Extra BTO pre-orders... Can dealers make it up in volume?

IDK. I think if you go down the road of waiting now, you may not get what you want. Essentially you are leaving it to the shops to dictate what the marketplace wants by waiting for the "blowout price".

I don't know the answer but I really appreciate the fact that dealers order extras. I can prioritize items when several things of interest are made at the same time and usually still find it later as budget permits. It also helps if you want to see the actual model before committing to buy it.

That said, I wish there were some PRR 2-10-4 and K4s still on the shelves but hopefully we will see those again in the near future.

Yea ask me about the nkp berk and then tell me how I Feel .. Should of preordered ..

prrhorseshoecurve posted:

... I think if you go down the road of waiting now, you may not get what you want. ...

I'll let you know how that strategy works out about a year or so from now, 'cause I didn't pre-order any big-ticket locomotives from the new catalog(s).  If there's nothing remaining, that's OK.

We just never know what's gonna move and what's gonna sit.  Look at all the recent ABS ES44's in stores right now.  What happened?  Did folks cancel their pre-orders?  Did dealers just order too many "extra's"?    This seems to happen when the importers re-issue a product that's been in very high demand.  Granted, the die-cast ES44's were a different product than the recent ABS models.  But who would have expected these ABS models to still be around.  When Lionel did a run of FM Trainmasters a couple of years ago in four road-names, they all flew off the shelves in no time... and I think that was before Lionel kicked off their BTO program.  Tough to predict.

David

Grampstrains posted:

I think it depends on the item.  I noticed that the 115th engine is still floating around.  IT's one of those, you either like it or you don't items.  The Texas Special set from LCCA is like that,  All the people that wanted one have one and none of the rest seem to be selling.

No offence to who bought one but 2k for a silver berk was insane...

Originally posted by Jojofry:

No offence to who bought one but 2k for a silver berk was insane...

I think many engines now paying 2K is insane! Most of them have been reissues.

jojofry posted:

Yea ask me about the nkp berk and then tell me how I Feel .. Should of preordered ..

If you're not too picky, the NKP Mikado is still around! 

IMHO, there are many reasons why BTO is a bad idea.  The issues listed in this post are just SOME of them, IMHO.

I'm in total agreement with JoJoFry on the 115th Anniversary Silver Berk. 1) Who cares? 2) Who would pay Vision Line Big Boy prices for....that?  3) Why would we pay to celebrate Lionel's anniversary?  If they really wanted to celebrate, shouldn't Lionel have offered a cool item....at a REASONABLE price?  How big is their ego?  And good luck trying to sell one of those down the road as, in my opinion, there will be little to no market for that particular item.

It's bad, bad business sense when you create a demand for your product....and then don't manufacture enough of the product to meet the demand.....almost regardless of how obscenely high your gross margin/profit is on those items.

I will give up the hobby before I drink the BTO kool aid.   "Ain't gonna happen!"

Rocky Mountaineer posted:

jojofry posted:

Yea ask me about the nkp berk and then tell me how I Feel .. Should of preordered ..

If you're not too picky, the NKP Mikado is still around! 

Both Legacy versions of the NKP 765 can still be found if you're patient.  I bet you'd find plenty of them at York in a few weeks.

Berkshire President posted:

Rocky Mountaineer posted:

jojofry posted:

Yea ask me about the nkp berk and then tell me how I Feel .. Should of preordered ..

If you're not too picky, the NKP Mikado is still around! 

Both Legacy versions of the NKP 765 can still be found if you're patient.  I bet you'd find plenty of them at York in a few weeks.

I guess I am going to York then!

Berkshire President posted:

 

It's bad, bad business sense when you create a demand for your product....and then don't manufacture enough of the product to meet the demand.....

That's what happened with the American Flyer FlyerChief Berkshires.

Rusty

jojofry posted:

Berkshire President posted:

Rocky Mountaineer posted:

jojofry posted:

Yea ask me about the nkp berk and then tell me how I Feel .. Should of preordered ..

If you're not too picky, the NKP Mikado is still around! 

Both Legacy versions of the NKP 765 can still be found if you're patient.  I bet you'd find plenty of them at York in a few weeks.

I guess I am going to York then!

You'll love it!  Just bring your wallet. 

I'd be shocked if you don't also see the elusive Milwaukee Road #261 there as well.

York is a blast if you've never been there.

The one stinkin' thing that was new, not a reissue or a rerun of a rerun, that I preordered and wanted badly, was canceled.....so...why bother?  Build it and I will come.

There does seem to be a glut of trains on the market, but then again that's been the trend since they've been made in Asia ~ 1990s. There are exceptions - some models in some roadnames do very well and are hard to find.

The BTO seems to be a crap shoot. People were wrong about the Legacy B6 switchers...right here on OGR forum they said "they'd soon be up to "$700 at York", and I almost bought into the hype and contemplated paying full retail but I held out and ended up finding one for less than the pre-order price.

I really don't mind the BTO process, but I have to admit I am having serious reservations about pre-ordering Lionel's Reading T1 at nearly $1,400 - the price gives me serious pause about this purchase, and I am not sure I will ever pre-order another engine at that price again ~ and I cannot think of a model that would even entice me to do so - just so happens the real T1 operated in my neck of the woods and was a local favorite amongst some respected people I know, so I justified it. Soon after, I found out that MTH released the Premier version last year at around $1,000 - I don't know how I missed that catalog! Competition is good - but you gotta stay abreast of the catalogs, LOL.

It's bad, bad business sense when you create a demand for your product....and then don't manufacture enough of the product to meet the demand.....almost regardless of how obscenely high your gross margin/profit is on those items.

Over the years the post 1970 "Lionel" companies have been accused of intentionally under producing some items to spur sales. The belief caused many people to make quick decisions, and preorder any items in which they had an interest. Perceived shortages also helped drive the instant collectables market where the prices on some items shot up immediately as the items were released.

If there are a lot of BTO items available at blow-out prices, I have to wonder whether Lionel decided to run a lot more pieces than were ordered. Lionel has told us that they over order and break down some of the extra pieces as a parts source. Maybe they just ordered a bunch too many.

Here's a scenario to consider...

A BTO item gets released to the marketplace and sells out rather quickly, possibly even "pre-sold out".  Now a potential customer who did not place a pre-order wants one, and searches all over to find one.  He/she contacts 3, 5, 10?? (pick a #) train stores/dealers trying to find it.

For argument's sake, multiply this one scenario by say 5 potential customers doing the same exact thing for the exact same item.

Now imagine you're a dealer.  You have just received 5 inquiries ("sales leads") for ONE sold-out item.  "Wow", you think to yourself, "This is a hot product.  I should have ordered a few more of these from the manufacturer/distributor".

So the next time a similar item gets announced, you order 2 or 3 (or more!) extras to cover the non-pre-order demand that you KNOW is coming your way.  Sounds like a good (and profitable) business decision, right?  

BUT...

Here's the problem.  In this scenario, there were really only 5 potential customers in the entire "train-buying universe" that were searching for that particular item after it sold-out the last time.  However, those 5 people may have generated 50 sales inquiries/leads, making the demand appear to be 10 times greater than it really was!

You can see why it would be totally understandable if dealers over-estimated the REAL demand for this item, and subsequently ordered too many extras the next time around.  If the 10 dealers above each ordered only 2 extras, there's 20 now in dealer stock with demand for 5.  What happens to the remaining 15??  You know the answer!

Even if you don't agree with the #'s used in the above scenario, you get the point.  And this is just ONE scenario.    Now, imagine you are a dealer and multiply this example times several (many!) individual items that just got announced in the latest catalog by company X.  What would you do??

No BTO for me.  Too much $$$$.  And My 2245, 2353 and Williams Diesels just keep on running!

Rocky Mountaineer posted:

jojofry posted:

Yea ask me about the nkp berk and then tell me how I Feel .. Should of preordered ..

If you're not too picky, the NKP Mikado is still around! 

Why settle if its not what you want and why play the roulette game of maybe it will be available discounted and maybe it won't. I guess you have to ask yourself a question... Do you feel lucky? This is by no means a poor mans hobby. Why risk not getting something you really want in hopes of saving two or three hundred dollars? It is much easier to lock in and not have to worry about finding one later. Model trains are no different than anything else there are going to be items that virtually unobtainable on the secondary market unless you are willing to pay and then those that seem to be everywhere. 

No offense, Mark McClung, but to me....it sounds like you bought the very Kool Aid Lionel was selling.  But that's your prerogative.  I, obviously, don't operate like that.

Personally, I've yet to NOT find a product that I really wanted on the secondary market.  If you are patient, almost everything eventually becomes available for sale.

Where do some of these prices come from? BTO and the surplus market? I missed the VL Reefers the first time around, just getting back into the hobby and feeling my way around all the new tech. I pre ordered a set this year from Charles Ro. The screen shot I attached is from EBAY about 10 minutes ago. About $300.00 more then I paid for a brand new set. Again, where are some of these prices coming from?

Mark Mcclung posted:

Why settle if its not what you want and why play the roulette game of maybe it will be available discounted and maybe it won't. I guess you have to ask yourself a question... Do you feel lucky? ...

It's not a question of settling.  It's more a case of seeing things for what they really are.

Sure...  If you REALLY want a BTO item, then you pre-order it and pay premium dollars for that privilege.  

For some folks, the extra dollars are worth the assurance that said product will be in their hands, and they never look back.  That's fine.  But for an increasing numbers of enthusiasts who already have trains out the ying-yang, they might not care if something sells out or not -- especially when the "premium to pre-order" can be significant.  So playing the "roulette game" is no big deal.

We can't help but notice some really great bargains out there nowadays.  And that in turn gets us thinking twice about pre-ordering the next time around.  Years ago, Lionel offered the blow-outs on excess inventory.  Now the dealers take it on the chin at blow-out time.  But that's the price they pay for having the opportunity to sell to a larger audience at pre-order time.

Just sayin'...  

David

CNJ #1601 posted:

Here's a scenario to consider...

A BTO item gets released to the marketplace and sells out rather quickly, possibly even "pre-sold out".  Now a potential customer who did not place a pre-order wants one, and searches all over to find one.  He/she contacts 3, 5, 10?? (pick a #) train stores/dealers trying to find it.

For argument's sake, multiply this one scenario by say 5 potential customers doing the same exact thing for the exact same item.

Now imagine you're a dealer.  You have just received 5 inquiries ("sales leads") for ONE sold-out item.  "Wow", you think to yourself, "This is a hot product.  I should have ordered a few more of these from the manufacturer/distributor".

So the next time a similar item gets announced, you order 2 or 3 (or more!) extras to cover the non-pre-order demand that you KNOW is coming your way.  Sounds like a good (and profitable) business decision, right?  

BUT...

Here's the problem.  In this scenario, there were really only 5 potential customers in the entire "train-buying universe" that were searching for that particular item after it sold-out the last time.  However, those 5 people may have generated 50 sales inquiries/leads, making the demand appear to be 10 times greater than it really was!

You can see why it would be totally understandable if dealers over-estimated the REAL demand for this item, and subsequently ordered too many extras the next time around.  If the 10 dealers above each ordered only 2 extras, there's 20 now in dealer stock with demand for 5.  What happens to the remaining 15??  You know the answer!

Even if you don't agree with the #'s used in the above scenario, you get the point.  And this is just ONE scenario.    Now, imagine you are a dealer and multiply this example times several (many!) individual items that just got announced in the latest catalog by company X.  What would you do??

I believe most of the remaining dealers [especially Atlas O] stick to BTO.JMO

JamesZZ:  Ebay is full of speculators who will attempt to sell anything.....and I mean anything....for profit to someone who doesn't know any better.

Jameszz posted:

Where do some of these prices come from? 

For decades there has always been a side of this hobby that is puzzling... namely, the very need to own that special "hot" item.  That in turn drives prices upward.  And as you've noticed with those VL reefers, the asking prices can be pretty crazy.

Up until Lionel announced the re-issue in the 2016 catalog, sellers were actually GETTING those prices.  There's been a natural drop-off in demand now, but some sellers are trying to play the "Don't you want the ORIGINAL reefers?" card.    Personally, I can't see spending the premium dollars just to have the privilege of "owning them all".  But some folks might... and that's why these sellers have set the asking prices that we're seeing on the secondary market right now.

David

I think dealers know when a hot product is out there by the BTO orders. Say they get orders for 25 GG1s with 5 stripes and 3 orders for a GG1 one stripe.

Do they order 27 GG1s with 5 stripes??

As CW mentioned, this has been going on for decades.  It's an imprecise business, and the BTO approach transfers most of the responsibility for assessing market demand to dealers instead of Lionel guesstimating.  It's pretty simple.  If you really, really want something, order it now.  If it's not a big deal to go without at the price advertised, wait and take your chances.  Not a big deal, and not something that is going to substantively change the hobby as it already exists or will exist in the future.  Or, as WS put it, much ado about nothing.  Not sure why there is so much hand wringing about this sort of thing, with all the other stuff one can get agitated about in life.  But whatever floats your boat .

Berkshire President posted:

No offense, Mark McClung, but to me....it sounds like you bought the very Kool Aid Lionel was selling.  But that's your prerogative.  I, obviously, don't operate like that.

Personally, I've yet to NOT find a product that I really wanted on the secondary market.  If you are patient, almost everything eventually becomes available for sale.

I am not drinking any Kool Aid from Lionel. It is easier to pre order it an be done with it. Look at the WTB section of this forum. It is full of adds wanting buy items from two to four years out of production. You are aren't going to find most of the items that  are in demand at anywhere near what they were new. I am sure everyone wishes they bought the Milwaukee #261 for $950 or so what it sold for new, along with the $269 Visionline Ethanol tank cars, the list goes on.

Everything normally is for sale on the secondary market but at what price? You want to spend two or three years trying to find it on the secondary market knock your self out. I don't have to exhaust time and effort going to shows or browsing the internet looking it. All I have do to is go pick it up when it comes in. 

So....just Pre-Order and be done with it....regardless of cost, appearance, or quality?  Not for me.

BTW:  You'll be shocked to know how many people have purchased a Milwaukee Road #261 for $800-$900....after the fact.

So without BTO preorders what happens if what you waited for doesn't get made? Not enough orders and that's what will happen.

Does anyone think that complaining about the high cost of high end model trains will influence the manufacturers' pricing structure?  I believe these prices are based upon the (lack of) economies of scale due to decreasing sales volumes, the increasing costs of new tooling and similar unfortunate facts of life. 

Does anyone think that arguing against pre-ordering is going to convince  people to stop doing that and start buying the way you prefer to handle the issues?  I think not, by and large.  If you are happy with your approach, you are living the good life.  Hopefully other people doing it differently isn't too upsetting .

I don't think there is any BTO kool-aid to drink. Lionel simply started the BTO program on higher end items because they really got burned on some high end locos and lost their butts. Like someone said earlier, BTO eliminates the quantity risk for Lionel and puts it on the dealers lap. It is a big guessing game for the dealers to decide how many extra BTO items to order. You are always hoping each item is a sellout hit but most aren't and sometimes you need to blow things out to either move inventory or just free up money to pay for the next shipment of new items coming in that you are hoping will be a sellout hit. No secrets, just business 101.

If something is being offered as a BTO and you really want, you can get good $ deals on pre orders and pretty much garanteed you will get. If you rather gamble and wait til later and hope for a blowout price, good luck. There is no 'right' way, just a free country with your own choice of how to get that loco you want on your layout.

Landsteiner posted:

Does anyone think that complaining about the high cost of high end model trains will influence the manufacturers' pricing structure?  I believe these prices are based upon the (lack of) economies of scale due to decreasing sales volumes, the increasing costs of new tooling and similar unfortunate facts of life. 

Does anyone think that arguing against pre-ordering is going to convince  people to stop doing that and start buying the way you prefer to handle the issues?  I think not, by and large.  If you are happy with your approach, you are living the good life.  Hopefully other people doing it differently isn't too upsetting .

So, here is the thing, what these trains cost to make has very little influence on the price they charge for us to buy.

The buyer always, I repeat always sets the price for any product. We pay what they ask for, so that is the price for the item.

The price we pay has little to do with what the costs to make the prpduct are.

I would be surprised if a $500 engine costs more than $ 125 when it leaves China.

So, yeah, alittle push back is a good thing.

Fred

So without BTO preorders what happens if what you waited for doesn't get made? Not enough orders and that's what will happen.

The sun will continue to rise, and the world will go on. Another train will come along.

BTO is a good for a manufacturer,  they sell all they make and they move on, and that was the whole point. 

If dealers choose to order extras because they believe they will sell at a profit who are we to question that?  It is their money they are risking.

However, I believe it to be a foolish risk and they will lose in the end.   They are probably hoping/betting that few, if any, other dealers will do likewise.  This will keep the production numbers closer to those who are actually willing to purchase them at these price points.   Also, they let emotions come into play and say to themselves, "everyone will want one of these..."  That is a fallacious argument.  The lower the price that number will increase but at the current price point the market has spoken.  Many, if not most, business people make this mistake once, good business people don't make it again.

The number of people who will be willing to pay preorder or better prices later is very small, single digits I would imagine.  And while they might argue, to themselves, that over time the market will show up this has seldom, if ever been the case.  So long as Lionel, etal keep moving on and cranking out new latest and greatest blah customers will move on as well.

If dealers choose to order extras because they believe they will sell at a profit who are we to question that?  It is their money they are risking.

I am surprised that nobody has mentioned the first Lionel Century Club. Some dealers (perhaps many) joined the club several times over to get some Century Club items for resale. I wonder how they made out.

I was an early bird member of the Century Club. I was very interested in the 726 Berkshire because I mistakenly thought they were going to copy the 1946 version, and there were hints of there being many extras added along the way during the 5 year program.
So I got the free special boxcar, which traded for money north of $500. Today they are not worth so much. There has been an unboxed one at the last three train shows I've attended. The seller can't get $25 for it.

I have no real idea where the Century Club merchandise is today or how it got there. My impression is that mint (new, old stock) locomotives sell for less than the original purchase price, and that the boxcars don't sell at all.

So how did the dealers make out on their speculative purchases of Century Club stuff, the original Lionel BTO program?

Not sure I understand the consternation nor the actual vitriol in this discussion about Lionel's BTO program.

I believe that MTH has used this a business model for quite some time, especially for the Premier Line and it has worked well for them.

As I recall, Lionel had quite a few misjudgments on hi end products that caused them to sell left overs for unbelievable prices.  (and yes, I do believe they lost money on many of them).  If it works for Lionel (and MTH) and allows them to remain viable sources for the trains we enjoy, the I am happy for them.  And I hope they can continue to make a profit as we go down the road.  For if they do not, they will surely cease to offer trains.  And for me, that would be sad!

Happy railroading,

Don

Berkshire President posted:

So....just Pre-Order and be done with it....regardless of cost, appearance, or quality?  Not for me.

BTW:  You'll be shocked to know how many people have purchased a Milwaukee Road #261 for $800-$900....after the fact.

You do it your way and that is fine. I will do it my way. I just threw the $950 out there the retail was  $994.99. I can't remember what I paid for mine but it was less than $950.00 when it showed up and I don't have to look for one. You will be hard pressed to find them for $800-$900 now. 

The Answer is two-fold, Good, Maybe not so Good, If You want a Product being Offerred on a BTO Basis, Really Want it, Then my thoughts are, Order It. Most of the BTO Locomotives in the Standard O Scale section arrive better than pictured in the Catalog...Now, You are more than likely Locking up your purchasing $$$$ until the BTO product arrives.  I know that when I make a Committment to my Hobby Dealer it's a hand shake type of Deal...Also, my dealer does not order any extra on the high end product line.  The risk is high, the cost of money tied up in goods not moving is hard for the smaller dealers.

The answer to the Question at the beginning is simple, The Larger Dealers get Larger, The Smaller Dealers barely Survive....The Smaller Dealers need are help, and They really are the Backbone of this Great Hobby. Good Post, Lots of Opinions, Lets Enjoy this Fun Hobby.....

Jameszz posted:

But, some have free shipping HAHA.

I ordered several sets when they were announced.  Never planned to resell them, however, when prices hit $550-$600, I sold a set at those crazy prices.  Pre-order was $275! 

Lionel's 2016 announced set was less than the previous pre-order price!  That's how the secondary market can go sometimes.

Personally, I don't have a problem with BTO.  Been happy with all the items I've received, cost less to pre-order, and I don't have the stress of looking for items after they are delivered (double edged sword).