want a set of N&W passenger cars that are the right color and style for their passenger service that ran in the 40’s and 50’s. Any one know where I can get some? the Powatan Arrow would be a nice set.
Its amazing that there are some in the for profit part of this hobby still think that a shop owner can carry merchandise for years because the manufacturer has price guidelines yet the public refuse to pay the price. Don’t the shop ownwers have to pay taxes on their inventories? And would it be better to move something off the shelf for a smaller profit and make room for the new stuff?
I should think the Interstate Commerce Comission might be interested in such activities as being in restraint of free trade, IF they were a big enough player in the game to make a ripple in a fishbowl. Placing any conditions on sales is very tricky. You could easily end up in a lawsuit worth more than the business ever was on it’s best day.
As a great believer in free enterprise and the operation of the market, I don’t like the whole system of manufacturer price control. If a retailer is ready/willing/able to sell at $33, he should be allowed to do so. If he wants to sell at a loss to bring in business, that’s fine. If he wants to sell at cost, knowing many customers will ‘add on’ other items to an order which do generate profit, that’s fine. The manufacturer has no business dictating any price other than what they charge the retailer. After that, he owns the inventory and should be allowed to do as he pleases, including giving it away free if that’s what he wants. Now, the retailer may be stupid to do any of these things, and that will shortly end it - he’ll go under, raise prices, or whatever.
I won’t be considering any Rapido product while such practices continue.
This harkens back to the U.S.A.'s Free Trade Act of the 1950’s, which attempted to set market pricing on goods of all types. Lionel was a participant in the act and when big store like Macy’s tried to discount their trains in an attempt to compete with the brand new suburban, big-box, price-cutting stores (the Walmart’s of that day), Lionel took Macy’s and other customers to court (the price-cutters never agreed to follow the act so couldn’t be sued). In the end, it was Lionel that lost out big time and created a lot of ill will.
Anyway, I expect that all Eastern Classics needs to do is order Rapido products through some wholesaler and he’ll sneak right by them.
This is rather common in MRR. Don’t buy from NCE for example either.
Quote from the Litchfield Station Site
NCE has a MINIMUM ADVERTISED PRICE policy.
Dealers cannot advertise any prices lower than those that you see at Litchfield Station. As a result of these restrictions, NCE decoders do NOT count against the quantity discount pricing.
They are really going to have a cow when these things hit eBay. They are Canadian prototypes anyhow, so I have no use for them. I am not about to shell $55 for a car that the Espee never owned.
I too am a believer in the free enterprise system and letting the market set the price. I don’t know anything about this manufacturer or their product. If they want to establish a policy that requires retailers to sell their product at a certain price level, that is their business decision. Whether that is a smart decision is another matter. Time will tell. If the public isn’t willing to pay $50 apiece for their cars, the aren’t going to stay in business long. Free markets will police themselves.
MAP pricing is very common. As noted, several DCC manufacturers has used MAP to protect the smaller dealers in their sales network. What this means is that I as a dealer cannot advertise an item below the ‘MAP’ price, but I can list the item on my web site with ‘Call for Price’ - Seen that before? Very common…
Isn’t what Rapido Trains doing called “price fixing”? My recollection of accounting/economics/business law classes tells me a manufacturer can control ONLY the price he charges. Any manipulation of what a retailer/dealer charges for the product falls into the definition of “price fixing” and is illegal. This includes instructing non-manufacturer owned dealers as to whom they may sell. Once ownership of the product passes to the dealer via purchasing it from manufacturer, pricing and distribution is out of the manufacturers hands (Unless the manufacturer owns the dealer). If the manufacturer thinks his product is worth more than the dealer is charging, the manufacturer is free to raise the price at which he sells to the dealer. But the dealer is free to set whatever margin of profit satisfies him. If he pays $32 for a car with a list price of $55 and choses to take a $1 profit, so be it. As long as he doesn’t violate any product dumping laws (set up to protect against large businesses killing the profits of smaller ones to run them out of the market). If the manufacturer thinks someone selling their products is doing this, they should take the proscribed legal action to stop it. Not an illegal one.
MAP pricing is different in that it only dictates what a dealer can ADVERTISE. It doesn’t dictate what the dealer charges. Hence the “Call for price” tactic.
At any rate, I won’t be buying anything made by Rapido Trains. If they are the only source, I’ll scratchbuild it before buying from them! Probably be more fun that way anyhow…
Sounds like greed to me, is the retailer selling these cars at cost? or below price to get the business? Ever ask yourself how much it actually cost rapido to mfg these cars, including overhead ( labor material etc, etc).Some, not all mfgs have a whopping mark up on their products.I f every one would take a little less then the price of most things would be a little less. Mfgs go by “What ever the market will bear,” and they will push it to its limits .
Oh. One other thought about the MAP policy from Rapido Trains’ website (dealers not allowed to ADVERTISE lower than 25% off MSRP… $37.50 for a $49.95 car). IF Eastern Classic is ADVERTISING the $33 price on a $50 car, then they are in voilation of this policy (which is perfectly legal) and Rapido Trains is free to take whatever action they please against Eastern Classic.
Sounds like there is not enough information on the situation to make a sound judgement. Especially since I couldn’t find any advertisements of Rapido Trains products on any Eastern Classic website I could find. Therefore I cannot determine if the Rapido Trains claim was about a published advertisement for $33 or the price someone was given when the “Called for Pricing”.
I withdraw my rash statement of product purchasing refusal [B)] based on this action. But I probably won’t buy any of their stuff anyway simply because it doesn’t fit into my turn-of-the-century era modeling.
I’m not sure what the big deal is about this manufacturer’s decision. It is not price-fixing, or subverting the free-market system or in any sense illegal. All that Rapido is threatening to do is to stop selling cars to a retailer that ignores their pricing policy. It is not trying to reclaim product already sold or prevent the retailer from selling any stock he has already purchased.
Business is business. So many times on this site I see people characterize the legitimate pursuit of profit as “greed” and “bad business practices.” These aren’t charities. If they can get $50 for their cars, good for them. If you don’t like it you don’t have to buy them. And it is absurd to characterize as a monopoly or a price-fixer a tiny firm that sells a non-essential, consumer good.