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

glennac Aug 10, 2015

  1. Puddington

    Puddington Passed away May 21, 2016 In Memoriam

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    Some interesting perspectives being expressed here. I look at pre orders from "our" perspective (working for a small model train company...five people small) as being the safest and most accurate way of determining interest in a particular line of products. By pre ordering ( and let's be clear; our definition of a pre order is when an end use customer goes to, calls, emails (whatever) their LHS and says "order me a Rapido "x" and/or when a distributor/store/internet vendor says "give me "y" Rapido products, "x" of which are for confirmed orders from a customer and "y" are for shelf stock. ) we are getting the most accurate (short of someone demanding payment ahead which we all know isn't going to happen, nor should it) way to see if the product we are offering is going to sell enough to be financially viable. The idea of surveys might seem fine but it's well known that people are far more likely to say "oh ya, I'll take 10" to a random survey than they are when they are committing to a vendor that they want to pre order something. That's not to say people don't fail to honour their order to LHS's... they do; but that is a smaller percentage of people than would fail to honour a "survey commitment".

    From the LHS perspective the pre ordering system saves them from some of the dangers of being stuck with massive inventory that sits, eats up capital and doesn't move. Imagine, with all the new stuff that hits the market each year if your LHS had to carry even minimum shelf stock.... how many $ 200.00 plus locomotives do you think the average store can afford to have sitting on the shelf without an order....? Not too many I'd wager. By offering the units for pre order they see what's popular; have a base load of orders and can make a semi informed decision on what, if any shelf stock to carry.

    It's easy to say "risk and reward" when it's not your money. I can tell you that if we (and many other companies) had to "go it alone" on projects; that is to say, go ahead and manufacture without an established pre ordered base of orders we'd not bring nearly as many products to the market; we simply couldn't the risk. Talk to a bank today; they will not support businesses that accept unnecessary risk. We (and again, many small train companies) are one major project flop away from serious financial consequences; investing 100K in a project that fails to sell enough product to cover costs and make a reasonable return could be a game changer for a lot of companies.... and I don't think anyone here is advocating for fewer players in the game. It's not the amount of capital you have; it's the wise use of that capital; being as sure as you can be that your investment will be successful.

    The flip side of pre ordering is the need for a company to be aware of their responsibility to supply quality. If we're asking for your trust, we better deliver. Now; mistakes and accidents happen. How a company reacts to them is critical in my opinion. Recently Intermountain announced they will produce new shells for GN Big Sky Blue products because of incorrect colour matches. That's a responsible reaction to an error. We had an issue with wiring on DC GMD-1's; we're producing new power chassis for those affected and because it's taking a while will be sending a free reefer to each person who'a ordered the replacement chassis. In both cases the manufacturer is responding to a problem as best they can and is doing their best to make the situation right. I firmly believe that if you ask for pre orders you need to stand behind the product; if errors occur then you have to fess up and do your best to make it right.... it is a two way street.

    I understand those who long for the days of overflowing shelves at their LHS. I lived through and loved the days of show cases of engines, all available for immediate purchase. I also, however, remember that these engines were generic; often total foobies, often less than well detailed, road name specific and even road number specific. The shelves of blue box kits didn't have 12 road numbers per name; didn't have multiple door types, see through walkways and laser sharp cars specific printing. I couldn't choose from three different boxcar ends on by AAR 1937 type 40' boxcar; I "got what I got"..... the market isn't the same; expectations are different; they are much more detail demanding; this translates into more sku's of more detailed products, each of which has the potential to sell smaller individual amounts.... Our expectations for detail, prototypical fidelity and quality have, in large part, driven the way the market has gone and thus, the way products are offered.

    As a modeller; I'll accept the trade off; I'm loving the models I get today and if I have to step up and say "I'm in", then that's ok with me.
     
    Last edited: Aug 12, 2015
    wpsnts, ken G Price and jpwisc like this.
  2. rrjim1

    rrjim1 TrainBoard Member

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    Very well explained, +1
     
  3. Rossford Yard

    Rossford Yard TrainBoard Member

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    I have no doubt that the deck is somewhat stacked against new mfgs. in many ways - access to credit as a new company, a wait and see attitude from modelers (that even happens to bigs who have less stellar reps, but trying to upgrade or re-enter like LL and Bachman). In addition, while I have no inside knowledge, I have heard that the bigger mfgs. price things to break even on the first run, while subsequent runs are almost pure profit. If even close to true, that sets the market price, and makes supplying a brand new product at a profit a lot tougher.

    In any event, I have the impression (obviously all details vary from company to company...maybe someone has taken a loan from the "bank of Dad" to enter the biz.....) that new MRR mfgs. probably have to take the slow but sure route, using mostly cash to get going. Its a big risk, for sure, with probably not a lot of return, which is why I have a hard time getting in a lather about anything a manufacturer has to do to better supply me with train products I crave more than White Castle hamburgers (for the un-initiated, WC advertises the "crave") In other words, while I love hearing about the biz side of MRR, in the end, I figure they know what is best for them and let them do it.

    Which brings me to another related question....I wonder how it is Kato and MT do manage to do biz without the pre-orders others find necessary. I suspect it lies in the very repeatable sales of collectors items and a niche market. While Kato's are also runners, they focus mostly on iconic train sets more than one or two loco models, at least these days, and can probably figure how many N scalers will buy a full passenger set, etc.

    They may have a great pulse on their own part of the market. That makes BLMA, which announces the product, then takes orders, but has never failed to deliver on them, a great success story. I think Craig, as a modeler simply hears at shows or trusts his instincts to bring out modern cars that haven't been addressed in the market place. To a degree, the GP60M by FVM would be in that category, although it could have easily been produced by Walthers.

    Slightly related, but a few mfg reps at train shows (I won't mention names) have joked about their "annual conference" where they divvy up possible products. Of course, most of the big mfgs deny, with credibility, that this ever happened, and so did the guys saying it. But, some N scalers wish that would happen, just in the name of coordination. A few suspect that the Chinese hacking was really an MRR mfg plot to spy on other companies.........
     
    Last edited: Aug 12, 2015
  4. rrjim1

    rrjim1 TrainBoard Member

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    I pre-order Kato and MT products. Even when I owned and operated a small train shop I had to pre-ordered both from a dist.
     
  5. Rossford Yard

    Rossford Yard TrainBoard Member

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    RRJIM1,

    Well, I guess they do announce shortly before shipping and that gives time for the LHS to get pre-orders from customers. I guess I have heard that Kato is often shorting their dealers, suggesting they make a set amount, perhaps loosely related to customer orders, but also hampered by the number of days they allocate to each product for production. In other words, if they make XX a day, and schedule for one day, then orders of XX + 20 get shorted anyway. But again, that is just from discussion on various boards and talking with a few LHS (usually asking why I didn't get mine, maybe its CYA story)

    MT announces about a month out, as well, but I have never pre-ordered from them, so I am not familiar.

    Perhaps ironic, but for all the complaints about the long lead times of other mfgs, we do hear complaints about the short lead times for Kato in many cases.......you just can't please everyone, I guess.
     
  6. RBrodzinsky

    RBrodzinsky November 18, 2022 Staff Member TrainBoard Supporter In Memoriam

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    I think there is a big difference in the Kato / MT pre-order process, and some of the others being discussed. For those products, it is really the retailers that are taking the orders so that the companies know where to ship the announced product. Also allows the retailers to judge and decide how many extra to order, for post day one sales. It is very different than the "reservation" that gets placed and sits for years on a "we are thinking about making a xxxx" announcement.
     
  7. Puddington

    Puddington Passed away May 21, 2016 In Memoriam

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    A few people here have brought up the time it takes from announcement to delivery; a valid topic to be sure and as many know, Rapido (the company I work for) has not been immune to lengthy delivery delays (I mean, 7 years between original announcement of the HO scale LRC to delivery... new world record) How can this happen...?

    There are a number of things that delay delivery; some of the ones that we've experienced are:

    1. Not enough orders to make the project financially viable: Despite the marketing you've done, the dealer emails, magazine ad's and internet talk you just don't have enough market interest to pull the trigger so you keep orders open and try to drum up more business. This is the big one......

    2. Development issues: The project gets delayed by tooling changes due to a number of reasons; errors in the pre production tool; new information that comes up after you've committed to tooling; fit and form issues that have to be fixed; there can be technology issues, the motor you have access to isn't right and the one you want isn't available, there's a delay in the design of a PCB or decoder by a sub contractor.... these can be several months long if you need a new decoder.... there can be lots of reasons that the end user never sees....

    3. Supplier issues: Your tooling supplier can't deliver, your production factory or assembly workshop gives away your spot and you get delayed; the factory loses 2/3's of it's work force after Chinese New Year and can't produce for months or has slow and poor production....Supplier issues happen more often than most people know and there's little you can do about it unless you jump on a plane and that's a major decision and expense to absorb.... and even then there's often nothing you can do about it....

    4. Priorities: You announced "Project A" first but "Project B" is getting huge response and will yield you significant dollars of profit that can help fund other projects so you make a change in priority...

    5. Closures: You wake up one morning to find your tooling supplier is gone and so are your deposits and moulds.....

    6. Worn tool: You go to production and get an email saying the tool is worn even after they swear they checked it before and it was ok; you need new tool and the lead time is "x" months......

    7. Shipping: It takes a week - ten days to get to a port, it's a month to cross the Pacific.... the west coast ports can be a mess; it can take weeks to get loaded on a train or truck; then you have to unload, sort, check, pack, ship...... it's all time off the clock.......

    8. Vendors: Manufacturers don't broadcast it but there are some few vendors who can't pay their bills..... hard to ship them product when they are 180 days out on bills..... Even harder when the vendor blames the manufacturer for not having product to sell you....... yesh!

    In short, there are many reasons that projects can get delayed..... many of these reasons are beyond the direct control of the model train company.

    Now; what you can do is communicate to the market. Some companies don't feel this is a priority; I feel most do..... At Rapido, Jason (our owner) communicates pretty well; monthly newsletters where he is well known to share our problems.... sometimes to a fault. Posting on websites, chat groups and dealer updates are all things we do; plus trying to answer the phone when an individual customer calls asking "where's my......"

    You can't reach everyone; a few people will assume you are lying..... They will call and give you hell; sometimes to the point of being rude and abusive. I always ask "why would we want to delay taking your money...?" I mean, we don't get paid until you get your cars/locomotives and we've already laid out tooling costs and a production deposit of well over 50%, sometimes the whole enchaloda..... Does anyone think we like delaying making money.....? No; delays are not something any company wants but they do happen; I think it's our responsibility to communicate as much as we can, as well as we can and as fast as we can..... You might still be miffed that your "x" isn't ready yet but if we keep you in the loop at least you'll know why and if you accept the fact that we "want your money" you'll accept the fact that we must be doing our best to deliver..... Regardless we will still get calls telling us we "hate N scalers" or "have it in for Espee modellers" or my favourite "you are conspiring with other companies to short the market and drive prices up"..... have you met the guys that run model train companies...? They are, for the most part just like you.... train nerds, not Captains of Industry..... Good grief!!!!!!!

    The model railway industry is like the old British Rail saying.... "We'll be late, but we'll get you there..." and for the record... we try... we really do.
     
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  8. umtrr-author

    umtrr-author TrainBoard Member

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    Micro-Trains did that this month with the pre-order for the RailAmerica SW1500s. While not providing specifics (and most manufacturers and marketers simply aren't going to do that), they did say, quote:

    MTL hasn't cancelled too many items in their history, and if I recall correctly, more were in Z than in N. To my knowledge, though, this is the first time that they've extended a pre-order deadline rather than cancelling outright.
     
  9. Inkaneer

    Inkaneer TrainBoard Member

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    Didn't manufacturers have a pre-order system before using the distributor who with or without input from their customers (hobby shops) determined what they would stock. I know every time I entered my local shop the owner, knowing what my interests were, would have some insight as to what to look for.
     
    Last edited: Aug 12, 2015
  10. Rossford Yard

    Rossford Yard TrainBoard Member

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  11. Hytec

    Hytec TrainBoard Member

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    Thank you for your forthright and honest explanations, they're a welcome exposure into small business operations.

    BTW, I feel extremely embarrassed that I do not own any Rapido products that I know of. Unfortunately, pre-1953 B&M and northeastern rail represents an extremely small niche market, probably only one individual, and your honest explanation presents a sound business decision which I fully accept. Which is why I and others like me frequent the estate sale tables at every show possible. I wish you and Rapido continued success.
     
  12. glennac

    glennac TrainBoard Member

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    Thank You Puddington! Hopefully such detailed responses can quell the moaners. Unfortunately, there will always be conspiracy theorists. As the old quote goes, “For those who believe, no proof is necessary. For those who don't believe, no proof is possible.”― Stuart Chase

    While I'm fully onboard with pre-ordering, the one wish I do have is your reference to keeping the market informed. Yes, a handful of companies make an effort. But far too many go into silent mode when deadlines come and go and pretend as if nothing was ever announced ("Gas Turbine? What Gas Turbine?"). I think it would go along way toward customer relations if manufacturers would just keep us informed of the status of overdue products. If a product simply isn't sparking enough interest (like the IM ATSF Slogan/Map box cars I mention in another thread that are over two-years overdue), well periodic updates might actually spark the lagging interest that the manufacturers seem to perceive.
     
  13. BoxcabE50

    BoxcabE50 HOn30 & N Scales Staff Member TrainBoard Supporter

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    This pre-order is for dealers? Not the public?
     
  14. mtntrainman

    mtntrainman TrainBoard Supporter

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    Thnxs Pud....well said and good info and appreciated.

    Now...from the consumers standpoint.

    *** In all fairness and full disclosure...I have NEVER preordered anything. I am baseing my thoughts on the horror stories I have read from others. All of which are valid from their and my perspective. ***

    1) The customer preorders 3 "x's". His finances are pretty solid. He has a good job, a new house, new car, 2 kids about to go to college. Life is good. 3 years after preordering those 3 "x's"...the company he works for decided to 'downsize'. The customer is no longer employed. He is barely making ends meet. Trying hard not to lose his house or car. He struggles to pay his utilities and put food on the table. He has to pay his kids education costs. Life SUXS!!! He forgot he preordered those 3 "x's" 5 years ago and when they came to market whoever took that preorder charges his CC and ships the items. The customers CC takes a major hit that years ago would have been ok...just not today ! What is he supposed to do now ? Lose his house or car for non payment ? Tell his kids they have to drop out of college because dad cant afford to pay for it this month ? Maybe not pay his utilities ? Who needs food, lights, water, or A/C in the middle of summer anyways !

    All this because he preordered and had to give his CC info in order to do that preorder 5 years ago and the time has come to 'pay up'! This is more of what I meant when I said I am not going to have my hobby 'Held Hostage' by a preorder system.

    2) The customer preorders and has to give his CC info to make that preorder. He wont be charged till the item comes to mareket. In the meantime (as John Moore has related) his CC info is out there floating around God knows where. Is it locked in a vault ? Is it sitting on someones desk ? Is it stored on a computer...or maybe a 'cloud' somewhere. All of which are non secure and anyone can get his CC info...and rob him blind !!

    I have had 2 cards hacked in the last 10 years. Non train related...but still hacked. Right now I have a handful of debt cards. Each is for different payments...and just enough on each payday to cover those payments with a small amount left over for'card fees'. If one of them gets hacked...they arent getting to much of my $$$ and surely not getting all my money because I 'put all my eggs in one basket'. Money goes on my 'Train Card' only when I am ready to order and pay for something right then. Not tied up for years in a preorder I made 3-10 years earlier.

    People can call me paranoid or a conspiracy theorists...thats fine. BUT...I still have ALL of my monthly disabilty check when I need it ;):p
     
    Last edited: Aug 12, 2015
  15. BoxcabE50

    BoxcabE50 HOn30 & N Scales Staff Member TrainBoard Supporter

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    The problem with announcements and passage of time is that the modeling community has seen many such incidents. After time passes, these announced items fall into the category of vaporware. Even if a very worthy endeavor, when you get to vaporware, you have distrust. Rebuilding that level of trust can be difficult. Doing the best possible to keep the consumers up to date, is all that can be done. But some companies do a poor job of this...
     
  16. Adrian Wintle

    Adrian Wintle TrainBoard Member

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    I think PCM/BLI has you beat with the N-scale M1a/b..

    Thanks for the explanations.

    Adrian
     
  17. Rossford Yard

    Rossford Yard TrainBoard Member

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    mtntrainman,

    Well, the sad part is the whole American economy has generally taken care of most of us, and we expect nothing but 3% raises or greater, at least until 2006 on. There are many consumers who suffer from "inadequate capitalization" these days. Not sure when pre-order was in full force, but probably after 2000 recession, so it had a run of five years in decent economy and probably worked okay. Of course, some mfgs can get their act together better than others, and all faced problems when the China factories experienced problems of their own.

    I know what you mean about credit cards, and have shied away from any dealer without a secure ordering site. With stored cards, in long delays, many times my card has expired, or been re-issued with a new number as a security measure against a breach. In most cases the dealer alerts me the card is no longer valid and gets the new one. I would probably complain a lot if I didn't get something just because the dealer didn't ask for a card update.

    BTW, I have seen dealers cancel orders on their own when delayed, like some of the IM F7 units I had on order. Others may ask on their site that you confirm you still want it. And, most do accept one time rejections, based on job loss, etc., but kick repeat offenders off their site, or make them order from stock. From what I have seen, most try to be fair and are reasonable, but as previously discussed, it seems they make the least margin and take the largest risk.

    Again, hard to get mad at those guys, just scraping to make a wage. But, I understand those who feel they can never be to careful with their own funds, just as the dealers and mfgs are. Sometimes, it just creates a situation where you can't do business or buy things you want, but I don't think anyone in particular is at fault.
     
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  18. bman

    bman TrainBoard Member

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    Like it or not, the pre-order system is here to stay unless the hobby's growth explodes dramatically over the next few weeks. I am no marketing analyst, but that's likely not gonna happen. Model railroad manufacturers have never been large companies to begin with. They are a fraction of the size of major manufacturers. Think about this. A whole production run probably fits into a 40' container. (And a lot of products, especially N scale, have been made overseas for years before China found out how hammer a nail let alone use an injection mold machine.) I've hauled 5-10 trailer loads A DAY out of an average size manufacturing companies whilst an operations manager for a trucking company. That being said, there are only a hand full of culprits that seem to keep pushing back their pre-order release dates. C'mon guys, we know who they are. We read the ads, forum posts, and talk to the LHS if we have one nearby. I've used the pre-order system may times. Have yet to have to hand over my CC number. I have yet to be disappointed. I am not gonna rattle off those reputable manufacturers as we should know who they are. I have had only 2 pre-orders pushed back. Both from the same company. One delivered, one has yet to. I found a buyer for my first pre-order that was pushed back since one of those life changing events happened and I didn't have the funds. But that's me. My LHS didn't force me to buy it. He probably got the money I had set aside most likely when I impulsed a purchase or 2 when he takes in a collection to sell. I ordered it. I know enough model railroaders that I knew I could ask around. It seems a lot of folks keep asking for higher levels of details, etc, but then really balk at the price when that highly detailed locomotive with sound already installed and tiny robotic engineers and conductors(hey, it will happen) is announced. Those bells and whistles add to the cost. I could pound my chest and say put the modeling back in modeling. But this IS a hobby and far be it from me to tell others how to enjoy it. And sad to say it, there will always be folks who buy those hot items then sell at over inflated prices. Whether it's online or at a show. Most of us pass them by. Those of us who are related to Mr. Gates or the head of BP buy them though, enabling these folks to be able to hang around. That's nothing new. The law of supply and demand seems to work well in instances such as these.

    That all being said, one thing that isn't helping and hasn't been mentioned that I read is the rising price and shrinking disposable income that's happening to a lot of us. Those of us starting out with young families most likely fall into place here. Or those of us that are on fixed incomes and those incomes are not keeping pace with inflation. This is likely the biggest reason I DO NOT pre order an item besides who is offering the pre-order. I don't see the funds being available or too many items announced too close together that I have interest in. I guess it's up to all of us to figure out how to fit ourselves into this picture. Obviously communications is the key on both sides. If I want it, pre-order. If I make it, keep in contact with me when something goes amiss. If it were just that simple though.
     
  19. mtntrainman

    mtntrainman TrainBoard Supporter

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    I have my fav etailers. One in particular may show an item out of stock when I look. When I contact them they usually tell me they will find it for me and let me know. If/when they get it and I am contacted...I pay...they ship...done deal.

    As far as all the detailing and bells and whistles (literally) and cost...not many can afford it anymore. Some couldnt afford it when the manufactures bent to the will of the few in the first place. I just cant figure how manufactures cant see the light at the end of the tunnel. If those high end items arent selling like hotcakes...quit making them....dont blame the majority of consumers for " not enough interest shown".

    I'll catch heck for this...but...its like sound in everything...who can really afford 200.00 plus for a locomotive ? I'll still buy my 120.00 decoder equipt locos...after I save up enough to buy one. If catering to 10 guys who will buy 5 expensive locos at 200.00 Plus each is better then catering to the 100 guys who can afford one 120.00 locomotive each is the prevailing attitude...then I guess I get left at the station...and thats ok too.

    There will always be a manufacture/LHS/etailer who will have something I can afford...no problem. ;)
     
  20. umtrr-author

    umtrr-author TrainBoard Member

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    Referring to the MTL RailAmerica SW1500s...
    It would be for the public through MTL dealers, and of course dealers can pre-order more also. The quote was transcribed right out of the August Micro-News.
     

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