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Exactrail
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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
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gn999gn
Brian -
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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:
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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
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Joel Holmes <lehighvalley@...>
Hi All,
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I think Horizon Hobbies has done the same thing. Joel Holmes
Brian -
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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
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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
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Joel Holmes <lehighvalley@...>
Hi Tim,
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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
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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.
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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:
------------------------------------ Yahoo! Groups Links
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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
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Rio Grande Ltd <rgmodels@...>
Well I guess I must be in the death spiral as I stopped wholesaling to hobby shops two years ago.
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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]
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Andy Harman
At 08:11 PM 4/2/2012 +0000, you wrote:
Question is; if one manufacturer elects this course, will others follow ?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
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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 harmHow so? If not for the basement (and traveling show) operators, 75% of the geographical market wouldn't be reached at all. Andy
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Andy Harman
At 04:42 PM 4/2/2012 -0700, you wrote:
No argument, Rich. My point was about those who RETREAT fromExactly. Andy
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naptownprr
So what was it that caused you to make that decision?
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Quoting Rio Grande Ltd <rgmodels@aol.com>:
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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 harmHow so? If not for the basement (and traveling show) operators, 75% of the geographical market wouldn't be reached at all. Andy
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Andy is right that in some places, only mail order or "travelling show" dealers
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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
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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
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Joel Holmes <lehighvalley@...>
Hi Tim,
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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
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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
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Joel Holmes <lehighvalley@...>
Hi Scott,
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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
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