Trade Tales

by “OO Trader”

In this first, of an occasional series, I intend to put to you some of the hazards and pitfalls that can befall the model railway retailer!

In this article I want to highlight the problems the trade face with regard to the chaotic delivery situation of new ready to run items from one of our major manufacturers.

At the end of January the trade sit down with the manufacturers at the Toy Fair and place their orders for the forthcoming year. We are given approximate delivery dates by the manufacturers and, while everyone understands that we cannot, at that stage, be given a delivery date “set in stone” it would be helpful to be given realistic approximations. Bear in mind that, say, a new express passenger locomotive may have a trade price of £60, if you order 100 you have therefore committed yourself to £6000, if you then have, between the manufactures, 10 different such models that’s £60000 worth of stock you are committed to, payable to obtain the vital “settlement discount” for prompt payment within 10 days of invoice.

Now if you take into account the smaller locomotives, rolling stock, track, power equipment, etc. etc. you do not need to be a financial genius to realise that the average medium sized model retailer has to find around £300,000 pounds UP FRONT for stock each year. Thus what you need is a steady flow of new items coming into stock at regular intervals not all the years releases dumped upon you in a fortnight in November! (I exaggerate slightly but you see my point).

To those readers with mortgages you will soon appreciate the cost of stocking loans/overdrafts from the bank on this sort of figure. Unless you can have a good cash flow, selling some items before the next arrive the cost of the money for stocking can easily outweigh the profit on the items. I can assure you that with the combination of high unit price and low profit margins on many model railway lines the banks do not regard the model railway trade with any enthusiasm and are not even keen on granting stocking loans or overdrafts.

The other big problem that erratic deliveries and missed delivery promises causes is that of potential customers ringing up to see if a new item is in stock and being very disappointed when you tell them it is not yet available, despite the fact that Model Railway Bugle has just carried a full review of said model and stated that it “Is available now from you local retailer”. What the manufacturer forgot to mention to the magazine was that they had one of the first models from the production batch which was flown over from China while the main batch are in a container on a ship that may have had it’s sailing delayed/run into storms on its journey/been held up awaiting Customs clearance upon arrival in the U.K. and thus the model does not arrive with the dealers until 6-8 weeks after the magazine carrying the article was published. The very sad effect of this is that a significant number of potential customers believe that the model is available when the press tell them and give the model railway dealer and his staff a very hard time, often with verbal abuse when you try to explain that the item is not in stock. After all no shopkeeper tries not to sell stock!

I can think of at least three product ranges from one manufacturer this year that fit into this category.

To restate my case I do not expect to be told the exact delivery date for each item in January, however one manufacturer seems able to publish in which quarter new items are likely to become available and by and large “stick to it”.

Exceptions to the rule will always happen, i.e. Hornby’s new Grange, Class 31 and A1/3 ranges which have been delayed due to the tragic death of the chief draughtsman at Hornby, however they kept the trade well informed regarding the potential delay into 2005 well before the anticipated launch dates.

So to conclude, a heartfelt plea to the manufacturers. When you announce your new product lines to the Press, trade and public each year please, please attach realistic delivery estimates to it; it would make life easier for the buyer, retailer and ultimately yourselves as well.

This article was first published in the Autumn 2004 Double O Gauge Association Journal
All Material copyright the Double O Gauge Association 2004