I've noticed a common theme in a number of threads relating to business of trains, their import, manufacture, and companies which sell us trains, that theme being that we should expect them to have to offer the most up date technology, meet projected ship dates, have a reasonable quantity of product on hand, offer a large selection with multiple road names and prototypes, and to be ever mindful of their retail prices.
This brought me to consider where does that expectation come from and exactly who are we asking to meet it.
The first part of the question I believe is that our expectation is based upon interactions with other companies, Apple, Amazon, Wal-Mart, etc., who establish the norms we as consumers come to expect in terms of quality, quantity, etc.These are for the most part big companies.
The second part asks us to look at the suppliers of O scale trains, Lionel, MTH, K-Line, etc., those larger companies who supply the majority of the trains we purchase.
So just how big a company is Lionel, MTH, etc., the answers are not easy to find, but if we look at the documents from the law suites between the companies and the bankruptcy filings we can get a rough idea. From those documents in the pre-recession years, around 7 years ago +/-, Lionel and MTH had sales revenues between 30 and 60 million dollars each, K-Line was between 5 and 7 million during the same time frame. If those numbers are accurate I would propose that all of O scale as sales of between 70 and 140 million dollars, a wide span, but we only need be in the ball park to look at how how we expect these companies to stack up with those companies who establish our expectations.
This year Lego is projecting sales to reach $490 million USD. This gives Lego sales of 3.5 times our high end sale estimates for all O scale train sales by all companies.
In 2013, Mattel, maker of Barbie, Matchbox, Fisher-Price, and Hot Wheels, amongst other brands, had sales of 6.3 billion dollars. This leaves O scale 52 times smaller in total sales that Mattel.
If we look to the Fortune 500 the scale of O scale becomes even clearer, in 2013 Fortune ranked The Children's Place (a retailer of kids clothes) 999 with sales of 1.83 billion. Nearly 13 times the size of all O scale.
All the companies mentioned as setting benchmarks for expectations were ranked by Fortune well ahead of the Children's Place.
This all leads me to realize just how small a fish even our biggest names are in the big pond that is American business. The harsh reality is Lionel, MTH, etc., are not big companies they are larger small to mid-size companies depending upon which end of the sale estimates we consider. This changed my view of what is reasonable to expect from these companies, they are all doing amazing things on what many larger companies would consider small sales revenues.
Food for thought before the next thread about about how X,Y,or Z, has not made a certain prototype in a certain road name again, or how there is a delay due to X,Y, or Z not being able to secure electronic components. I venture these companies are doing their best to compete in the big pond in which they must operate.
