Exactrail


Brian Ehni <behni@...>
 

Direct from Exactrail; looks like I'm not going to be buying anything new
from themŠ

Hello Brian,

The reports are correct and it is not a rumor or hoax.

As of May 1, 2012, ExactRail will no longer offer a dealer discount and will
discontinue our dealer network. Hobby stores may continue to purchase
ExactRail products from ExactRail.com at the standard consumer price.

Cost of production has increased considerably for ExactRail over the last
two years. We have absorbed most of these increases through our margins. As
we consider the sustainability of these trends, our conclusion is that the
best solution to serve the consumer is through a more direct model. By
serving our customers directly, we hope to be able to maintain lower prices.

Dealers will continue to receive a discount through the month of April.

Orders placed in April, including any advanced purchases, will still receive
the dealer discount.

Our decision to discontinue our dealer distribution network has come from
much deliberation. We appreciate the dealer¹s contribution to our industry;
we feel that this decision is necessary so that ExactRail may contribute
with them well into the future.

Best regards,

Dave Lotz
Regional Sales Representative
Phone (801) 822-3202


Thanks!
--

Brian P. Ehni


gn999gn
 

Brian -

Question is; if one manufacturer elects this course, will others follow ?
The pressure to do so will be substantial.

Walthers is the elephant in the room, to some degree ...
They are in the precarious position of distributor and manufacturer.

Another nail in the coffin, with the LHS bearing the brunt of this.

Ron dePierre

--- In STMFC@yahoogroups.com, Brian Ehni <behni@...> wrote:

Direct from Exactrail; looks like I'm not going to be buying anything new
from themŠ

Hello Brian,

The reports are correct and it is not a rumor or hoax.

As of May 1, 2012, ExactRail will no longer offer a dealer discount and will
discontinue our dealer network. Hobby stores may continue to purchase
ExactRail products from ExactRail.com at the standard consumer price.

Cost of production has increased considerably for ExactRail over the last
two years. We have absorbed most of these increases through our margins. As
we consider the sustainability of these trends, our conclusion is that the
best solution to serve the consumer is through a more direct model. By
serving our customers directly, we hope to be able to maintain lower prices.

Dealers will continue to receive a discount through the month of April.

Orders placed in April, including any advanced purchases, will still receive
the dealer discount.

Our decision to discontinue our dealer distribution network has come from
much deliberation. We appreciate the dealer¹s contribution to our industry;
we feel that this decision is necessary so that ExactRail may contribute
with them well into the future.

Best regards,

Dave Lotz
Regional Sales Representative
Phone (801) 822-3202


Thanks!
--

Brian P. Ehni





[Non-text portions of this message have been removed]


Charlie Vlk
 

ExactRail has had difficulty with playing well with dealers from the get-go
with several failed attempts at notification of new products and
pre-ordering.



The problem with going direct is that you have to develop the infrastructure
to deal directly with ALL your potential individual customers instead of
using the distributor and dealer network as a primary interface with end
consumers.



The money behind ExactRail comes from the computer software industry. If
they think they can use that model for customer service for Model
Railroaders they are in for a big surprise.



Direct sales may be a viable business model for specialty custom
manufacturers with just-in-time manufacturing models with low inventory
situations but the traditional distribution network (including e-retailers
and non-brick and mortar shops) absorbs a fair percentage of production for
most manufacturers and acts as a reservoir for holding products before they
get to their ultimate home. It is easy to forget that the margin that
wholesalers and retailers get for handling the product benefits both the
manufacturer and the end user.



Charlie Vlk

Railroad Model Resources


Joel Holmes <lehighvalley@...>
 

Hi All,

I think Horizon Hobbies has done the same thing.

Joel Holmes

Brian -

Question is; if one manufacturer elects this course, will others follow
?
The pressure to do so will be substantial.

Walthers is the elephant in the room, to some degree ...
They are in the precarious position of distributor and manufacturer.

Another nail in the coffin, with the LHS bearing the brunt of this.

Ron dePierre




--- In STMFC@yahoogroups.com, Brian Ehni <behni@...> wrote:

Direct from Exactrail; looks like I'm not going to be buying anything
new
from them�

Hello Brian,

The reports are correct and it is not a rumor or hoax.

As of May 1, 2012, ExactRail will no longer offer a dealer discount and
will
discontinue our dealer network. Hobby stores may continue to purchase
ExactRail products from ExactRail.com at the standard consumer price.

Cost of production has increased considerably for ExactRail over the
last
two years. We have absorbed most of these increases through our margins.
As
we consider the sustainability of these trends, our conclusion is that
the
best solution to serve the consumer is through a more direct model. By
serving our customers directly, we hope to be able to maintain lower
prices.

Dealers will continue to receive a discount through the month of April.

Orders placed in April, including any advanced purchases, will still
receive
the dealer discount.

Our decision to discontinue our dealer distribution network has come
from
much deliberation. We appreciate the dealer�s contribution to our
industry;
we feel that this decision is necessary so that ExactRail may contribute
with them well into the future.

Best regards,

Dave Lotz
Regional Sales Representative
Phone (801) 822-3202


Thanks!
--

Brian P. Ehni








Tim O'Connor
 

From conversations I had with Ron Sebastian when Horizon bought Athearn,
I got the strong impression from Ron that Horizon was very "pro-dealer" -- In
fact, Horizon will not deal with non-brick & mortar retailers as far as I've been
able to tell. (This cuts out the basement operators, who have done great harm
to dealers over the years, going back to the 1960's.)

Exactrail may be socking it to themselves with this move. We'll see.

Tim O'Connor


Anthony Thompson <thompson@...>
 

This doesn't apply necessarily to ExactRail, but in the past, manufacturers who retreated to direct-order only were usually in a death spiral.

Tony Thompson Editor, Signature Press, Berkeley, CA
2906 Forest Ave., Berkeley, CA 94705 www.signaturepress.com
(510) 540-6538; fax, (510) 540-1937; e-mail, thompson@signaturepress.com
Publishers of books on railroad history


Joel Holmes <lehighvalley@...>
 

Hi Tim,

I double checked with my LHS and he told me that what you said is correct.
I stand corrected. Thank you for the information.

Joel Holmes


From conversations I had with Ron Sebastian when Horizon bought Athearn,
I got the strong impression from Ron that Horizon was very "pro-dealer" --
In
fact, Horizon will not deal with non-brick & mortar retailers as far as
I've been
able to tell. (This cuts out the basement operators, who have done great
harm
to dealers over the years, going back to the 1960's.)

Exactrail may be socking it to themselves with this move. We'll see.

Tim O'Connor






SUVCWORR@...
 

It is not as uncommon a practice as might be thought among the small to mid-size manufacturers. So as not to risk jail for commenting on the market practice of specific manufacturers, I won't enumerate them here. But just think of the small to midsize manufacturers and ask yourself how they market their products. You will find most of them use only direct sales. While this change is not welcome, I view it as an admission of the market share relative to costs.

Rich Orr

-----Original Message-----
From: carbonblack1 <radepierre@yahoo.com>
To: STMFC <STMFC@yahoogroups.com>
Sent: Mon, Apr 2, 2012 3:11 pm
Subject: [STMFC] Re: Exactrail


Brian -

Question is; if one manufacturer elects this course, will others follow ?
The pressure to do so will be substantial.

Walthers is the elephant in the room, to some degree ...
They are in the precarious position of distributor and manufacturer.

Another nail in the coffin, with the LHS bearing the brunt of this.

Ron dePierre




--- In STMFC@yahoogroups.com, Brian Ehni <behni@...> wrote:

Direct from Exactrail; looks like I'm not going to be buying anything new
from themŠ

Hello Brian,

The reports are correct and it is not a rumor or hoax.

As of May 1, 2012, ExactRail will no longer offer a dealer discount and will
discontinue our dealer network. Hobby stores may continue to purchase
ExactRail products from ExactRail.com at the standard consumer price.

Cost of production has increased considerably for ExactRail over the last
two years. We have absorbed most of these increases through our margins. As
we consider the sustainability of these trends, our conclusion is that the
best solution to serve the consumer is through a more direct model. By
serving our customers directly, we hope to be able to maintain lower prices.

Dealers will continue to receive a discount through the month of April.

Orders placed in April, including any advanced purchases, will still receive
the dealer discount.

Our decision to discontinue our dealer distribution network has come from
much deliberation. We appreciate the dealer¹s contribution to our industry;
we feel that this decision is necessary so that ExactRail may contribute
with them well into the future.

Best regards,

Dave Lotz
Regional Sales Representative
Phone (801) 822-3202


Thanks!
--

Brian P. Ehni





[Non-text portions of this message have been removed]



------------------------------------

Yahoo! Groups Links


Anthony Thompson <thompson@...>
 

Rich Orr wrote:
It is not as uncommon a practice as might be thought among the small to mid-size manufacturers. So as not to risk jail for commenting on the market practice of specific manufacturers, I won't enumerate them here. But just think of the small to midsize manufacturers and ask yourself how they market their products. You will find most of them use only direct sales. While this change is not welcome, I view it as an admission of the market share relative to costs.
No argument, Rich. My point was about those who RETREAT from dealer sales to direct sales.

Tony Thompson Editor, Signature Press, Berkeley, CA
2906 Forest Ave., Berkeley, CA 94705 www.signaturepress.com
(510) 540-6538; fax, (510) 540-1937; e-mail, thompson@signaturepress.com
Publishers of books on railroad history


Rio Grande Ltd <rgmodels@...>
 

Well I guess I must be in the death spiral as I stopped wholesaling to hobby shops two years ago.

eric bracher
Rio Grande Models

-----Original Message-----
From: Anthony Thompson <thompson@signaturepress.com>
To: STMFC <STMFC@yahoogroups.com>
Sent: Mon, Apr 2, 2012 2:15 pm
Subject: [STMFC] Re: Exactrail





This doesn't apply necessarily to ExactRail, but in the past,
manufacturers who retreated to direct-order only were usually in a
death spiral.

Tony Thompson Editor, Signature Press, Berkeley, CA
2906 Forest Ave., Berkeley, CA 94705 www.signaturepress.com
(510) 540-6538; fax, (510) 540-1937; e-mail, thompson@signaturepress.com
Publishers of books on railroad history









[Non-text portions of this message have been removed]


Andy Harman
 

At 08:11 PM 4/2/2012 +0000, you wrote:

Question is; if one manufacturer elects this course, will others follow ?
The pressure to do so will be substantial.
If EXR succeeds with this new scheme, certainly others will want to follow. I'm more concerned that others will follow without waiting to see if it succeeds, or follow even if it fails.

Andy


Andy Harman
 

At 09:02 PM 4/2/2012 +0000, you wrote:
able to tell. (This cuts out the basement operators, who have done great harm
to dealers over the years, going back to the 1960's.)
How so? If not for the basement (and traveling show) operators, 75% of the geographical market wouldn't be reached at all.

Andy


Andy Harman
 

At 04:42 PM 4/2/2012 -0700, you wrote:

No argument, Rich. My point was about those who RETREAT from
dealer sales to direct sales.
Exactly.

Andy


naptownprr
 

So what was it that caused you to make that decision?

Quoting Rio Grande Ltd <rgmodels@aol.com>:


Well I guess I must be in the death spiral as I stopped wholesaling
to hobby shops two years ago.

eric bracher
Rio Grande Models





-----Original Message-----
From: Anthony Thompson <thompson@signaturepress.com>
To: STMFC <STMFC@yahoogroups.com>
Sent: Mon, Apr 2, 2012 2:15 pm
Subject: [STMFC] Re: Exactrail





This doesn't apply necessarily to ExactRail, but in the past,
manufacturers who retreated to direct-order only were usually in a
death spiral.

Tony Thompson Editor, Signature Press, Berkeley, CA
2906 Forest Ave., Berkeley, CA 94705 www.signaturepress.com
(510) 540-6538; fax, (510) 540-1937; e-mail, thompson@signaturepress.com
Publishers of books on railroad history











Brian Ehni <behni@...>
 

Personal experience: I had a brick and mortar in Nashville, TN. $40,000 in
inventory, and offered a 20% discount to the local modular club members.
They would come in, see what I had, and then go order from the club
president who was a basement bomber with no overhead and gave them 30% off.

We took pictures of what Walthers said was his shipping address (a
residental location), showed that he did not advertising as they require,
had no manned store location with signage, ad nauseum. Bottom line was they
refused to stop selling to him, even though he in no way met their own
requirements.

Since only a handful of the 150 or so registered club members ever bought
anything, we eventually gave up.

THAT'S how basement bombers harm brick and mortars.

Open your own brick and mortar and see for yourself.


Thanks!
--

Brian P. Ehni

From: Andy Harman <gsgondola@gp30.com>
Reply-To: STMFC List <STMFC@yahoogroups.com>
Date: Tue, 03 Apr 2012 11:00:05 -0400
To: STMFC List <STMFC@yahoogroups.com>
Subject: Re: [STMFC] Re: Exactrail






At 09:02 PM 4/2/2012 +0000, you wrote:
able to tell. (This cuts out the basement operators, who have done great harm
to dealers over the years, going back to the 1960's.)
How so? If not for the basement (and traveling show) operators, 75% of the
geographical market wouldn't be reached at all.

Andy


Tim O'Connor
 

Andy is right that in some places, only mail order or "travelling show" dealers
are available. And I have bought plenty of stuff from the non-brick & mortars
myself over the years. I've known a few guys who became dealers (especially
of brass imports) simply because they wanted to get their OWN collections at
dealer net and then sold enough to friends and acquaintances to keep the
pipelines open. And I have even known of couple of basement guys who ended
up opening their own stores, and became established shops.

Still, there's no question that these operators siphon business away from real
hobby shops, and that hurts real modelers in the long run because we need
lots of detail parts and supplies and tools and paints etc that the basement guys
normally don't carry. And the basement guys don't attract NEW modelers to the
hobby the way that the stores used to.

The smartest shops seem to have realized that by operating mail order on the
side, they can expand to a much larger customer base. That is the only way to
survive nowadays, I think.

Tim O'Connor

----- Original Message -----
From: "Brian Ehni" <behni@comcast.net>

Personal experience: I had a brick and mortar in Nashville, TN. $40,000 in
inventory, and offered a 20% discount to the local modular club members.
They would come in, see what I had, and then go order from the club
president who was a basement bomber with no overhead and gave them 30% off.

We took pictures of what Walthers said was his shipping address (a
residental location), showed that he did not advertising as they require,
had no manned store location with signage, ad nauseum. Bottom line was they
refused to stop selling to him, even though he in no way met their own
requirements.

Since only a handful of the 150 or so registered club members ever bought
anything, we eventually gave up.

THAT'S how basement bombers harm brick and mortars.

Open your own brick and mortar and see for yourself.


Thanks!
--

Brian P. Ehni


Scott Kremer
 

There is a shop in Phoenix that seems to have a different model that
works. Rather than have a store in a typical strip mall they have a
store in a light industrial area. The store has a small office and
what is basically a warehouse with shelfs and displays. It appears to
be very low overhead. They do also run an extensive mail order
operation. Despite all of that the owner still works a regular job
elsewhere. One of the real points to be recognized is that more of us
want ready to roll cars and locomotives with sound decoders
installed. I was at a local store this week and saw the Atlas, old
Branchline, kits for $13. If more of us were willing to do what we
did a few years ago, that is build kits, install decoders, etc.,
perhaps the price pressures we see on current products would not be
pushing the hobby the way they are.

Scott Kremer


Joel Holmes <lehighvalley@...>
 

Hi Tim,

I think you may have hit upon one of the most important parts of the
retail model railroad store - 'the basement guys don't attract NEW
modelers to the hobby the way that the stores used to.' Nor does the the
mail order Internet business.

Without new modelers, the hobby will die.

Joel Holmes


Andy is right that in some places, only mail order or "travelling show"
dealers
are available. And I have bought plenty of stuff from the non-brick &
mortars
myself over the years. I've known a few guys who became dealers
(especially
of brass imports) simply because they wanted to get their OWN collections
at
dealer net and then sold enough to friends and acquaintances to keep the
pipelines open. And I have even known of couple of basement guys who ended
up opening their own stores, and became established shops.

Still, there's no question that these operators siphon business away from
real
hobby shops, and that hurts real modelers in the long run because we need
lots of detail parts and supplies and tools and paints etc that the
basement guys
normally don't carry. And the basement guys don't attract NEW modelers to
the
hobby the way that the stores used to.

The smartest shops seem to have realized that by operating mail order on
the
side, they can expand to a much larger customer base. That is the only way
to
survive nowadays, I think.

Tim O'Connor


Andy Harman
 

At 12:09 PM 4/3/2012 -0500, you wrote:

Open your own brick and mortar and see for yourself.
I would never consider doing such a thing unless I won the lottery. And I don't mean a 2.5 million, more like a 100 million plus.

I think the real harm is that the large players in the industry still want to pretend it's 1950 when it comes to the distribution/retail practice, and as you pointed out there are either loopholes or selective enforcement of their policies anyway.

Attempts to artificially prop up a business structure that is not competitive on its own will fail. Unless you're DeBeers, and even they could not keep control of supply forever.

Andy


Joel Holmes <lehighvalley@...>
 

Hi Scott,

I thank you are correct. Is started with kits. Went to scratch building
almost immediately as a cost savings. I was poor in those days. I have a
lot of RTR equipment, but still build kits, and mostly scratch build. I
cannot afford much of this museum level RTR cars and locomotives. I like
that idea of a railroad warehouse. I also knew a basement model railroad
shop which has now become one of the largest model railroad and hobby
store in a major city.

Joel Holmes

There is a shop in Phoenix that seems to have a different model that
works. Rather than have a store in a typical strip mall they have a
store in a light industrial area. The store has a small office and
what is basically a warehouse with shelfs and displays. It appears to
be very low overhead. They do also run an extensive mail order
operation. Despite all of that the owner still works a regular job
elsewhere. One of the real points to be recognized is that more of us
want ready to roll cars and locomotives with sound decoders
installed. I was at a local store this week and saw the Atlas, old
Branchline, kits for $13. If more of us were willing to do what we
did a few years ago, that is build kits, install decoders, etc.,
perhaps the price pressures we see on current products would not be
pushing the hobby the way they are.

Scott Kremer