New-Old-Stock - Will it Ever Sell?

You see that in plastic model shops. A place that closed a few years ago had NOS Dragon (DML) armor on the shells. I had moved away for several years and when it came back it looked as if it was the same stuff, the newer product boxes had changed to different colors. Prices were still the MSRP that was on them 6 years previously. I asked him once, I said I would buy some of it for a better price. And I bought newer items for similar prices. He got a little, uh, irritated. No worries, not my store. But now it's gone. Finally got those deeply discounted prices. But picked over fast.

Frank

@RickO posted:

Personally I'm done with the constant legacy debacles. I now focus on tmcc stuff from the early-mid 2000' s which I can usually find at prices 50% of the latest version.

This is what I consider the best time frame to focus on:  mid-to-late TMCC (especially RailSounds 5) to early Legacy.  Call it 2003 to 2010 or so.

It was a period of innovation, relatively reasonable pricing, no BTO, no hideous color mistakes, and many steamers were made in Korea.  And Lionel Service was only 1.5 hours from me in Ohio.

Back then, the biggest challenge seemed to be potential damage during shipping and smoke output that was less than that of MTH.  Today, it's......seemingly everything at times.

That said, MPC and LTI engines and rolling stock are worth a fraction of their original MSRP today........although I'm starting to reminisce more on some of the MPC stuff.....that is silly cheap....but works.

@Mannyrock posted:

DKD,

If I had to guess, the manufacturers are in fact selling new/old stock at deep discounts after 5 years, but they are selling them to retailers, who buy them up in bulk, with visions of making very large margins when they sell them.  And, these retailers think that they have bought "gold" that will go up in value every year.

Most people who own a small train shop suffer from constant "cash flow" problems. They want cash cash cash at high margins, so when you offer to buy one of those new products in 20 year old dusty boxes at less than sticker retail, they feel like they are being cheated or shorted.   After all, they were going to make a HUGE profit.

This goes on and on, until they go bankrupt..

I know that retailers often advertise "Warehouse Finds"...NOS that got  hidden/ignored for too long...for which they'll have blow-out sales, deep, deep discounts, etc..  I also know that even well run manufacturers...like MTH...have lingering stock (but seldom in the 5+ year category) which they aggressively work to sell off at a discount.  But any business...especially the manufacturer of the product...knowingly just sitting on NOS that old is losing money...big time...and probably not really making a dime off of it for all the continuing expenses associated with having it decorate their shelves that long.  Potential bankruptcy down the road with such practices?...you bet.

All I'm saying is, if that stock is a snapshot celebration of 5+year old technology/design, no longer supported by the original manufacturer, then caveat emptor...let the buyer be aware.   This forum has lots of posted questions from newbies.   They get a lot of help/answers, too.  That's good!  If those newbies are taken in by a deeply discounted NOS item...LHS, online purchase, etc....and are not made aware of the post-sale service/parts issues should they be needed shortly thereafter,  do you think there might be a problem "in the House of Denmark"?  Sure, an average lawyer might have some fun (profit) with this situation, but not the buyer...who probably couldn't afford an average lawyer, anyway, in proportion to the NOS purchase price...unless the lawyer was his cousin Vinny.

I'm among those who would gladly like to find NOS of real interest...not just a pretty price.  A few short York years ago I found such an item...a NIB/NOS in Red Hall.  A Lionel B&O I-12 red caboose, original run, crisp box that probably had never been opened...$30. Hesitate?...no.  Same show...Orange Hall, major retailer.  NOS PS-1 locomotives, boxes somewhat shelf worn, weird (MHO, only) road names, deeply discounted.   Even though I'm satisfied with conventional running, only,  a scrambled sandwich, dead battery in that old technology would cost something more to even run conventionally.  I passed. 

Interesting topic, though.

KD

One Local Train store had a date code on every box, and after so many months they moved it to a discount table and put a new lower price on each box nest to the old price tag.

I brought many items off that table, new and used.

They did understand the time value of money stuck in old inventory.

There was a well known hobby shop in Indianapolis, a part of a chain store. They had a lot of N O S items. Most of it sat there so long it was dusty, dirty and a lot of faded box's. Would not budge on price at all. Full retail price. That shop is no longer there.

@totrainyard posted:

One Local Train store had a date code on every box, and after so many months they moved it to a discount table and put a new lower price on each box nest to the old price tag.

I brought many items off that table, new and used.

They did understand the time value of money stuck in old inventory.

Sounds like a well-run business.

The owner of my favorite train store--sadly, he passed away too soon--used to say: "I don't run a museum. I want to get 'em in and get 'em out."

I NOW have a policy of buying  (MTH) engines only from dealers and in box new with no miles on the OD.  I got burned with a beautiful looking  PS2 Premier Jersey Central ABA set from a dealer that was closing locally. I was told it was NOS and was in his display case; a bit dusty. We did a short run and it looked and sounded  OK. I took it home ran it and ran it for a short time putting about 350 miles on the OD. Then I moved. Then I rebuilt my layout. Then I put the F3 on the rails. It ran poorly with herky-jerky motion. The sounds and smoke and lights all worked and still do! I took the shells off and there is obvious repair work. The motors are not following the rotational speed of the leading F3 motors. The PWB setup looks nothing like the MTH diagrams.

So is this one going to be a Siding Queen with sound, smoke and lights going no ware.

I have bought some of this stuff.  When I was a kid, my first train set was the Lionel Black River Freight.  I found an NOS set from one of the online stores for $125 and couldn't resist.  The train set was actually brand new and the locomotive ran like a top.  I also bought an NOS Penn Central auto hauler to go with it, also from the MPC era.  

At my last train show, I came across an old, NOS MTH Amtrak Superliner set.  I got the set plus three NOS add-on cars for $300.  I thought that was a good deal.  Again, the locomotive ran perfectly (after a new battery).  When I bought that one, I figured a seven-car Superliner ensemble was well worth the $300, so if the locomotive worked it would just be a bonus.

And I do buy NOS freight cars here and there.  I don't think there's much difference in price between NOS and good used most of the time.

Mark;

I just got my MTH F3 fixed that was NOS; I have bought NOS and used freight cars. Thought it was a no brainer until I realized the couplers can be different. I like the couplers that have a side tab to uncouple.  I bought a few NOS Lionel sets for the grandkids that worked out great. They stand up with no electronics!

@totrainyard posted:

One Local Train store had a date code on every box, and after so many months they moved it to a discount table and put a new lower price on each box nest to the old price tag.

I brought many items off that table, new and used.

They did understand the time value of money stuck in old inventory.

A LHS that understood good business practices and inventory management?  Now that's how to run a railroad!

I truly think it depends on the item in question. For example, a hobby shop near me has NOS on the shelves that is older than I am for the original price. Eventually, it will get to the point where the original price is a decent deal and I think it will sell.

They had the N&W Warhorse set NOS for the retail price. Someone was looking for one, and I told them about it. It wasn't there when I went back next time. That's a popular set that has held its value fairly well.

On the other hand, they have a shelf of hotbox reefers (probably over 30). These cars are not as popular, and considering their high price, I don't think they move at all. They will probably still be there 10 years from now.

Can you imagine going to a car dealership and hearing:

"Let me show you this beauty right here.   A 2016 Camry, brand new.  Never been out on the road.  Priced at Manufacturer's Suggested Retail Price,  plus freight and tax.  Are ya interested?  I KNOW you are!"

@Mannyrock posted:

Can you imagine going to a car dealership and hearing:

"Let me show you this beauty right here.   A 2016 Camry, brand new.  Never been out on the road.  Priced at Manufacturer's Suggested Retail Price,  plus freight and tax.  Are ya interested?  I KNOW you are!"

It's actually worse than that when it comes to motive power.  Here's a 1997 Camry with 90s era technology....no air bags, AM/FM with a cassette tape player, and a whopping 20 MPG.  Now, for a few hundred more, you can get a 2018, but who'd want all those safety features or better technology, and you won't even get a cassette player.

Cash flow and turnover are key to any successful business, but some business owners are more hoarders than business-savvy.

Businessman One holds out to get top dollar for his item, and the overpriced item sits for 5 years (or, for some of these items, 10 or 15 years) before he finally finds the right buyer seeking that exact thing and willing to pay all he is asking.

Businessman Two guy prices it reasonably and moves it within six months, his markup is only half of Businessman One.  Who comes out ahead?

Businessman One thinks he did twice as well, and that patience is the key to his success.  But he does not understand the opportunity costs.  His capital has been tied up for years and paid no current income or interest.  It has also tied up a portion of the store, so there is a positive cost associated with holding this item; a portion of the rent, utilities, labor to man the store -- some small share of all of these costs are associated with this shelf space, so if one were to truly account for all costs, there is a negative cash flow each month and each year for the unsold inventory.

Businessman Two used his markup, though lower, to cover a share of his rent, utilities, and to pay himself an income; upon his sale, he used his returned capital to buy another engine, and used that same shelf space to show the second engine; sold it within 6 months; and repeated the process 10 times altogether in five years.  For the same original investment, his cumulative markup is thus ten times Businessman One's markup, and he had ongoing income that he could have used to pay himself; or to cover his overhead; or to invest in more goods to sell, to grow the business.

So when you see the same dusty, overpriced NOS items in a store, feel sorry for the shop owner, because he doesn't understand business.  The problem is not the merchandise, but the price.

Those same NOS items, priced reasonably, will sell and be enjoyed by someone who either does not have $1,000 to spend on a new engine, and would otherwise be priced out of the hobby; or by someone who does have the money, but would rather spend a fraction of the money on something a few years old, or even a few decades old, enjoy it well, and enjoy it all the more because he put the difference in his kid's or grandkid's college fund.

David

@raising4daughters posted:

It's actually worse than that when it comes to motive power.  Here's a 1997 Camry with 90s era technology....no air bags, AM/FM with a cassette tape player, and a whopping 20 MPG.  Now, for a few hundred more, you can get a 2018, but who'd want all those safety features or better technology, and you won't even get a cassette player.

My daily driver is a '69 Chevy pickup.   I would happily pay MSRP for a new one.

I have interest at all in anything will the newer technology.

Unfortunately, Chevy cannot build a business on customers like me--and there are more of us than you think.

@palallin posted:

My daily driver is a '69 Chevy pickup.   I would happily pay MSRP for a new one.

I have interest at all in anything will the newer technology.

Unfortunately, Chevy cannot build a business on customers like me--and there are more of us than you think.

But we pay more for new trains than the 69 pickup was a Msrp. Lol

@palallin posted:

My daily driver is a '69 Chevy pickup.   I would happily pay MSRP for a new one.

I have interest at all in anything will the newer technology.

Unfortunately, Chevy cannot build a business on customers like me--and there are more of us than you think.

I'd equate your '69 Chevy pickup to postwar era engines.....another era, real collectability value, nostalgia, etc.  It's like comparing my 1960 4-4-0 General with a modern Lionchief version. The classic stands up.

I'm more referring to early modern era engines being priced similar to late modern equivalents. At one time, their tech was worth the price, but now they're obsolete and worth no more than half original MSRP.

Just today, I saw a Rail King Berk with PS1 from 1996 listed for $349.99.  That's $50 (16%) MORE than original MSRP for 25 y/o outdated technology. I recently bought a Rail King Berk with warranty and PS3 for 10% more than what that seller wants. 

Comparing the idea of paying MSRP from 50+ years ago to the concept of paying MSRP for a Lionel or MTH NOS item from 15-20 years ago misses the point.  Not only has inflation slowed down in recent years, we also have the ability to find a substitute item that offers many improvements, usually for about the same price. 

Only two ways I see this stuff selling.

1.  It's an item you have been searching years for and now that the hunt is over you are willing to pay for it.

2.  Item's are greatly reduced when you local hobby shop goes out of business.

Otherwise I can't see anyone paying full retail for items that are 20+ years old.

I don't like the term NOS.  It's NOT new, if anything it's old, unused/unsold stock, but it's NOT NEW.  If it wasn't bought in the year of production/release we shouldn't be calling it new.

With that said, I can think of only 1 engine I've bought that was new, as in recently produced and that was a 3rd Rail E7 I pre-ordered.  All other engines (other than my SAL motorcar 2028 which was 3D printed new) were bought used or old/unused.

My freight cars are 1/3 new, 1/3 used, and 1/3 old/unused, same with passenger cars.

I agree with Bob. The plastic used in stock sitting on the shelves for years deteriorates as does the lube used on the gear trains. The electronics become out of date and fresh parts not available.

AND sadly their manufacturers die (Ebay ?) as the younger generation are not interested.

@WashRR posted:

I agree with Bob. The plastic used in stock sitting on the shelves for years deteriorates as does the lube used on the gear trains. The electronics become out of date and fresh parts not available.

AND sadly their manufacturers die (Ebay ?) as the younger generation are not interested.

True.  There's "infant mortality" in electronics, it might die as soon as it's fired up or it may last years.  With it sitting on a shelf for untold number of years, I would expect something to not be pristine.  Paint fades as well if left out under certain types of lighting.

If bought from a LHS, get them to run it for a few minutes, if thru the mail you're on your own.  I'm willing to take my chances and have not been disappointed yet.

Way back in 1963 a department store was selling American Flyer rolling stock NIB for .67cents each!

I bought all they had and in the last few years been selling it on ebay for $100 to $130 each

This was all in crisp new boxes

Old stuff will sell !

Gunny

Many retail store owners fall in love with Inventory.  You see a lot of dead inventory when you make a customer visit.  There is an interesting ratio: DSI Day Sales Inventory   that we use to calculate what the real turn on Inventory is.  If you have been paying utilities, rent, insurance and other Operating Expenses on a locomotive which has been sitting on your shelf for 5 years and you want $450 for it as your Cost was $300, we consider it "iron" and a complete write off.  The highly successful hobby dealers simply blow the dead inventory  out and take the mark down. You get a customer with a roll of cash, you can liquidate plenty of dead stock and generate CASH FLOW.  Remember Cash is Talking while Dead Inventory is costing  you MONEY.

@Milt Dardis posted:

Many retail store owners fall in love with Inventory.  You see a lot of dead inventory when you make a customer visit.  There is an interesting ratio: DSI Day Sales Inventory   that we use to calculate what the real turn on Inventory is.  If you have been paying utilities, rent, insurance and other Operating Expenses on a locomotive which has been sitting on your shelf for 5 years and you want $450 for it as your Cost was $300, we consider it "iron" and a complete write off.  The highly successful hobby dealers simply blow the dead inventory  out and take the mark down. You get a customer with a roll of cash, you can liquidate plenty of dead stock and generate CASH FLOW.  Remember Cash is Talking while Dead Inventory is costing  you MONEY.

And future business.

Case in point, years ago, 70s and 80s,  when no new developments were being done in the hobby or lots of other items for that matter, this model would work. But now in keeping up with technology doubling every 18 ~ 24 months, most people want the latest, best, newest, spiffy items AND at the same price point as last years models.  After awhile, people looking for the new items, will stop coming in the door.

I had an interesting firsthand discussion with small LHS owner one later afternoon about his inventory. Never seen a car in the parking lot when I happened to go by.  This happened around 2010,  I was just getting back into the hobby. I asked about X, nope, ok how about Y, no idea what I was talking about. Ok, this item here was 2 times the going price as online, no tax either;  um can you do a little better, NOPE. I could see he was irritated, attitude was "I deserve to get this much" or "Look, I HAVE to sell it at this price cause I have overhead". Ok, I understand.

Spent total of 30 minutes in store, didn't buy anything, never went back. Maybe less than year, he closed up for good.  I think lots of other folks can relate to this. My view of the moral of this story; keep up with the changing market / business conditions. Today, you can see brick and mortar shops that have a strong online presence, especially actual on-line sale, payments and shipping, that turn the inventory, carry the latest and greatest for folks wanting it and they seem to have embraced this new business model.

The train hobby attracts strange retailers.  If it were me, I wouldn't want my money tied up on the shelf.  I would incrementally lower the price until it moved.  Not a fan of BTO from the customer perspective, but it helps some of these people manage inventory.

@romiller49 posted:

Pete, I sure don’t see it as a dying hobby at all. The big dealers appear to be doing pretty good. Yes, many small shops have closed mostly because of retirement age  or no one willing to buy them out. Most small shops I’ve been to have very limited inventory, no website and no one trying to sell me anything. You are not going to stay in business trying to sell trains as we did in the post war days. Just my opinion.
Also, I’m sure the successful dealers know what they can and cannot do with old inventories.

Rod, I think what you say is generally true. However, I believe there are exceptions. For instance, I believe a LHS can sell trains the way it was done in the Post war days if it is located in an affluent area, it's the only LHS in that area (no competition), the LHS purchases collections (probably from widows whose husbands were train collectors) and there happen to be collectors with big bucks who aggressively buy trains and regularly visit the store.

The reason I believe such exceptions exist is because I think my LHS is such an exception, but I could be wrong. Arnold

New old stock Lionel has been selling for 100 years plus!, K-line, Weaver, Williams etc. all enjoy sales. MTH products are well made and will continue to be a part of the hobby a long time !

@MR_P posted:

And future business.

Case in point, years ago, 70s and 80s,  when no new developments were being done in the hobby or lots of other items for that matter, this model would work. But now in keeping up with technology doubling every 18 ~ 24 months, most people want the latest, best, newest, spiffy items AND at the same price point as last years models.  After awhile, people looking for the new items, will stop coming in the door.

I had an interesting firsthand discussion with small LHS owner one later afternoon about his inventory. Never seen a car in the parking lot when I happened to go by.  This happened around 2010,  I was just getting back into the hobby. I asked about X, nope, ok how about Y, no idea what I was talking about. Ok, this item here was 2 times the going price as online, no tax either;  um can you do a little better, NOPE. I could see he was irritated, attitude was "I deserve to get this much" or "Look, I HAVE to sell it at this price cause I have overhead". Ok, I understand.

Spent total of 30 minutes in store, didn't buy anything, never went back. Maybe less than year, he closed up for good.  I think lots of other folks can relate to this. My view of the moral of this story; keep up with the changing market / business conditions. Today, you can see brick and mortar shops that have a strong online presence, especially actual on-line sale, payments and shipping, that turn the inventory, carry the latest and greatest for folks wanting it and they seem to have embraced this new business model.

Just because Lionel was doing nothing in the 70's and 80's does not mean other small manufacturers were doing nothing.  There was new product coming on the market if you would care to do a little history work.

@CLIFFORD posted:

New old stock Lionel has been selling for 100 years plus!, K-line, Weaver, Williams etc. all enjoy sales. MTH products are well made and will continue to be a part of the hobby a long time !

No one has a problem with NOS items, just the prices.

Brendan

We're talking inventory turnover here.  Very interesting topic!   Look it up in Wikipedia.  Under the bullet-points in the Application in Business section it sums it up beautifully. 

My take for our hobby is Lionel's 'boom' years of the '50's was a match made in heaven - incredible demand and huge inventory turnover.  We all know the prices from then too were a stretch for many.  Heck, in the early '70's I remember our local hobby store's prices to be costly for Lionel items.  But guess what?  We scrimped, saved and relished our purchases - even then, some of the store items had dust on them.

I digress - NOS is the topic.  Now that I've returned to the hobby in a big way (in my world anyway), if someone has a line on older NOS TMCC items for slashed prices look me up!  :-)     I didn't realize just how much fun CAB 1 and a Legacy remote was.  If y'all can believe it, I just got into this old CAB 1 technology.  This desire even led me to purchase some Lionchief items.  So much fun!

@Brendan posted:

No one has a problem with NOS items, just the prices.

Brendan

Especially on 1990 and newer engines which are now effectively rolling computers. Who wants an engine with Locosounds, PS1, or RS 2.5 at full MSRP today unless it's a rare road name or model? Like buying a 386 PC at Best Buy for $1,500 because that's what it cost in 1995.

You can sell anything for the right price to the right customer at the right time--and if you have the right attitude toward the customer and the market. The question is how long you are willing to wait for the right customer and right time to coincide--or spend money and time finding that customer. If you choose to hold onto an item that is priced unattractively to 99.999% of your customers and wait, then I hope the Lord has granted you more years than Methusalah!

I wonder if some train retailers go into business with a sort of cognitive dissonance about selling. On the one hand, they want to move merchandise, make money, and sell to customers, but, on the flip side, thinking like a collector they get caught in the trap that there is an absolute value to the trains  so they choose to hold on the price to realize that perceived value--which is by no means absolute or unchanging.