ExactRail announces addition shipping options

[MichaelWinicki]

It's worth noting that the two shops you cite (MBK & FRT) are not LHS's for the most part and have played a bigger role in the demise of the true LHS than ER has. 

This, this and this again.

Hey, I understand what Ed is saying but we're going to see more "direct to consumer" selling.

But yeah, it's the shops that have resorted to deep discounting to make sales as opposed to trying to create a unique selling proposition via a technique other than trying to be the cheapest on the block.

Don't get me wrong hobby shops themselves have caused many of their own issues but the deep discount shops greatly helped the demise of many LHS.

[DKS]

If you don't think the survival of hobby shops and their important aggregation function isn't important, than by all means keep thinking this is a great development for the hobby, but if you ever wanted to grab some paint, rail joiners and a magazine without shelling out $30 for shipping, you might want to rethink your Exactrail cheerleading.

Ed, your point of view is valid... for you and those in your position. And only to a certain degree, at that. I have no LHC. By the time I shell out for gas and tolls to get to one, I'm already partway to your (inflated) shipping fee. While hobby shops are irreplaceable for the touchy-feely-before-you-buy experience, I contend that online shops have helped the hobby far, far more than it's hurt it. Think about modelers in more extreme circumstances than mine: for some, an LHC is hundreds or more miles away.

Then there is the issue of the cost of dealing with dealers. I've had to curtail many of my products owing to the fact that the dealer discount simply ate away too much of my margin. Oh, I could mark it up to compensate, sure, but that would then eat into the total number of units sold, not to mention suffer the ire of modelers bellyaching about my prices. There is no easy answer.

This is a free economy, which is the survival of the fittest. LHCs with smarts have online stores side-by-side with their brick and mortar ops--you of all people should know this, having been part of the MB Klein scene. Those hobby shops that don't have the chops to survive simply won't. What do you expect, manufacturers to slash future offerings in order to compensate for slimmer margins because they must offer everything to dealers?

You can't have it both ways. So, unfortunately your argument does not carry as much substance as it does emotional charge. And who here has paid that much for shipping?

[Scottl]

Exactrail is manufacturing goods in the US, which adds to the cost.  They compensate, in part, but direct selling.  So would you prefer they go to a made in China or Mexico production model so you can buy it from your LHS, one of which is on the opposite coast? 

I'll repeat that I appreciate Exactrail has been responsive by adapting their shipping policies.  A positive sign of a business who listen, IMO.

[conrail98]

Exactrail is manufacturing goods in the US, which adds to the cost.  They compensate, in part, but direct selling.  So would you prefer they go to a made in China or Mexico production model so you can buy it from your LHS, one of which is on the opposite coast? 

Micro-Trains makes their products in the US and they still sell through LHS and dealers. Nice try though,

Phil

[DKS]

Micro-Trains makes their products in the US and they still sell through LHS and dealers. Nice try though

MTL also has a very different customer base. Exactrail does not have droves of collectors willing to pay full MSRP for whatever MTL puts in a box.

Nice try, though.

[Ed Kapuscinski]

First, ER isn't doing all their manufacturing in the US. I know, for a fact, that their trucks come from China (the land of no copyrights...).

Second, my point isn't just about the loss of the LHS it's the loss of the HS in general.

In my example, I wasn't just talking about a local hobby shop, I was talking about what happens if the direct sales model works, and more manufacturers decide to adopt it. Imagine if Atlas or Testors did it.

Need some rail joiners? You couldn't just "tack them onto your order", no, instead, you've gotta get them from Atlas directly now, so, for a $2 thing, you've gotta shell out $6 for shipping.

How about some paint? Can't just have it tossed in a Chuckpak, nope, gotta go to testors.com, and spend $6 more for your $4 bottle.

Now for some styrene. Need a sheet of clapboard? Well, good luck! Time for another $6 of shipping.

Our friends in shipping will love it, but it sure sucks for us.

Hobby shops, either local or online provide a very valuable aggregation service for consumers, especially for low dollar amount items, but largely survive off the margins of larger ticket items. If you take away the one side of that through increased direct sales from manufacturers, you destroy their ability to function, and lose that valuable aggregation (and curatorial) function that serves us all in ways that aren't immediately perceptible.

How many BLMAs, Fox Valleys and NZTs could get off the ground without those curatorial venues to get their products in front of consumers? Yes, direct works for some folks, but trust me, more eyes get on new products every weekend at Kleins that do all week on a forum like this.

Yes, it sucks that not everyone has a hobby shop locally. Personally, I'm spoiled living 15 minutes from MBK, but even online, it's great being able to email Chuck and say "I want one of those new Atlas things, one of those new MTL things, and throw in one of those Kato parts" and having it all arrive in one box, and with one shipping charge.

[Dave V]

Call me unprincipled...  I support my LHSs when possible (and currently my nearest is an hour's drive), but I don't run my hobby as a charity.  If I can hook up a friend with a decoder job or buy local I will, but if there's something I need for the layout and can't get otherwise, I'm willing to buy direct.  I don't like the direct-sales model, but for me, it's not a hill to die on.  Same goes for the mega-blowout locomotive prices the big guys have (or eBay stores) that the LHS can't keep up with.  Much as I'd love to help the little guy, oft times the discount from the big guy is enough to cover the decoder I'll need.

I would disagree with calling MBK an LHS.  For those in the Baltimore area, sure...  But it is anything but your average Joe's Trains in a strip mall storefront.  The incredible depth of stock at MBK is matched only by Caboose Hobbies in Denver, which is, of course, an LHS only to Coloradans.  Even Trainland/Trainworld doesn't match the parts stock the MBK does.  If MBK is the benchmark for an LHS, then there are only two in the country that I know of.

An LHS to us is often more like the one I had on my drive home between NC State campus and Apex, NC.  I won't name it, but he had a fairly small N scale collection at full MSRP that remained mostly stale.  He was good for a magazine or two along with the occasional tool, bag of grass, or flex track (again, at full MSRP).  Very nice staff, though, and very helpful. I would have been sorry to see him fold...  But at the same time I never went to him with a big order because I could do so much better down at the store in Wilson, NC at less than list or online through MBK.

Feather River is my pusher of choice for pre-orders, not my LHS.  Every time you mail order from a big online store, your local "Joe's Train Shop" doesn't get your business.  It's a new business model.  Steam gave way to diesel, and online gives way to LHS.  I do hope that direct-order doesn't overtake the online hobby shop, though.

[DKS]

Ed, first, it's highly unlikely everyone will start selling direct.

Second, there are many hobby shops that land in between the extremes you describe, and I suspect they will be around for quite some time as well, again because I highly doubt everyone will adopt the direct sales model.

My suspicion is direct sales will be adopted by a select class of manufacturer. The Atlases of the world likely have enough breadth to their product line to make the standard distribution model profitable.

So, why do people persist in envisioning the demise of Feather River, et al, just because Exactrail goes direct sales? So what if a handful more do? I could almost guarantee that you will be able to buy your rail joiners along with your bottles of paint. Maybe not at the little mom-and-pop LHS, because the economy pushed them out of business (as opposed to Exactrail--did you really expect to see them at such a shop in the first place?).

Yikes, is the sky falling, too?

[Scottl]

Micro-Trains makes their products in the US and they still sell through LHS and dealers. Nice try though,

Rats, there goes my argument.

[Hyperion]

It's not like the industry is going to commit mass suicide by making such stupid choices.

This is pretty obvious logic -- if something a business does prevents people from spending as much on the business as they usually would, they're obviously not going to do it.  Or at least not for long or not as the standard business model for everyone.

If everyone going to the direct model made shipping costs for everyone go sky high, then everyone's spending would curtail, and obviously things would have to change.  Or, an entrepreneurial person would realize the opportunity to buy in bulk and pass on the shipping savings to customers.  If everyone going direct made product visibility so bad that no one ever knew about your products, then clearly you're going to stop doing that and put your product in an LHS.

With more and more businesses going direct and/or limited dealer distribution, it's obvious that the model does work, at least isn't as detrimental as some people want to think that it is.  And if it does end up not working, then obviously they'll go back to the 'old ways'.

[cv_acr]

• Added USPS First Class Parcel. This is less expensive when shipping a smaller order of ExactRail cars.
• Lowered the free shipping level to Canada on orders over $100.

Both of those together is quite good news. UPS dings you with all sorts of extra "brokerage fees" to ship something across the border, which can upwards of 30 bux to the final cost. 

[ArtinCA]

Hobby shops, either local or online provide a very valuable aggregation service for consumers, especially for low dollar amount items, but largely survive off the margins of larger ticket items. If you take away the one side of that through increased direct sales from manufacturers, you destroy their ability to function, and lose that valuable aggregation (and curatorial) function that serves us all in ways that aren't immediately perceptible.

Survive off large ticket items? Seriously? I work at an R/C mostly hobby shop and I can tell you that's not where the money is. MSRP $850 R/C cars sell for roughly 30-50 dollars above cost, which is about 25% of the price. You can sell them all day and you don't make any money. Where you make the money is in the parts, batteries, hopped up motors, etc. The big kits in todays market don't do much to keep the lights on.

And our biggest competitors are the mail order arms of the distrubitors! Those guys drive us nuts most days.

[Philip H]

Ed,
With respect,

Yes, it sucks that not everyone has a hobby shop locally. Personally, I'm spoiled living 15 minutes from MBK, but even online, it's great being able to email Chuck and say "I want one of those new Atlas things, one of those new MTL things, and throw in one of those Kato parts" and having it all arrive in one box, and with one shipping charge.

Everytime you order from Chuck (which I do a lot) you cheat Klein's, and do so in a way that mirrors what Exactrail is asking you to do.  Sure, Chuck has a store, and sure, he makes some money off your order that is above Exactrail's price, or anyone else's for that matter.  But I do think you are spoiled by having MBK so close, and it's making it ahrd for you to embrace this (and I'd add that you can order far more from the MBK website then in the store, even with in-store pick-up).

MBK happens to be my closest LHS too - but it's almost an hour away (if there's no traffic on I-95) so most of my orders from  them are online.  Much of the rest comes from Chuck.  And considering that Exactrail is producing several cars I want in my operating scheme, I will, at some point, buy from them.  For me, it's about the product, followed by the customer service.

And frankly, unless you want to call Craig out for selling his pipe loads direct (!) I think this is more about . . . Exactrail's intellectual property history . . . then about preserving the LHS.

[Ed Kapuscinski]

I can't lie, their history of being a bad seed in the industry does color my outlook on them, but I think this is just another example of their general abrasiveness (the IP thing is one thing, but I remember there being other things where I thought they came off like jerks, but I can't remember the particulars).

That said, I did indeed say something about the direct only thing on BLMA's video where they announced it, so I am being fair in that regard. Also, at the same time, BLMA isn't also saying that everything they do will always and only be available directly from them.

I also order stuff from MBK online too (in fact, you saw some of them yesterday), because not all stores stock all products (I didn't see the ESM X58s at FRTS), which just goes to show that this is even more important. Different stores stock different things, and having a vibrant marketplace where there are multiple stores to choose from is a great thing. Imagine how much it would suck having to order EVERYTHING that's not made by EXR, Atlas, Kato or Horizon through Walthers. Everything.

By encouraging direct to consumer sales, you're continuing to chip away at the foundation. There are lots of things that are causing erosion, but I don't want to be overtly part of one of them any more than I have to.

[Philip H]

Ed,
I respect your decisions here, but as more manufacturers look at the books, we may see the foundations chipped away whether we like it or not.  Just look at Best Buy's decision to retool away from big box stores and toward it's web market.  I'm not saying Exactrail has the same market share, but I am saying that, until someone else comes out with an accurate waffles box, and accurate HyCube and an accurate 67' bulkhead, we n scalers are stuck.  We can either support a manufacturer who has listened to our wants and brought product to market, or we can boycott them because they went direct market so they could stay in business.  either way, we have to trade our intellectual and philosophical purity for our participation in the marketplace.