Author Topic: Exactrail doing SOU Waffles in N  (Read 9312 times)

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Dave V

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Re: Exactrail doing SOU Waffles in N
« Reply #30 on: May 27, 2012, 06:26:28 PM »
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I had said on their Facebook page that I would be willing to play by their direct-order game if only they did the Southern waffle.  I will stick by my word.

The sample image is stunning.

SkipGear

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Re: Exactrail doing SOU Waffles in N
« Reply #31 on: May 27, 2012, 07:04:15 PM »
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Tony,

I'm not being a wise guy, just curious if you really think EXR was being deliberately dishonest when they decided to go the dealer route?

I mean sitting around a table one day and coming up with that type of marketing scheme to generate leads seems a bit... over the top.

It's been several years since I've been in the hobby-shop business, but I view it as simply them attempting to go that route, i.e. dealer network and determining that it wasn't going to work for their particular situation.

But maybe you're right.

 The way they pushed hard for us to become a dealer from the start, I fully think it was intentional. It was easy to become a dealer and they were farming for as many as they could get. I lost count of how many times the shop received mail touting how great it was to become an Exactrail dealer. I threw away more dealer signup forms than I can count. I just glad I threw them away instead of filling them out.
  If they really valued their dealer network, they would have worked with margins and pricing to make it amicable for all. As it is, they increased their profit margin by about 40% minus the free shipping and screwed a lot of people that worked hard to get them where they are.

In a year or two, if I am able to find some waffles in the aftermarket, used, I may get over it and actually buy the product. At least they wouldn't be profiting directly from it.  Because of their treatment of existing dealers and copying of existing models from other makers, I don't have much use for them. That is all I will say about it.
Tony Hines

Brakie

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Re: Exactrail doing SOU Waffles in N
« Reply #32 on: May 27, 2012, 07:09:09 PM »
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Climbing on the Soap Box....

Larry,
 It wouldn't bother me a bit if they started out direct sales only and stayed that way. If they did that from the start, I would be buying a half dozzen of the waffles in CSX and Southern variations. Where I draw the line is how they used the LHS to promote and give people a hands on of their product, then yanked the rug out from under them once they got a following.

Stepping down now.

Tony,Here's the thing maybe not enough hobby shops was carrying their products? I know the shop I go to didn't carry ER and wouldn't even special order them.I suspect there are more shops that didn't carry ER or wouldn't order them..

I did notice the discounts ER gives.

I suspect in a few more years LHS and Train Shows will be nothing but,fond memories of a by gone era thanks to the computer and the high cost of manufacturing-unless we are willing to pay 50  or more dollars for a N Scale car.

I mention that  once on the Atlas HO forum around 9 years ago and was basically told I was out of my mind.HO is now seeing $50.00 cars.

I'm not in the business and I have no loyalty to my LHS since he caters more to HO then  N Scale and his small collection of MT cars dates back over the last 12 years with no new N releases from any manufacturer and then he boldly tells me  N doesn't sell..

BTW He doesn't carry FVM N either..He did end up with 3  N wagon top boxcars that wasn't picked up.

In my case I would had to order those waffles off line anyway.



« Last Edit: May 27, 2012, 07:10:51 PM by Brakie »
Larry

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MichaelWinicki

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Re: Exactrail doing SOU Waffles in N
« Reply #33 on: May 27, 2012, 07:12:47 PM »
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The way they pushed hard for us to become a dealer from the start, I fully think it was intentional. It was easy to become a dealer and they were farming for as many as they could get. I lost count of how many times the shop received mail touting how great it was to become an Exactrail dealer. I threw away more dealer signup forms than I can count. I just glad I threw them away instead of filling them out.
  If they really valued their dealer network, they would have worked with margins and pricing to make it amicable for all. As it is, they increased their profit margin by about 40% minus the free shipping and screwed a lot of people that worked hard to get them where they are.


I've got to admit... I've worked with over 2,000 businesses over the years and 99.8% of them would not have the forethought to put together a marketing plan that... for lack better words... duplicitous and cunning.

havingfuntoo

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Re: Exactrail doing SOU Waffles in N
« Reply #34 on: May 27, 2012, 07:52:11 PM »
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I am not knowledgeable on LHS agreements and when one is signed what commitments are give by the manufacturer with whom it is signed, but I am very familiar with sales driven by market forces and cost, and the dog eat dog world that exists in business..

If running a dealer network would result in pricing my self out of the market place then I would regrettably shut down my dealer network and sell direct. It is understandable the dealers I had would not be happy if they felt they had helped to establish my business but from the other side of the fence my dealers had had the advantage of being able to earn income and attract customers from the fine models I had produced.   

From a modelers perspective I would rather have high standard model available at a reasonable price than have a model that has a price that I can not find justification to purchase, with end result being another manufacturer being lost to us. 

From a manufacturers perspective it is simple, self preservation, hard times call for hard decisions.

C855B

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Re: Exactrail doing SOU Waffles in N
« Reply #35 on: May 27, 2012, 08:05:50 PM »
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Well, not to add further to the rehash of this whole debate, ad nauseum...

Quote
...duplicitous and cunning.

I really don't think so. What would be the point, you'd be outed eventually and animosity would still result. I think what happened is there were a lot more retailers like Tony, who weren't buying into the sign-ups, probably because they didn't want yet another inventory and purchase channel to manage for what was actually a limited selection of niche product. So, in the end, there wasn't enough of a retail presence to keep it going, and certainly not enough to move product. They were very likely trying this rather than relying on traditional distributors, who need their own cut of the margin, and who also tend to be picky, limiting and controlling, a la Horizon. (In the long-distant past when I worked at a hobby shop, I hated the distributors' "take it or leave it" miserable selection of product.)

I ordered directly from EXR from the day they launched. It is entirely plausible that they built enough of a direct-sales market in the interim that it trumped the poor response from the retailers. I don't think they set out to screw the dealers, I think they looked at their spreadsheets and the dealer volume wasn't offsetting the margin, and that direct sales was continuing to improve, or they weren't losing money, at least. And the decision was made - go where the money is.

BTW, I never saw EXR product on a retail shelf. Never. I could order it from internet shops, and that was it. To postulate that they were using the shops for "exposure" and then canceling the agreement because they "thought" they could do better direct... well, that's a bit of a reach. They got much more effective exposure through their slick magazine ads.

MichaelWinicki

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Re: Exactrail doing SOU Waffles in N
« Reply #36 on: May 27, 2012, 08:08:26 PM »
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I am not knowledgeable on LHS agreements and when one is signed what commitments are give by the manufacturer with whom it is signed, but I am very familiar with sales driven by market forces and cost, and the dog eat dog world that exists in business..

If running a dealer network would result in pricing my self out of the market place then I would regrettably shut down my dealer network and sell direct. It is understandable the dealers I had would not be happy if they felt they had helped to establish my business but from the other side of the fence my dealers had had the advantage of being able to earn income and attract customers from the fine models I had produced.   

From a modelers perspective I would rather have high standard model available at a reasonable price than have a model that has a price that I can not find justification to purchase, with end result being another manufacturer being lost to us. 

From a manufacturers perspective it is simple, self preservation, hard times call for hard decisions.

You make some good points... Actually very good points.

The one thing that bothers me concerning the idea of a company first forming a dealer network and then abandoning it for a direct-to-consumer model is that the most valuable asset of a direct-to-consumer business is not their product list, but their consumer list.

If you have access to the person spending the money you have power.

The challenge I have with EXR knowingly and willfully entering into dealer agreements that they knew were going to be short-lived is that EXR wasn't building a customer list.  They weren't getting the names and contact information of the folks buying their products, so from that standpoint they weren't gaining much of anything.

Were hobby shops out there promoting EXR products?  Obviously many carried EXR products in their shops, which consumers could see, touch and feel.  That certainly was a benefit to EXR.  I'm just not sure to what degree... And no, I'm not trying to belittle the local hobby shop.  I'm just sure how many folks even have the opportunity to visit a LHS that even carried EXR items.  I know I don't have any within a comfortable driving distance of me.  I'm sure there are a lot of folks in the same boat.

SkipGear

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Re: Exactrail doing SOU Waffles in N
« Reply #37 on: May 27, 2012, 09:18:31 PM »
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We did not carry Exactrail because two other shops in the area did and one shop that frequented all the local shows. I didn't feel there was enough sales potential there for 3 shops within a 25 mile radius to carry it. This release of the waffle box is the first release that they have done that I or any of my customers were even intersted in.

Not everybody lives in a hobby wasteland.
Tony Hines

Hyperion

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Re: Exactrail doing SOU Waffles in N
« Reply #38 on: May 27, 2012, 09:44:05 PM »
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As I travel every week, in the past couple years I've been to probably nearly 100 hobby shops across the US west of the Mississippi.  I wouldn't even need half of one hand to count the shops that actually carried N Scale Exactrail stock.  I own maybe a dozen Exactrail cars and that's more than I've ever seen in a store.  This doesn't mean that they weren't dealers necessarily, just that they weren't maintaining stock (FWIW, I never see BLMA cars in stock either, but that's probably because no one can buy enough).

If they had some diabolical plan to sell merchandise at wholesale rates to dealers in order to get some market exposure, so they could turn around and screw them later, it was about the most failed marketing scheme since New Coke.

If the supposed duplicitous activities of trying hard to get dealers from the start, making it easy to become a dealer, trying to get as many dealers as possible, and touting how great it is to be a dealer is how scammers work, I sure hate to see how someone trying for a good dealer relationship should do business. 

Sounds to me, in conjunction with the anecdotal evidence of a "dealer network" that was anything but, that it's far more likely that they tried hard to establish the usual manufacturer/distributor/dealer relationship only to find that they simply couldn't get a sufficient toe-hold with their pricing to make it work, so they went the route that was apparently (based on the fact that they went that way) more successful for them.  I doubt they'd go online-only if it wasn't already generating a not-insignificant portion of their sales.
« Last Edit: May 27, 2012, 09:45:47 PM by Hyperion »
-Mark

Brakie

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Re: Exactrail doing SOU Waffles in N
« Reply #39 on: May 27, 2012, 10:40:05 PM »
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Tony:Not everybody lives in a hobby wasteland.
-------------------
My closest hobby shop meca is only 64 miles away or 128 mile round trip and most of those shops specializes in HO and Lionel and carries  N Scale as a second thought or maybe third thought.

I fear the hobby shop wasteland is more common then many (including myself) believes when it comes to stocking  N Scale.

Larry

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Mark5

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Re: Exactrail doing SOU Waffles in N
« Reply #40 on: May 27, 2012, 11:01:34 PM »
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I think my dilema has been solved, looking at the photo of the model on ER's site, it appears the built date on the the number series they are doing is 1976 - too late for my 1974. 8)

Too bad, since "In 1974, Southern took delivery of 70 ton, 5277 cubic foot box cars from Pullman-Standard. Different from other cars of the IPD era, the Southern cars had a full set of "waffles"--stamped impressions" - Exact Rail blurb

GonzoCRFan

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Re: Exactrail doing SOU Waffles in N
« Reply #41 on: May 28, 2012, 09:57:18 AM »
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That's a nice-looking car and I'd definitely like to get some...except I refuse to play EXR's new direct-order game. Comparing the cost of their Evans 50' boxcars they make in both HO and N, I'd expect to see these cars to cost about $25-26, unless they decide the door-opener detail is worth jacking the price up a few more dollars.

Here's the thing that bothers me most: the way I understand the workings of the traditional dealer network, I'll do some math: If we take a $25 MSRP car, we know a LHS got it wholesale for $15. So if the manufacturer sells to distributors at that same 40% markup, that means the manufacturer sold it to the distributor at $9 and still made enough of a profit to make it a worthwhile venture.

So, if we choose to buy EXR's sob-story about needing to reap more of a profit to remain competitive, we need to remember that instead of making a few dollars per car using the old dealer network, they're looking at adding an EXTRA $14 profit per car.  If they were making $2 a car before and now they're making $16, that's an 800% jump in profit. I certainly don't begrudge any business wanting to make a reasonable profit, but I personally feel that any company that turns around and suddenly realizes they need to increase profits eight-fold to remain a viable business venture probably should be going the way of the dodo.

Thinking about this really makes me wonder what happened at EXR. Have they lost their mythical sugar-daddy that I've heard numerous rumors of? Or have they just been spending too much money on unwise business decisions like duplicating other manufacturer's efforts and hiring models to be their booth-bunnies at large hobby shows?

I just have a really hard time stomaching the feeling that EXR will now be tripling or quadrupling their money and laughing all the way to the bank with the expectation we should still be paying full retail. If they're going to be cutting out two middlemen, they better learn to pass along a better discount to the end-user if they want any of my business.
Sean

ljudice

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Re: Exactrail doing SOU Waffles in N
« Reply #42 on: May 28, 2012, 10:07:48 AM »
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Seriously guys, I doubt anyone is getting rich in this industry.  The owner of Exactrail is pretty well known as an expert in business intelligence systems and I suspect he did an analysis of where their business was, how their direct sales were going, the cost of selling through dealers and distributors - and made a business decision supported by data.

My suggestion is if you like the cars - buy them - I certainly will.  If you don't - then don't.

BTW, if you think for 2 seconds that every other manufacturer isn't sitting waiting to see how EXR does in this adventure (direct), you are SERIOUSLY in denial. The world is changing (rapidly) and those who cling to the past are not going to be around long.  Almost all of these people sell direct (around their dealers) not to mention Walthers and Horizon who (in my opinion) outrageously sell around their dealers.  EXR has made plenty of mistakes up to this point but give them the credit for making a decisive attempt to be viable and bring more product to market. Whether it works or not we will see...


- Lou
« Last Edit: May 28, 2012, 10:10:27 AM by ljudice »

Dave V

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Re: Exactrail doing SOU Waffles in N
« Reply #43 on: May 28, 2012, 10:21:45 AM »
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FWIW, I have 2 other ExactRail cars...  Both were purchased after sitting around the LHS for some time and sold to me for considerable discount.  One of my dealers back in Omaha practically gave me that Conrail foobie 40' Gunderson gon...  That he kept asking me to take it off his hands, each time at a larger discount, is the only reason it's on the Juniata Division.  I wonder if that sort of thing is what ExactRail's been worried about (although it seems that if they sold the cars to the LHS wholesale, they're unaffected by blowout prices down the road).

Brakie

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Re: Exactrail doing SOU Waffles in N
« Reply #44 on: May 28, 2012, 10:43:26 AM »
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BTW, if you think for 2 seconds that every other manufacturer isn't sitting waiting to see how EXR does in this adventure (direct), you are SERIOUSLY in denial. The world is changing (rapidly) and those who cling to the past are not going to be around long.  Almost all of these people sell direct (around their dealers) not to mention Walthers and Horizon who (in my opinion) outrageously sell around their dealers.  EXR has made plenty of mistakes up to this point but give them the credit for making a decisive attempt to be viable and bring more product to market. Whether it works or not we will see...


- Lou
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I agree..The business world is changing fast and there will be more that will go to direct sales especially as more and more hobby shops closed their doors.

There's very few manufacturers that doesn't sell direct and some offers a token discount.Its a new trend that is aim to up the profits in order to survive the coming years of increasing labor and material prices or face the possibility nobody will buy a $100.00 boxcar..

I also suspect in the coming years(months?) the fittest will buy out the weaker manufacturers and when the dust clears 3 or 4 manufacturers(maybe  distributors) will dominate the market and I highly suspect direct sales will be one of their tactics..

I even have a idea on who will become dominate.
Larry

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