Bill Henning posted:Yeah, a handful of big dealers buy directly from Lionel while the rest buy from various distributors (middleman).
The big dealers typically get a better price which can be quite frustrating. They also get the new items shipped directly from Lionel which can sometimes be several weeks before the others who have to wait for their distributors to receive, process and ship to their dealers. This also gets very frustrating.
So basically, the big guys get it cheaper and faster. And in the small world of the internet it makes it a struggle for the typical local hobby shop. Unfortunately this is business.
As for the example of the new Freights Sounds box car. The MSRP price is $134.99 but we would typically have priced at about 15% off at $114.74, Though I see Charlie Ro has priced at $99.95. From a distributor that car to the dealer would cost about 35% off for $87.74 so to match Charles Ro price I would profit $12.21 for the $99.95 sale. I do not know what that car cost the big guys directly from Lionel.
In most businesses that is a pretty poor profit margin, especially considering wages, rent, utilities, insurance, fees, etc. has to come out of that $12.21. Yeah it sucks, but like I said, that is business and business in the 21st century (amazon world). We live in a free market and a dealer sets their prices the way they see fit.
Though, it does really get frustrating when you see one of the big guys selling off stock at prices below what we, the typical dealer, pay for from the distributor.
Because of all these reasons above, it is SO important for a store to give the best possible service you can provide while also trying to build solid worthwhile relationships with your customers and hopefully they’ll consider you when thinking of that next purchase.
The big guys get it cheaper and faster, because they are a distributor as well as a retailer, resulting in extra margin. As a distributor, you purchase direct from Lionel and sell it through your retail format.
Someone mentioned CODB for varying prices. This is true. If I order one piece of rolling stock or $20K in MTH product direct from MTH, I pay freight no matter the order size. They even charge freight to ship catalogs!! Have to recoup this cost somehow or another.
Train Express out of Indy was a distributor and retailer for many many years. Larry visited us near the end and indicated he could make more leasing the building he was in than selling trains. Strictly a business decision.
