How do we go beyond "Reservations?"

[drgw0579]

I know I don't like to reserve models when they are announced, even if the expected delivery time is rather short.  But I missed out on some items I wish I had.  As has been pointed out often, if a company wants to make something and don't initially get the response they expected, they are sort of in a bind.  Do they cancel the project outright, no matter how much has already invested, or do they continue on, even it all the indicators show that they're going to lose money, maybe in a significant way?  Something is always changing.  Maybe a competitor unexpectedly announced the same, maybe the economy is projected for a downturn, maybe the person who made those initial assumptions is incompetent.  In my career, I've worked on several projects where the team put their heart and soul into the project, only to be cancelled before production.  But these were relatively big companies.  A small company, such as most of our hobby suppliers, can't afford such a disaster. At least not more than once.

From time to time, you will see independent surveys circulated asking what should be made for a particular railroad.  These, I'm assuming are completely non-binding, and if I think back, probably have not been overly successful. 

I was thinking of some sort of web site or online clearing house, where an interested party (maybe anonymously) could suggest that they are interested in producing such and such, and would anyone be interested in buying.  The crux of the matter though is that talk is cheap, anyone can say they would buy a Baldwin Road Switcher in Reading paint, but what happens at delivery time, when those two people buy all they need, and the importer ends up with 998 still on the shelf? 

So I thought it would be interesting for the insightful here to come up with some ideas how manufacturers could get a better idea of what will sell and what won't.  Let's not call out specific industry participants, they may not like the current situation either, but the current model is all they have to work with.

Bill Kepner

[mu26aeh]

Not that I want to call them out, but for example using IMRC, just my personal opinion on the interpretation of the response, and I'm pretty sure I'm not the only one that feels this way but if they would actually cut down on the number of car numbers and roads per release they might get better response from the modeling community.  Most of their freight car releases are at least 6 numbers per road, some go to 12 per road, and then they throw out 10-15 roads.  Many of us can't justify or afford 12 road numbers at once.  Spread the wealth a little bit, announce 5 or 6 roads, with 3-6 numbers each.  And make another release next year or something.  With so many options the reservations get spread across the selection and then it looks like there isn't as much demand for certain roads. This tends to happen in the locomotive department too, but at least with road numbers you have 4 to select from, not as bad as 6 or 12. Again, just my thoughts.  YMMV

[Philip H]

I don't really think it's a potential sales problem based on model selection.  Rather, small and medium sized companies (which most model railroad manufacturers are) simply have little access to credit to start projects.  I'm no financial whiz, but my understanding is one of the by products of the Great Recession is an unwillingness by lenders to advance business credit to firms whose ability to repay is based on potential future sales.  Reservations mitigate this somewhat because they show a nominal dedication to a minimum buy of the product, which can be advanced as a guarantee of repayment.  A really useful thing might be development of a crown funded micro-credit bank for model rail road manufacturers.  if we all contributed say $100 annually and the bank was managed to fund only new tooling, then manufacturers might have the ability to move away from the reservations model.

[jpwisc]

I love the idea of solution focused plan.

There would have to be a way of adding a monetary component. Otherwise too many people, who will never have the cash, say they will order one of every number.

What about a crowd funding based alternative? Pay some money up front, securing your "shares" (number of cars/engines). If the production doesn't happen by X date, you get your money back. If it goes into production you pay the remainder. That reduces the liability for the manufacturers and allows people to have input into projects.

[Dave V]

I would imagine--as always happens with threads like these--that we will simply demonstrate how little we non-manufacturers understand about the economics and logistics of manufacturing.

[drgw0579]

I would imagine--as always happens with threads like these--that we will simply demonstrate how little we non-manufacturers understand about the economics and logistics of manufacturing.

YES!   I will probably regret starting this thread before the day is out, but maybe, just maybe, we can all learn more about how things work.  We do have some people here that do understand those logistics, and I assume (maybe incorrectly) that the majority of the folks here ARE fairly intelligent and are willing to agree with the facts.

Bill Kepner

[Philip H]

I would imagine--as always happens with threads like these--that we will simply demonstrate how little we non-manufacturers understand about the economics and logistics of manufacturing.

Considering the number of threads we have had on this topic, and the number of times our "in house" manufacturers have described the situation to us I disagree whole heartedly. I certainly hope some of them will weigh in here, but I took the OP as looking for ways to change the system as it has been described to us.

[Rossford Yard]

I liked the way IM did it in the old days for unit train type cars - offer single, 3 pack and 6 pack, so you can buy 1, 3, 4, 6, 7, 9, or 10 numbers.  If they offered two single numbers or a two pack, you could fill in any number from 1 to 10 to suit your tastes.  Then, presuming the road numbers on the single, 3 and 6 pack are different, they can do it again in the next offering for those who insist on different road numbers for 20 car unit trains.......

And actually, singles and three packs is pretty standard for several offerings anyway.  Probably not worth it to the mfg. on most cars to do much more than that. 

I recall George from Wig Wag being amazed at how many folks simply pre-ordered the first one or two road numbers.  Few decide to click down for Road # 3, 5, 6, etc.  You can even see it on Model Train Stuff, where I usually buy because I don't pre-order, but they always seem to have extra for stock.  Top numbers are always out, last road # usually in stock for a while. I tend to order from the bottom up, getting some satisfaction from not having the same road number as everyone else.

BTW, I see the variety starting to increase in other ways (much like 3 options for locos) in shiny, lightly weathered and heavily weathered/graffiti coming at us more and more.

Someone could explain to me the cost/complexity of different road numbers and/or the weathering aspect. It seems MT either holds some back or has leftovers on their normal models which they weather later.  It must cost something to offer multiple road numbers for the very few modelers who need 10-20 of anything (other than grain and coal).  But, I was never against varying the model price (MT used to base prices on number of paint colors/passes) I think companies could offer the same car, at lowest price for well known roads (ATSF, etc.) and charge a small premium for off beat roads to cover the smaller sales cost per unit of a shortline road. 

This would especially apply to locos.  For instance, I am intrigued IM did the Toledo Junction in SD40-2 (or announced it) I would be glad to pay $5-10 more for that if that is what it took to offer an unusual short line.

[ljudice]

I refuse to pre-order - and there is not one single thing I have not been able to locate and buy - ever...

It just takes some imagination and Googling....

[JoeD]

We have been doing pre orders for some time now and are expanding it a bit for specialty items.  Unlike other companies we do our manufacturing here so we can anticipate and schedule runs so they are delivered the month promise (for the most part)  For a company our size it's a great way to make sure everyone gets what they want.  For years we had the rep of shorting our manufacturing so the collectors could profit...which was and always has been complete BS.  I have been here 15 years now and never, ever once saw a situation where we limited production to benefit the few...if we did I would be working someplace else.  Each month we have to anticipate the demand and produce to those levels.  Sometimes we are left flat footed, sometimes we get it right...no conspiracy here.   Pre Orders give us the opportunity to get a clear picture into the size and scope of the market and still get you what you need.  We've also had complaints that a few dealers say we are out of something when we have a raft of product on the shelf having never asked us or attempted to re order.  I think it's more the perception than the reality in that case.  Anyway, I like being able to pre-order products from other manufacturers, I can make wise choices with the funds I earmark for my hobby, target what I need vs impulse buys and everyone wins. 

But the issue of delivery will always be the sticky wicket for companies reliant on China for manufacturing.  Sometimes it seems they will finish when they finish and you just need to sit tight.  Awful way to run a business.

Joe

[Rossford Yard]

Joe,

You might not want to answer this, but given so many express a desire not to pre-order, how do you anticipate how many extra to make? Sounds like gut feel.  I would guess its a bigger issue with new tooling (like the SW1500 vs. re-running a box car) Of course, there is always the second run if sales are unexpectedly great.

Similarly, we know there are minimums (usually said to be about 300) but are there any max quantities, due to shipping numbers (like using multiples of a 24, 36 or 48 case box) or max number before its time to clean up a mold, paint screens, etc.? Does that every once in a while lead to shortages or over runs? Or, is it possible to run say, 4291 of something if that is what actual orders plus estimated sales without pre-orders dictates?  Would seem like tech would allow more flexibility than in the olden days, but again, not sure, which is why I ask.

And lastly, how many locks do you put on that warehouse where the extras are stashed to prevent some 1:161 thefts by over zealous N scalers?

[prr7161]

It seems to me that there is something to be learned from the boardgame people here.  GMT Games is a sort of standard for this.  They also use a reservation system, and like the model railroad companies, it makes sure that what they are offering will be sold at an acceptable level.  But there is a lot more transparency in the process.  Each product has two thresholds to pass - the first number, 500 reservations, gets it from prototype to final development, and the second, 750, means that it is guaranteed to get to market.  There is a public ticker showing reservation process for each product, plus a regular newsletter updating reservation totals and featuring various development progress fun on the games.  Sometimes stuff has to get the ax, in which case there is usually a direct statement saying something to the effect of "if we don't hit x reservations in the next month, we are dropping the product."  Although it can take an extremely long time, sometimes years, to get a product out, at least there is a lot less wondering about the delays and viability of the end product.

One side effect is that if a buyer wants to really get something out there are occasional cases of someone swooping in making a mass order to "save" a product.

[nkalanaga]

Rossford Yard:  "many folks simply pre-ordered the first one or two road numbers"

In most cases, unless I WANT a particular number, which is rare, I reserve the first, then tell my dealer that I don't care which number I get.  If he wants, or needs, to send me a different one, he's free to do so.  Quite often I don't get the first number on the list, but that's fine with me.

[thomasjmdavis]

But there is a lot more transparency in the process.

I think this is really the key, along with good communication as basis of customer service and marketing.

I don't in any way represent Micro-trains, other than as a satisfied customer.  But they may be the best "N scale" example of how a company can successfully handle delays.  I think you could argue that their willingness to discuss the issues they have had over the single window coach has actually enhanced their reputation, and will make the product more successful when it finally arrives.  This coach has been delayed longer than any production model I can think of.  But the MT staff has kept us up to date, we know why.  Would I have liked to have it several years ago?  Sure.  But is anybody mad at them about it?  Not that I know of.  The whole point is that the company could not produce the car to their own quality and consistency expectations, and would not put it on the market until they got it right.  I think most of us respect them MORE because of this delay.

Another point in their favor is that they will respond to email questions or postings on this board.  And I've noted, over the years, that they try to build some consensus for what they are doing.  So they ended up with an Erie baggage car that seems well received in a variety of paint schemes, or the upcoming NYC coach that will be a great stand in for a variety of other roads.  Maybe that was their plan all along, but modelers felt they had some input into those decisions, and so there is real enthusiasm when the models hit the market.

Bluford, in recent years, is another manufacturer that seems to approach things in much the same way.

This kind of marketing appeals to me much more than the "top down" approach of "you must commit to purchase in the next 3 months and we will deliver sometime next year, or maybe later, depends how things go, we'll let you know when we are ready to ship..."  I had an order like that years ago, and by the time it was actually manufactured, I had moved twice, and that didn't matter since the hobby shop I place the order with went out of business in the interim.

Hopefully, the Micro-trains business model will prove more successful than the "preorder and maybe we'll make it" system favored by some others.  Economics has its own natural selection- eventually, the most successful business models win out.

Tom D

[jdcolombo]

My 2-cents.  The reservation system will never go away, because it reduces risk for a business that requires significant up-front capital investment for individual product production and in which the "players" are mostly small businesses - even the big ones (Atlas, Athearn) aren't very big in the overall world of commercial corporations.  If any of these folks make a single major production mistake, it could be catastrophic for their business.

And I don't see why it is a problem.  If you desperately want an announced model, reserve it, or watch MBK's web site until it shows up and get it while it is there.  If you don't desperately want something, as another poster indicated, you can usually find something after it has been produced for some period of time - not forever, maybe, but for a while.

If people want to go back to the Athearn blue box days when a company produced 5 models and always stocked them, well, those days are gone, and like the 1950's, they ain't coming back.  And honestly, good riddance (to both the 1950's and that production model).  The reservation system we have today has resulted in a vast variety of stuff produced that would never get produced under a constant-stock model, with better quality, at prices that, taking into account inflation and the quality improvements, are reasonable. 

I just don't see a problem with the reservation system.  We make reservations for hotel rooms; airline flights; train trips; dinners; and a host of other things.  Making them for models to be produced just doesn't seem to be a big deal to me.

John C.