Will Snubbing the Pre-Order System Get Us the Products We Want?

I used to pre-order but they would come in and clear out my bank account. I have to much stuff anyway if I have the money and find something I like at a train show or Lhs I buy. I will buy online or ebay if I can't wait. Nothing pre-ordered anymore, there are plenty of big dealers pre-ordering for me.

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I see two different things going on, at least taking the manufacturers at face value...

(1) Mfr needs a minimum order quantity to make the project a go. He takes pre-orders till that MOQ is met, however long that takes.

(2) Mfr wants to build/ship the product but production issues (tooling, factory scheduling, etc.) get in the way and cause delays.

I'm not sure what to do about the latter, but I wonder if something like the Trainboard Special Run model could be applied to the former... introducing some transparency into what is going on.

Imagine if Vendor A said, "We want to make Car X, but we need 500 pre-orders to make it go. Sign up now! No money due until we ship!" ... and then on their website they had a counter showing how many pre-orders they had. At any time, a customer could see... "Oh... they haven't made them yet because they are only up to 372/500 orders..."

Probably never happen because this would be considered confidential competitive business information, but the transparency might help with some of the concern over pre-ordering and the long delays with no explanation.

 

Oh, it happened alright. The company was PCM aka BLI and the product was the PRR M1. They even had a counter on their website showing what you stated. They jerked potential customers around for over ten years and they still have not a single model available for sale. Last I heard the ETA was November. But we shall see. In any event I pre-ordered two way back in about May, 2005. Cancelled the order six years later. I don't intend on buying any if they do make them. For that matter, I am not buying any BLI stuff. You just can't treat potential customers that way and expect them to buy your product.

Bachmann announced a PRR K4 in late August. I ordered one and within 4 weeks I had it in my grubby little hands. Now that is how it is supposed to be done.

 

No doubt it helps to have the factory under your direct ownership/control.
Besides Bachmann, Kato and Micro-Trains, how many other of the major model manufacturers can claim that advantage?

 

This is the defining problem with most of the model railroad companies which we deal with. Other than those mentioned above... I don't believe the manufacturing, assembly & decorating is under the direct control of the model railroad companies.

I know that some companies have factories here in the USA which can & have produced the injection molded plastic parts within the past 10 years... Intermountain Railway Co... for certain is one of them. They would then send the parts to companies in China to assemble, decorate (paint shells and printed/decal). The completed sub-assemblies were send back to the USA for models to be inspected. Once all components were here in the USA... shells were mated with the chassis (for locomotives); other items were boxed in the USA to send to distributors.

I believe the process has changed in the past 5 years to have everything done in China... just in time for the bottleneck in production to foul-up the shipping schedule to what it is now. I believe other small companies were doing something similar to IMRC... may have even had IMRC produce the shells for their rolling stock too. I don't know if these business processes have stopped or changed... except that China has still been involved in the processes.

 

And whose fault is that? Surely not the average model railroader. Manufacturers went on a campaign of out sourcing to save money but did they really do that? I'm not so sure they did. They gave up a lot of infrastructure along with a lot of control. Before they had to wait on their research dept. to complete their work on a newproduct. Now they have to wait on some foreign factory to give them production time. But did they save money? Not if you look at prices. Prices are comparable no matter who made it or where it was made.

 

I'm not sure price is a good metric for this... The market will force the pricing to be comparable / competitive. If the chinese-factory companies are able to drop their prices substantially, the american-factory companies will be forced to either lower their prices accordingly or adjust their marketing significantly to counteract the price difference.

It's entirely possible / likely that whoever has the higher cost basis is simply forced to deal with a smaller profit margin in order to keep the price in line with the market. Thus, price would be no indication of who is actually saving money and who is not.

That is not to say one way or the other whether anyone actually saved money or didn't by moving to china. Only to say that price would not be a reliable tool to measure that savings.

 

I know for a certainty that they missed out on 3 Code 55 #10 turnouts that I wound up buying secondhand.

 

Nobody is selling at a loss. At least not for long. I think companies have a clear idea of what they expect for a profit margin and price accordingly. If going to China resulted in lower costs then those lower costs had to be impacted by the subsequent turmoil in the market. Lower cost means nothing when there is no product or when product is delayed or when you must wait for your product's production time. Those 'cost savings' can evaporate pretty quickly.

 

Well, some idgits, years ago thought this preorder idea was great! So far I have Seen more negative feedback about this than positive.
I don't think it's china..
Some college grad wanted to impress someone above them and came up with this preorder scheme. It Had to be that way because I don't think an actual model railroader would do this to the rest of us.
Our entire economy is based on the bottom line scenario. Low risk, minimum labor/cost, controlled supply, cheapest price (thanks to kids of Sam), and instant gratification (hence fewer kits)
At some point, this scheme will fail..

I know.
How about we just start listing all the preorders that have not come about in two years from their original inception ? Change always has to start somewhere.
We need to stop complaining and get our voices heard.
I mean ten years to wait for a loco? Come on already. Build it, and build it well. It will sell...



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I didn't say selling at a loss. I said selling at a lower profit margin. Those are two very different things.

To a point, they do. But they must also price competitively. Or provide value to justify the price difference vs. the competition (which is, I suppose, still pricing competitively). There are limits to how much profit margin one company can expect, and one of those limits is the pricing that the rest of the market is willing to accept. If the market requires two companies products to be priced similarly, the one with the lower cost manufacturing will have an advantage in profit margin. There are a lot of other factors at play, of course.

You are absolutely right. Even now, in the larger manufacturing world, companies are beginning to shift away from China. Some to even lower cost areas such as Thailand and Vietnam. Others are looking at moving back to a more local, regional manufacturing model, at least for final assembly. Much of this is being driven by companies finding China to be less of a "bargain" than it used to be, or than they thought it would be.

 

That's where Fig Newtons are now being made.

 

If a certain presidential candidate wins in 2016... it's going to be very hard to get those Fig Newtons over the wall.
The smuggling of Fig Newtons will certainly create a new conspiracy that they are addictive and will become a banned substance.

I'm not so sure I want my model trains to be made in Mexico... they might become a banned substance!

 

I would disagree. What you are saying is applicable to 'widgets', a product that is relatively very similar to a competitor's product. But in the market made famous (infamous?) by rivet counters I am not sure that holds true. I will grant you that price may not be the best tool to use in a comparison but lacking 'inside' information from the companies it is basically all that we have. And price is the one thing that first meets the customer. I have talked to a lot of people at various N scale meets and train shows who have either stopped buying new product or have curtailed new acquisitions. If that is a systematic market trend then that can have far ranging repercussions for manufacturers. Lower demand will translate into lower supply which then translates into even higher prices as nonvariable costs have to be spread over less product.

 

When you factor in that the majority of the 'no brainer' stuff like the USRA designs that many RR's had and copied, having, to a large degree, been done and in some cases redone; there is not much out there that one might want to take the risk of investing in new tooling. At least not without expecting to sell at a reduced volume. Reduced sales volume mandates higher price. Higher price means less sales which then means still higher prices. That cycle does not have to repeat itself very often for this marketing strategy being the cyanide pill that doomed the model railroad industry. I think the pre-order system is the beginning.