The Hobby Business, 'Frustration 101'

After 3 years from produced the warranty is no longer in effect. I think this applies to MTH as well.

Seems to me that most of the profit potential is not in the new stuff but rather in Post and Pre War Lionel and other manufacturers products.

Example: I was in my local hobby shop a couple of years ago when an older man walks in with a box of trains. The engine was a Lionel 520, fairly common item, along with about six pieces of rolling stock. The owner of the shop looked at the items and said he'd give the guy $25.00 for the whole lot. The guy took it.

I mentioned that when I was a kid my father had a 520 that we ran around the tree at Christmas. The owner turned to me and offered the engine to me for $100. Needless to say I did not buy it.

That is where the real profit it.

I'd guess that either he still has that 520, or he cut the price significantly to sell it.

Our largest model railroad shop sells both new and used trains. IMHO, his prices on used equipment are reasonable.
I was friendly with the previous owner of the store. He told me his bread and butter was HO.

Not at all surprised to hear that.  And that's VERY consistent with many a business owner I've known personally.  The guys who own the land on which several stores exist often find the money coming in from rents/leases help "fund" a business that might not otherwise be making ends meet on its own merits.   They just have the luxury of thinking "big picture".

The Western Depot very often sells stuff at MSRP, with only occasional sales on a small percentage of its inventory.  When the rest of the country's dealers sell through their inventory -- which may also include Lionel-to-dealer blowout specials, toy train enthusiasts then resort to paying MSRP if they really still want the item(s) that can be sourced from The Western Depot.  Sometimes that may not occur for 2+ years from the time an item first hits the street.    It's definitely not a business model for the faint-at-heart or the guy looking to make a living selling trains.

Most train shop owners who rely on their toy train revenues are MUCH more motivated to move product along quickly.  In fact, they almost NEED to sell items quickly if they want to avoid the scenario that the OP is encountering, when blow-outs to select dealers can be had at a lower street price than the internal cost a small mom-and-pop LHS may have paid for the item several months ago.

Tough business all around, and it all depends on a how "big a picture" one has to work with.

David

The 'blow out' vendors also have their own problems. People can get used to getting items consistenly from a vendor dealing in bulk and good prices, only to find one day that the well has run dry.

Anyone into On30 knows this, there's a well-known eBay vendor that had great prices on Bachmann On30 stuff. Many On30 modellers went through them.

In the last month or so, the well ran dry apparently. What used to be listings sometimes almost at 3-digits levels, they only have a few 'buy it now' listings for common items, at about retail. I can't say the cause, but when this happens, this is when the local hobby shop probably does best. You've lost the only benefit you ever got off the discounters; stock and price. Then, you see the benefit of the local hobby place.

Frankly, I'd rather buy local and pay a little more. But that's just me. Most of the good model train places in my region have gone under. There's only half a dozen that I'd go to now in a 2-state area, there were many more just 5 years ago...

I work at one of my LHS and every year the big manufacturer puts items on sale for less than we can buy them from form our distributor. That manufacturers issue is they eliminate their dealers and only sell to about 10 people including the big distributors. If they need to blow stuff out they have to do it to the retail customers and screw over the local dealers. MTH actually sends out sale listings frequently to dealers with some good buys that I see get passed on to the end user. This is the way to go

I've always felt this is one of the big obstacles to growing this hobby.   Some big plusses to local shops:

1) No shipping charges

2) No shipping hassles - Ever had something new with an issue and dealt with returning via the mail? The cost, the hassles, the time wasted...Don't have this problem with a good local shop

3) Can test an item before you take home or they can test it for you before shipping

4) If you don't live close by and you ask they will probably bring with them if displaying at a show (or maybe they belong to a modular club which runs at several local shows a year).

5) Can provide valuable advice on making a layout or graduating to the next level in the hobby

To me the above is worth forgoing a discount.  

Local shops need not be local.  My local hobby shop stopped carrying the brand I primarily collect due in part to the reasons stated in this thread.  This forum lead me to another local hobby shop who provided all the services I listed above.  

To those of you who wish to save a much as possible and deal with stores without a brick and mortar presence I wish you the best of luck.   Just beware that many have policies in place which are decided NOT customer friendly. 

Plus you never know who you might meet and possibly meet new friends in the hobby.

--Greg