Build to order/Preorder?

Terry Danks posted:

I was confused about this. Still am really. What's really the difference?

Seems the same thing to me.

Not the same.

1) Build to Order means that the manufacturer will ONLY build the EXACT quantity ordered by dealers, i.e. NOTHING built for "stock".

2) Preorder, is simply what customers of dealers order from their local hobby shops/dealers.

If there aren't enough preorders for an item, build to order for that item ain't gonna happen.

Rusty

HW hit on the subtle nuance between BTO and general pre-ordering.  The concepts converge IF AND ONLY IF dealers order exactly what their customers pre-order.  However, that's seldom the case -- especially for Lionel, who has a robust dealer network that often orders a few "extra" orders BEYOND what their customers actually pre-order.  Exactly how much extra ordering is done, we consumers never know.  But to date, I've seldom been sold-out of something I've shopped for after BTO products are delivered.

There's been ONE exception recently.  And that was with 3rd Rail -- who typically builds EXACTLY to consumer pre-orders, since they don't have a broad dealer network, per se.  After I saw photos of the Amtrak El Capitan cars, I emailed Scott to see if he had an extra Amtrak set.  And unfortunately, the few Amtrak sets made were shipped to those who pre-ordered them.  There were no dealer "extra" orders to pick up the slack -- the way we often see extras in Lionel-land or MTH-land.  At the end of the day, that was OK though.  It would have been an impulse buy anyway.  So the money is better off in my pocket (for now).

When all is said and done however, BTO is really a slick way the importers have side-stepped the risk of holding warehouse inventory -- almost completely transferring the risk to their dealer/distributor networks.  As is always the case in life, however... there is never any free lunch.  Dealers are only willing to accept this risk, because Lionel has allowed them to compete for pre-order sales that they would otherwise NEVER be able to secure in the former business model.  And for dealers who don't order any BTO extra's, the risk of holding excess inventory is pretty much eliminated -- barring pre-order cancellations.

David

i hate BTO it just cuts guys like me that can't preorder outa the equation

paigetrain posted:

i hate BTO it just cuts guys like me that can't preorder outa the equation

That's silly. All you have to do is buy from any number of dealers that tend to order extra items for their own stock. The only difference being, you would NOT get the lower "pre-order pricing".

Both Atlas and Sunset hold reservations to build quantity very tight, obviously Sunset is pretty much direct sales with a small dealer net work, almost everything sells at Factory price. Atlas has a much larger dealer base but in recent years most do not order for inventory, Atlas also takes pre-orders direct, one way you can be sure of getting what you ordered when it is eventually delivered [at retail pricing] neither company brings in any where near the production numbers of Lionel or MTH.

No one is burdened with the risk of warehousing any inventory.  The choose to have inventory.  They take a risk on knowing what they can sell.  BTO can keep costs of making and then blowing out items that don't sell.  If a dealer takes a chance and orders 10 and only 8 sell and later he has to cut his profit margin to dump the product how is that anyone's fault but that dealer.

To me the biggest risk of BTO is having an item delivered with drastic changes than what was cataloged.  If the manufacturer / importers can make what is in the catalog description it should be very successful for all involved.

Terry, you might be overthinking things a bit. 

Items that are BTO vs. what I'll call "regular production" are determined/selected by the importer.  The importer doesn't warehouse BTO items -- everything they make gets shipped out to dealers (or customers in the case of direct orders) except for those broken down for parts.

Importers still warehouse "regular production" items like track, accessories, and all items not listed as BTO.  Business as usual for that stuff.

Pre-ordering typically occurs during an "early buy" ordering period that dealers (and sometimes importers) offer to consumers to POTENTIALLY get a good price on a product.  While pre-ordering an item USUALLY gets buyers a better price than waiting 'till after products are delivered, that's not always the case.  Some dealers often offer 10%-15% discounts off their regular everyday selling prices, and those discount prices could be -- and often are -- less than the prices offered during the pre-order period.  I've purchased many items (BTO as well as regular production) during discount sales recently.

As for MSRP?  There's virtually no reason anybody should be purchasing new products at MSRP nowadays.    The only possible exception might be products from 3rd Rail, where consumers typically order directly from the importer.

David

I tend to agree with Danks. The only difference seems that Lionel has incorporated a three letter acronym to make the customer feel more intimately involved in the production of a "special" offering. Just a marketing gimmick. 

When an item has not yet been built, but is announced, in most cases this is BTO, even if not termed such. Long before this hobby commonly used the "BTO" term, it was still the way business was done on high-end models, when possible. If the orders were thin, it got canceled. 

I can see no other rational way to do business. Why would I build a high-cost item for which there is demonstrably (few ordered it) little or no real market? 

BTO/Pre-order can be our friend, in fact; certainly, many things have been skipped in the past (not just in model RR'ing) that would have sold, but there was too little data, and they were seen as too risky and/or too capital-intensive to offer them.

Business managers are not psychic nor endowed with special senses - they're just like you and me and try to act wisely on what they can observe. Overt "BTO" let's them determine this better, and sometimes they get a surprise - "hey, they do want this thing! Build it." It also brings the serious customers into the decision loop, and reduces the influence of the woulda-coulda-shoulda "customer". 

Is Thomas the Tank BTO? Are Pepsi and Coke BTO.  Some of what I call crap, they waste material manufacturing.  MHO

There is no reason to downgrade the BTO program because its smart on both ends, the Buyer, The Dealer, The manufacturer, the Builder....This way, everyone Wins...We get the train we desire, we have time to save up the funds, We complete our transaction....I did not pre-order the VisionLine BIG BOY, Thank goodness Mr. Muffins had a few extra's....Now, for the Scale Enthusiast, I would like for Lionel, OR MTH OR 3Rd Rail and Atlas O, to make an annual High End Signature Catalog introducing nice Engines like VisionLine Locomotives like the past Century Clubs for our Appetite of super Quality,Feature Rich, Locomotives....Just Thinking....Di you Agree....

leapinlarry posted:

...Now, for the Scale Enthusiast, I would like for Lionel, OR MTH OR 3Rd Rail and Atlas O, to make an annual High End Signature Catalog introducing nice Engines like VisionLine Locomotives like the past Century Clubs for our Appetite of super Quality,Feature Rich, Locomotives....Just Thinking....Di you Agree....

Excellent idea, Larry.  3rd Rail would probably pass on the idea though, since EVERYTHING they offer would admittedly fall into that category.   And they tend to announce their offerings throughout the entire year.

What you're describing though almost sounds like the "Special Introductions" brochure(s) that Lionel offered back around the turn-of-the-century and early 2000's.  They weren't BTO at the time, but they were usually high-end locomotive offerings -- often billed as "specially allocated" items that dealers only typically received in very low quantities.  Seems whatever Lionel wants to call it... (i.e., club offerings, collector's line, limited edition, specially allocated, or BTO)... the idea was/is to always generate a sense of urgency for enthusiasts to order early or miss out. 

David