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Old 02-12-2008, 02:29 PM   #16
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The economics here are simple, most racer shops do not deal in the volume to be competitive with the online shops for one of three reasons. A lot of the common distributors have very small breaks even for large orders on consumable parts so you can't just say that XYZ online shop sells cheaper because they buy for half the price because most of the time they don't, they just make a smaller margin on more products. 100 tires for $16 is the same as 160 tires for $10 right?

One reason, the shop believes they must make X profit per item and will hold to it even if they are not competitive in the market. This leads them to having $16-$18 foam tires on the wall instead of $10-$12 that the racers buy them for on the internet and then the racers also see other parts at the places they buy from, and remove even more business from the local store.

Second reason, the shop doesn't want to deal in the raw quantity required. Sheldon's hobbies used to cater to the racer and hold races, but they also had (and probably still have) a huge mail order business. The front of the shop was only 1/8th or less of their inventory and they moved product like it was going out of style.

Third reason, large inventory is scary. Most people do not want to order what's hot (new parts, bodies, whatever) and then end up not selling it so they end up understocked like probably half of the shops I've seen in recent years. Again, this leads people to buy online and if you're going to buy one thing, why not two or three.
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Old 02-12-2008, 02:52 PM   #17
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Its a nice idea, but the economics just don't work I think.


Why would they sell something for less then they can?

Cheaper tires at hobbies shops just mean I goto the hobby shop to buy tire instead of buying them online. Maybe doing like Mazda and offering a discount to regular racers could work...but in the end the increase is business from people racing has to be enough to cover the decrees in profits due to the drop in price...it would take a strong drop in price to create a significant increase in peoples race habits...and it would take a whole lot of racing to increase sales to the point where it balances out.

The distributors aren't gonna take a money loss for the greater good of the sport, I just don't think it works in the real world.
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Old 02-12-2008, 03:10 PM   #18
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Default HOBBY SHOPS

I'm not saying not to buy on line. I am saying," Try to spend as much as you can a your local shop." 1 way the help the hobby shop is to bring out new racers. Help the new races and help your hobby. As you can see by all the post here, there is no one answer.
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Old 02-12-2008, 03:52 PM   #19
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Originally Posted by tomkelley View Post
It is my understanding that distributors even though they offer online sales they charge full suggested retail.
Tower Hobbies is a distributor and sells directly to the public. Often, they sell at a price so low, the hobby shops can get product cheaper from the online store than the distributor that runs it. This is unfair in my book.
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Old 02-12-2008, 04:05 PM   #20
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Tower Hobbies is a distributor and sells directly to the public. Often, they sell at a price so low, the hobby shops can get product cheaper from the online store than the distributor that runs it. This is unfair in my book.
Maybe the hobby shops should be buying from tower?

Also, I think some hobby shops have a higher markup. They do get some of the items for very cheap, but because of the low volume, they have to increase the markup. The only way to beat that is to increase the number of buyers. Regardless, I support my LHS 99% of the time even though it hurts (the wallet) sometimes.
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Old 02-12-2008, 05:47 PM   #21
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Remember that the hobby shops believe they need a large markup (which they may due to overhead)

I know the foam tire market well so I can quote prices here so you guys can see them. Car kits sold online are usually maybe $40 more than cost while parts usually carry something around 50% margin.

Prices vary, but shops buy Kyosho tires for $9/pair or less and sell for $15-17
They buy Jaco for $7-9 (as little as $4.50 I heard once but I've never seen it) and sell for $15-$18.

I believe kyosho has a lock on the price limiting the shop, but if you look at the other brand for say $8, and selling for $11 that is $3 profit per pair and competing with online companies with the luxury of picking it up right there on the spot and keeping the racer at the store.

Lets say the shop needs to make $500 profit on tires per month to stay in business.
at $15/pair, buying at $8 that is about 72 pairs of tires.
at $11/pair, buying at $8 that is something around 167 pairs of tires BUT more racers will buy at $11 than $15 and it will bring in side business. The racer says I'm already spending $100 in tires today, I need body clips and some shock springs or maybe even a servo or radio.. The benefits are huge, but most shops want to stick to that large profit margin.
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Old 02-13-2008, 06:39 AM   #22
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Originally Posted by Unregistered View Post
Distributors should not be online hobby shops. This a big part of the problem because they get the wholesale product much cheaper than what they sell to a hobby shop.

The distributor/online stores have an unfair advantage in the marketplace IMO.
DING! DING! DING! DING!

Absolutely agree. This is one of the biggest problems that most brick and mortar hobby shops face. When the supplier that they use has an online shop selling to the public for just about the same 'wholesale' price they sell to the hobby shops, it's just about impossible for a hobby shop to charge what they really need to keep the doors open.

This is why most manufacturers won't sell their product directly to the public for anything other than MSRP. This allows their distribution chains to get the product spread around and gives the retail locations a fair opportunity to make a reasonable profit.


I buy from my local track hobby shop. The ONLY time I buy online is when they can't get it, or they can't get it quickly enough and I'm in a big pinch. In the last 15 years, I've ordered from Tower only once. And oddly enough, that is because I needed a motor and Great Planes was telling my shop that they were backordered.
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Old 02-13-2008, 08:23 AM   #23
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You may have missed out on about 100 threads about this.
What I have gathered is the fact SHOPS are going to have to sharpen there pencils, its all fair in business and we the consumer............. "benefit".

The sad truth is that SHOPS are no longer needed and it will hurt any shop with an only RC related stock for there base of selling.

Hobby town can survive but only in a small store. And or if the corporate chain will show some back bone they could open mega tracks.
It may be the hobby shops last line of defense.
I think it would be a major flop.?

As racers we need a place to crash and bash so the traks can adjust race fees accordingly and the parts sales they pic up from the "No longer hobby shops will be a perk on race night and committed patrons.

Just some thing to chew on.

Last edited by UN4RACING; 02-13-2008 at 08:26 PM.
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Old 02-13-2008, 09:37 AM   #24
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Default Setting the Record Straight.

I just want to mention that this thread has gone in a completely different direction than I had intended.

My point was would'nt it be great (and make good sense) if Manufactures and Distributors started an insentive program (via discounting race realted goods) for place opperating legit tracks. This plan would help keep racing going, help companies thrive, and in the end help the consumers also.

Another thread where people grip about male order (which is not going away) won't help anyone.
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Old 02-13-2008, 09:50 PM   #25
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Originally Posted by mrrcguy View Post
I just want to mention that this thread has gone in a completely different direction than I had intended.

My point was would'nt it be great (and make good sense) if Manufactures and Distributors started an insentive program (via discounting race realted goods) for place opperating legit tracks. This plan would help keep racing going, help companies thrive, and in the end help the consumers also.

Another thread where people grip about male order (which is not going away) won't help anyone.
That would be great.
Yet what you are proposing would result in higher prices to the consumer.
I want my product cheap and the closer you can get to buying from a manufacturer the cheaper.

The tracks need the support of the racer, and the support they get from them as far as purchases go is a perk.

And lower costs to the Tracks and or shops will not mean they will lower there price.
Think about it brushed motors are cheaper than 10 years ago and still the shops are selling them as if there is no price war at all.
If the shops are lucky the tracks will let them keep the basher kit sales.?

We drive the market and then the market reacts and takes care of it self.
Winner takes it all.

The tracks have already found a way to survive by bare boning there cost to open and maintain a track. Thats commitment to the sport of RC racing and the patrons.

I like the way the future is looking.
We are ever so close to renaming our recreational hobby...."recreational Sport". I think we are getting there.

At least we are on the right path, pro shops sitting on site with a track.
If the tracks could be out front like the shops we could then be more recognized as a sport. Rather a hobby. The only way is to be able to capture the sales of the shops. Maybe then the tracks could step out.

There are more branches of small tracks scattered around tucked away than ever. It looks like theres no racing going on but there is. The groups are smaller is all.

RC racing is alive and well.
Just ask the internet.
If the tracks were to sell at there cost and only charge for racing and practicing.
WHAT WOULD HAPPEN TO INTERNET SALES.?
I think they would get cheaper.? And even at that the one stop shop any thing you want internet store may be to strong to win over. The internet has conquered supply and demand.
The tracks are the back bone of the racer.
Racers control the market. With out the track, no back bone.
Support your local track what ever your racing. I think its to late for the shops at any cost.

I'm far from being the Wizard. Just trying to be.
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Old 02-13-2008, 11:10 PM   #26
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Quote:
Originally Posted by mrrcguy View Post
I just want to mention that this thread has gone in a completely different direction than I had intended.

My point was would'nt it be great (and make good sense) if Manufactures and Distributors started an insentive program (via discounting race realted goods) for place opperating legit tracks. This plan would help keep racing going, help companies thrive, and in the end help the consumers also.

Another thread where people grip about male order (which is not going away) won't help anyone.
Maybe the manufactures... but the Distributors doing this... Fat chance... They do not want to mess with 2% of the business when they have to investest 10% to make it happen... or even as low as 4%... The bottom line is only 2% of R/C sold is racing... so 98% is where the real business is focused.. Our 2% is nothing to the big boys... Just ask Orion on the 4800 Lipo... how many sold to racers compared to bashing...

Sorry.....

What mite be better is for companies like AE (sorry to pick your name) to sell to both directly, the LHS and the Distributors, for the same price... Distributor should understand the LHS is selling mainly to racers, so this should impact them... Now would AE want the collection issue... Maybe, maybe not...
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