2015: The year when Lionel's BTO program really comes of age?

When Lionel announced the BTO Program, I said then and still do that it is good for the hobby. It makes no sense to have access inventory both from the dealers and consumers posture.

I feel the built to order is a bad idea.  A lot of these engines are announced having certain features but when they are released. Some features are not included.  It's better to wait and see what some think because buying the engines

"A lot of these engines are announced having certain features"

 

No my experience at all. Perhaps you would be good enough to share with us your research on this subject that leads you to this conclusion.

So now we'll complain because BTO is working as planned. We are an interesting bunch. 

In rebuilding my operating collection, I will avoid BTO. That being said, it seems to be a contest between instant gratification and economic necessity in terms of survival for the manufacturers in the O Gauge world. Add to that uncertainty...will an item be produced? When will it arrive? How the two sides of the coin meet ultimately will be based on a willingness to be very flexible on the part of the consumer...and given the devotion of the hobbyist, this will continue into the future as well as O Gauge itself. It simply is what it is. 

BTO is like the annual flu shot.

Gives short term immunization for impulse buyers.  

Joe 

Or........ maybe Ro simply didn't receive their full order (again) and more will magically reappear in the next 6 months

I guess anything is possible, but I haven't heard about any short-shipped scenarios since the PE Berk.  After all, Lionel can only produce so many 115th anniversary products.     To date we have a locomotive.  Perhaps that's how we'll get an entire 115th anniversary train?     What's your preference: passenger or freight?

 

David

I think all is as it should be.  I like the new system.  As Passenger Train Collector said, its good for everyone if there is never any excess inventory.

I have not seen any BTO arrive without previously announced features and think about this your values may not decrease as rapidly.

Mikey

Good Day,

 

My thinking..........the Lionel's BTO policy helps provide the hobby shops with more accurate preorders. It would be interesting to hear from the hobby shop owners with regards to BTO policy.

 

Regards,

Swafford

Lionel, MTH and other O scale companies must do anything to keep their companies profitable. They are here to make money and if they make their customers happy in the process, then every one is happy

 

IF BTO works for some, then be it. No one twisted our arms for BTO or anything else. We are responsible for buying them trains .

 

One hopes that their BTO and limited production is what they claim them to be. This may keep the value of these toy trains high enough to keep customers coming back for more.

 

My hope is that the BTO items do become fairly readily available in the used market. I'm doing postwar exclusively right now, and even a "rare" item can be found every few weeks on eBay. If, when I complete school in a few years, I want to move to modern-era Lionel, I want to be able to actually find and purchase those engines and pieces of rolling stock I want.

Excess inventory costs money and ties up capital that could be used for producing or purchasing new products. The costs of extra inventory will be passed on to us as consumers or the manufacturers and hobby shops will go out of business. The consumer always pays for everything.  

 

One of the things I have learned since re-entering the hobby a few years ago is that if you really want something and want to insure it gets made you need to pre-order it.

i.e. Runs sold out weeks/months in advance.

 

If I were in the business of making money on train sales, I would also note that I'm underselling my market in that there was more demand than product.  That means I lost money that I could have made.

 

The real hard part is ACCURATELY judging the market and having minimal oversupply AFTER the initial sales are made.  The small oversupply can then eventually be offered at reduced prices and still make a profit on them.

 

They're NOT maximizing their income by producing less than will sell.

 

However, at least they are not grossly overproducing for the demand. 

Part of this equation is if you really want an engine, you order it. Just because Lionel introduced the BTO program last year, it did not change my buying habits. When the catalogs came out, I went through them carefully and ordered what was of interest to me. Nothing has changed for me with the BTO Program.

 

It does however stabilize the market in a good way.

Please pardon this question, because I am not very knowledgeable about how to run a business.  If Lionel (or MTH, Atlas) sells out very quickly of an engine, can they quickly make and deliver more if they want to?  For example, if Lionel says "Wow, we could have easily sold 300 more M1a locos than we did based on demand", then could they go back and make those 300 more and deliver them to stores in about 2 or 3 more months?  Would that be profitable or even possible?  Or I am oversimplifying it?  

 

Thanks!  

 

Rob

I agree, I have been pre-ordering everything I purchase since re-entering the hobby about 4 years ago. so nothing has changed for me either. It's all still business as usual for me. I just study the catalogs carefully, try to be certain I don't miss anything, whittle my lists down to fit my budget (this is the really hard part) and then place my order by the deadline. Of course you (at least I do anyway) have to keep track of what you ordered and when it is scheduled to arrive so you don't deplete the train budget on something else.

 

The only exceptions to this for me are an occasional missed item and older items I have purchased that were manufactured before I re-entered the hobby. I have pretty much purchased everything else I have by pre-ordering.

Last year with the NKP 765, I felt I had missed out, so I looked for the overall best listed one after I had seen they had been shipped. I contacted CTTrains and they delivered it safely and quickly, with no broken pilot truck bushings (I still will try and purchase some just in case if I can, though). Needless to say, by then, many dealers had either sold out of the Berks or were asking much more than the preorder price. I paid a little bit more than the average preorder price in the end, and even though I feel it was worth it, I decided I wouldn't do that again if I saw something I really wanted that was BTO. In this year's case, the Empire State Express Hudson.

 

In the case of the other BTO engines so far, however, it's a roll of the dice. The M1As and Berks seem to have been the steamers snapped up the quickest with least amount of extras available, but I still see plenty of Big Boys wherever I look for sale. At York, I did see a good amount of the new Heavy Mikados for sale at very good offers, but other than that, the Mikados do seem to be getting snapped up on  certain places quickly, too.

Rob, I think that's a great question... No need to apologize for it.  And while I make no pretense to speak on behalf of any of the importers, I'd say the scenario you bring up is quite possible.  And we have three very recent cases I can think of off the top of my head that support this conclusion.

 

• I think with their latest catalog, MTH is now on their THIRD production run of the premier line GE EVO Hybrid with the charging lights.  They seem to be selling whatever number of units they produce!
• Scott Mann of GGD / 3rd Rail just recently confirmed a SECOND production run of El Capitan cars is in the works with a delivery ETA of Nov/Dec 2015 -- roughly 6 months after the initial production run is due to ship later this month.  And he's currently accepting reservations for the second run.
• And lastly, Lionel is due to ship very soon a number (presumably 50) of scale black PE Berks to Charles Ro Supply where there was some type of snafu last November and Charlie didn't receive nearly the quantity that was expected.  So Lionel put another run into production for Charlie, AND the balance of that run (250) is reportedly being used to deliver the Lionel 115th Anniversary all-silver Berkshire later this year after the nano-plating process is completed.

So while it may not be ideal to schedule follow-on production runs, it's certainly being done as needed.  And it may be a nice way for the importers to hedge their bets when they're uncertain about initial production quantities and they subsequently sense a greater market demand will absorb more units.  Nobody wants to leave $$$ on the table.  

 

And from the perspective of us mere mortals, it appears the BTO model shifts all the risk of holding inventory to the dealer/distributor level.  Whether that's entirely true is an answer that remains inside the supply chain, but certainly seems that way -- especially compared to the former distribution model. 

 

David

I think BTO is great idea if you have been in the hobby for a long period of time.  I really started buying this past winter.   I like to go into the large train shops and look at all of the engines before I purchase one of them. 

David, 

 

Thanks for the perspective, very interesting.  

 

Rob

David, you make interesting points about BTO.  Personally, I am OK with it but I am concerned that it may create new difficulties with respect to replacement parts.  Time will tell.

And the cost of tooling is ????? (probably won't be easily amortized over the BTO order, even after many "runs". ) JMHO, Dave G.

When they finally make something scale that I want I will buy it

I think BTO might be good for owners when it comes time to sell.  We all know how values of various items can be driven by supply and demand.  The downside is if the manufactuers keep delivering re-issues, then the demand could reach saturation.  I'm not expecting prices will increase, but an owner may be able to sell a particular item faster, or for a higher price if there is a lean inventory of his item.

PTC,  that was my modus-operandi years ago.  Did a ton of pre-ordering in my day, but that all stopped in the mid-2000's decade.  I still made purchases, but there was little to no incentive to pre-order.  And I rarely -- if ever -- found myself in a situation where product I wanted to purchase was not available.  The financial "incentive" to pre-order during those years was negligible at best.  So I pretty much abandoned the practice.

 

Even for products delivered last year, there were very little that I formally "pre-ordered".  I had a hunch that the Daylight cab-forward would be produced in low volumes, so that was one of the few exceptions.  Two other items I pre-ordered were the two CP FM Trainmaster locomotives, and those sold out quickly even though they were not officially BTO products.  I bought the Gold Polar Express loco and several passenger coaches just as they hit the street, and I even purchased the GM ToT just as they were arriving Statestate... I was lucky that there were -- and I believe still are (surprisingly) -- a few remaining to purchase.

 

I'm not buying "that much" O-Gauge product these days -- at least compared to other years.   But this year I sensed the need to pre-order some special items that I really wanted:  the CN ES44's, the Alaska RR SD70MAC's, the Polar Express GLa hoppers, and the Y6b.  For whatever reason I just had a sixth sense, and I'm glad I did... since some of these (at least thus far) don't appear to be readily available after Lionel has shipped them.  And some are selling out just before Lionel has shipped them.

 

To be completely truthful... With the exception of the Y6b, the other items were ordered AFTER Lionel's BTO deadline, but the dealer (Charlie Ro) accepted my post-deadline pre-orders since they had ordered "extras".

 

And I even lucked out at 3rd Rail with the El Capitan train.  I placed an order AFTER the reservations (for the first run) had closed -- fully expecting to be placed on standby, and was pleasantly surprised when I received an order confirmation for the 8-car set.  But a couple extra add-ons were placed on standby.  Now even those are confirmed, as we now know Scott is doing a second production run for later this year.  Again, I was very lucky.

 

But going forward, it does appear that pre-ordering will be the "new norm" again for O-Gauge model train enthusiasts.  And I have mixed feelings about it simply because it is nice to walk into a store and browse around before making a purchase.  Not too long ago, we had a thread here that asked if the OGR forum "influenced" purchases.  And from the discussion, it appeared the overwhelming answer was "yes".  However, I wonder now if the pure BTO model might make it tough for that to continue -- especially at the high end where BTO is more prevalent.

 

Case in point:  the other day, somebody posted a picture of his SD70MAC locomotives in BNSF and Alaska RR liveries.  Yet the Alaska RR units (both road numbers) already appear to be here-and-gone at a sampling of the large dealers.  I really wanted the Alaska RR units as Legacy locomotives to head up my set of Alaska RR Superliners.  I have the original scale F3 locomotives in an ABBBA configuration, but wanted to change things up from time to time.  So I pre-ordered the SD70MAC's, and I'm lucky I did.  Believe me, I'm not always that lucky a person.  But it worked out this time.

 

I also pre-ordered MTH's Norfolk Southern OCS F7's and passenger cars, 'cause I don't think those are gonna be sitting on dealer shelves too long.  Plus, there's nothing to really "look at" that we don't already know from the original production run several years ago.  So why risk them not being available.  Pre-ordering seemed the prudent way to go for those jewels. 

 

Look folks... BTO is what it is, and it's likely here to stay in one form or another.  And that's fine.  I have a gut-feel Lionel's BTO program will take on more of what we've seen in MTH-land for years compared to the much more strict BTO programs practiced by Atlas-O and 3rd Rail (GGD).  But that's only because I still think dealers will pad their orders a bit more for Lionel than they do for other importers.  Again, that's just a hunch... and your mileage may vary. 

 

Of course, there are ALWAYS ironies in life... and amidst all this talk of BTO, it's still nice to see dealers offering great incentives to grab great deals on items that are in their inventory.  Even on the heels of York, a couple of forum sponsors are running great sales right now as they prepare to take delivery of new items due in soon.  Somewhat like the law of gravity... ya just can't fight it. 

 

So thankfully, BTO hasn't completely killed off the nice feeling we get when we land a great deal from time to time as we buy stuff the old-fashioned way. 

 

David

 

The secondary market has been my "go to" for years when I was into HO and now in O scale. Secondary market has saved me thousands of US $$ to say the least, there is no need for pre order for me, But I ave sinned and yes I did  pre order the VL BB and the Cab forward just because I was just getting into buying Lionel Legacy locos for the first time and now I am cured of any pre order of anything....

 

There will almost always be good buys after models are shipped and for a better price. why pay hundreds of dollars more for an item that one can have for less $$ only a few months later?

I myself like the built to order. With this you have more of a chance to get road names you couldn't get if they were normal runs. Maybe even down the road new tooling for different engines because they can get more orders for engines by being able to offer them under this option. My case being I ordered a couple of South Buffalo Railway switchers. If not for BTO I would of only gotten them if I painted them myself...........Paul