Now that is a reasonable and correct conclusion. It's absolutely true I'd prefer to shop from multiple sources. I like to at least get three strikes and your out when looking for the obscure items my customers want.
Well, based on experience with prior exclusive Horizon (and Great Planes) items there is a very low risk (although it is a risk). Instead of Athearn products going to a varied number of distributors it'll all be in one of two large warehouses that can be stocked checked very quickly. My experience is that items in current production that go out of stock are generally restocked quickly. Horizon has vast experience with exclusive product lines similar to Athearn. These lines have very high availabilty. Horizon has a stocking rate of some 87% which is excellent considering the wide array of products they carry. One good example is Team Losi. Horizon took them exclusively years ago. New products constantly flow into Horizon from Losi. Product availability is very high.
Mike next time you get down my way I can show you what I mean.
I'd say your correct that it is likely the main risk. But again they have done this type of work so many times I'd give it a very low probability.
But a large percentage can figure out a business plan a mile away. This one is very easy to see. Take over sole distribution. Figure the product is hot enough that demand will remain constant, hike prices or lower discounts, and make more money.
The flaw is that people are not going to pay more for the product and seek out the few stores that now carry the product. Athearn is not that hot of a product.
Sorry for the delay in responding, but I really wanted to give this the answer I think it deserves, and I haven't had the time to do it properly.
Many, many non-storefront dealers do ALL of the same things that storefront dealers do. They are recognized as legitimate businesses by the Federal, state and local governments, trade press, the NMRA, many distributors (INCLUDING Walthers, who offers an e-tailer account), quite a few manufacturers (large and small), a fair number of storefront dealers, and quite a lot of CUSTOMERS! You may not like the fact that a non-storefront dealer can get by with lower overhead, and that's OK by me. But I think it's grossly unfair to equate an honest, law-abiding merchant to someone who stole hundreds of thousands of dollars from the industry. And that is the comparison you've just made.
Obviously, I don't know about every hobby shop that ever went out of business. But it's routine to blame it on mail order.
It's difficult to be objective about our own failings. That's not meant to be a criticism, it's just human nature. I have known a few hobby shop owners who went under. They blamed mail order or shows. In each case, as an outside observer, I've seen other major factors that were likely to have caused the downfall. Were mail order and shows a factor? Certainly. But few people shop on price alone. If they did, anyone without rock-bottom prices would be out of business in no time. That's how a storefront dealer can compete. By giving the customer the best combination of what he wants.
All of the dealers I'm talking about REALLY believed that shows and mail order put them out of business. But they couldn't, or wouldn't see the other factors. Some were under their control, others not. One was in an area where NO hobby shop I know of lasted for very long. Combination of local rents too high, and not enough modelers in the local area. In another case, the guy thought he was a slick businessman, but had run several businesses into the ground.
What happened to you? I don't know. I don't have enough information to make an educated guess. Certainly the local basement guy didn't help, but I'm not prepared to agree that he was the only cause, because I've never seen, or even heard of, a case where that was true.
Again, I'm not trying to be mean or insulting. But it's entirely possible that, for one reason or another, there were other major factors that you might not have seen, or may have been out of your control.
And, if situations were reversed, I might well feel the same way that you do.
I suspect most of them. The way they are designed, it's to attract walk-in traffic, something many non-storefronts are not able to accomodate.
Anyone who is civil to me is going to get the same thing in return, no matter how far apart we are in opinion. Some of the most interesting, and rewarding, online conversations I've had have been with people who I've disagreed with on everything under the sun.
I was thinking the same thing, let's see where we are late this year. We might also look at it at the 1yr mark, and see if Horizon is going to make any changes after the one year mark.
Most people would rather blame someone else instead of themselves. In the 70s I was into strategy war games in Toronto. I lived in the old "Cabbage Town" area and there was a local store one block from my house.
Over on Younge Street (the main N-S street in Toronto) there was a large 3 story shop that sold everything gaming/hobby/toy related.
The prices at the 2 shops were about the same. Mr Gameway's Ark, the big guy on the main retail street had high expenses but could get volume discounts, while the little guy on Parliament Street in Cabbage Town had lower overhead, but smaller volumes. It was no secret that the little guy would match Gameways prices.
Why then did most of the people stop going to Mr Little and go to Gameways?
Let's see....
If you were not on "friendly" terms with Mr Little, he had no use for you and would not stop talking to his friends to help you out.
If you were not in his inner circle he would say "Sure I can order it for you and have it here in three days". As a customer I asked, "Do you want a deposit" Answer " Not Necessary". However, if you could not get back to his shop until 5-6 days later, you got the "I brought it in for you, it was here
3 days ago, but you did not show up so I sold it, want me to order it again?" Customer's Answer "No, I wanted to play it this weekend, I will get it from Gameways." Mr Little's response, "OK, but don't ask me to order anything else for you."
Over have the boxes in Mr Little's store were open, why because he wanted to set up and play the game with his buddies because he was bored.
He went out of business and blamed it on the fact that "his customers went to Gameways because it was bigger and flashier."
I guess that was better than saying "Except for my 6-8 buddies, I drove all my customers away to the competition because of my bad customer service and my attitude toward people."
Has anyone noticed the Walthers ad in the February MR, on pages 24-25? It's for their Super Chief train that will be powered by specially decorated Athearn Genesis F7's. The pair of powered A & B units is listed at $254.98. And get this - the pair of non powered A & B units is $199.98!
Wow, who would have even thought that four Athearn diesels would cost $454.96? That's about $680.17 here in Canada, using an exchange rate of
OK, Dave. We've discussed RC airplanes, let's talk about trains.
The last medium-sized line to pull out of the regular distribution channel was Micro Engineering. In this case, prices stayed the same. (There was a modest price increase a couple of years ago, but I can't attribute it to the distribution change.) See their products around much? Why not? Because you either have to go to ME to get it, or through Walthers at a courtesy discount.
But Athearn is a LOT bigger than ME. The last big manufacturer to pull out of the distribution chain was Bowser. The number one comment I hear about Bowser is "Boy, these cars are nice. I never see them anywhere." Bowser also raised prices AND cut the dealer discount on a lot of their products. Bowser appears to distribute more model RR lines than Horizon, but still doesn't seem to attract a lot of dealers.
I don't doubt that Horizon can keep up, but once they cut back on distribution, they start to fall out of the public eye. ESPECIALLY when they disappear from the Walthers catalog. Sure, they'll step up advertising, but they're not going to advertise every item every month. Some items will NEVER get advertised. How will modelers know about them?
That's why I fear distribution will suffer. Train lines that have limited distribution don't seem to do as well as they might. Particularly, not being in the Walthers catalog is a major disadvantage.
That's just a pessimistic outlook at best. Horizon has traditional bought companies and gones to exclusive deals. Never have they jacked up prices nor cut discounts after achieving exclusive rights. Examples are JR radio products (a very hot item for R/C modelers), Losi R/C cars. Hangar 9 aircraft, Dynamite R/C products. I can give you a pretty decent sized list of companies that they sell exclusively. All of these products can be found on mail order sites. The only difference is these sites also have a retail store associated with them (as does Longs and MB Kleines, Caboose Hobbies, and many more). What you think Horizon will do would not make sense. They would be killing off a major acquisition. As they have the reputation for never having done so I do not believe it will happen. Again this is based on experience with not only Horizon but other distributors with exclusive brands.
Isn't MB Klein the place that has repeatedly dumped P2K at below distributor cost? Just wondered because isn't that one of the things Horizon wants not to happen, but Klein is a large B&M store.
As I understand it MB Kleins is set up as a "distributor" and apparently gets items straight from the manufacturers. In the case of Athearn they will not be able to get this distributor pricing via Horizon that they got from Athearn. Down here in Florida Orange Blossom Hobbies got merchandise from Pan-Am Distributors which was part of the business. This was why Pan-Am received Kato as a distributor but "sold" only to it's retail front Orange Blossom Hobbies and no one else. Then Orange Blossom could sell at a lower retail price but maintain the same profit levels. My shop dealt with Pan Am for over 20 years and helped the original owners establish the shop. Kato was to my knowledge the only item them kept exclusively for themselves. Kato at the time was an extremely hi demand item.
Likewise here if it goes south. I can see why folks are pessimistic and without knowing more of the background info I have I'd likely be as well. My opinions are based solely on the many acquisitions that Horizon has pulled off and how they have handled them. One final example and I'll let this topic rest. Horizon has for several years hadLosi R/C cars and has allowed the company to continue to develope winning race cars. They have also expended large assets in seeing that the Losi name can be prominently found by any R/C fan. This includes sponsored race teams and advertisement galore. If anything Horizon tries to push as much product as possible and maintain high stocking levels in both Midwest and West warehouses. I'm am curious as to if they will have Athearn in the trade booths or keep them separate for the time being. All of Horizons exclusive lines are usually well represented at the Trade Shows I attend. I expect in the foreseeable future tis will happen as they merge marketing and sales. Horizons aim is to be the number one distributor. Who knows maybe sometime in the future they will absorb Walthers as well. Now that would be interesting to see happen.
Dave, Who is the larger now, Walthers or Horizon. I assume Horizon is because they have more products where Walthers is primary the railroad distributor. Jerry
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