Pre-orders and backorders

Pre-orders and backorders

Or, why can’t I get the item I want—right now?

By Ernest H. Robl

One of the “facts of life” I try to present to beginning model railroaders is that the ordering and purchasing process for model railroad items is not the same as for most other items.

The good aspect is that you don’t need to send young children out of the room during such a discussion; the bad aspect is that this process takes some adaptation on the part of the model railroader.

While what follows is also true to a degree for those modeling U.S. prototype, it is much more relevant to those living in the U.S. and modeling European or other foreign prototype railroads.

Big and small

While model railroading is a big business and the largest manufacturers do millions of dollars (or Euros, or whatever) in business per year, it is also a business of very small production runs. So, unlike purchasing a book or blender from Amazon.com, the item will not always arrive within a few days.

It can be quite frustrating. I count myself among those frustrated by having to wait months to receive an item. But, I also recognize why this is the case.

I received some insights into this in 2001 when I was able to tour the Roco factory in Salzburg, Austria. Years before that, I had also been able to visit the Liliput factory in Vienna, when that company was still based in Austria.

Components

Each model can be made of up of well over a hundred components. (Yes, some related models use many of the same components. Even some visually quite different models may use the same component, such as a circuit board or motor.)

So, doing a production run of a relatively complex model means that before you begin, you have to have adequate supplies of all the components.

But, there are also components you never see. There are special jigs used for the efficient assembly of small components. And these have to be made before the production can begin.

And, while it may look as if no additional hardware would be needed for a new production run of a previously produced model in a new paint scheme, there may actually be new hardware that is needed.

Paint and printing

In a previous Blog, entitled “Progress,” I included a look at the important role of printing in the detailing of models. Yes, most of the lettering and many of the small decorative details are actually printed on the model, even on curved surfaces.

But, large color surfaces are still spray painted (airbrushed — often still by hand). And, where you have multiple large surfaces of different colors, you need to mask the model during painting. These masks are made of metal and have to fit very precisely. In many ways, they are identical to the molds in which the plastic body of a model is cast — except that they only cover part of the model shell.

The consequences

So, production runs take a lot of planning – in addition to whatever research is needed on the prototype and on interest by potential purchasers.

Model railroad manufacturers typically announce new models a year in advance – the planning and printing of catalogs needs lead time, too – but sometimes as much as two or more years in advance. The latter isn’t planned; it just happens to work out that way.

There may be unanticipated problems during development or production of a model. And, if there are such delays, certain models get priority. The release of a model – even an Era II or III model – may be tied in to current events. For contemporary models, that may include the unveiling of a new paint scheme. For models of older equipment, that may include special anniversaries associated with the prototype or an event at a museum where an example of the prototype is housed.

As these events generate a lot of publicity for the model – sometimes models from the first production run are presented to dignitaries visiting these events – such models necessarily get a high priority for timely completion.

(Unless you follow railroad and modeling events in a particular country very closely, you may not be aware of the tie-in of a particular model to these events.)

Other complicating factors are the release of sets that consist of a locomotive and matching cars. Sometimes these sets are sold together; at other times, they are offered individually, but at the same time. Again, to keep customers happy, priority is given to having all matching items available at the same time.

Yet another complicating factor for timely production of models of current equipment is that the prototype may actually change before the model becomes available. A paint scheme or some other part of the equipment changes, leading to subsequent revisions by the model manufacturer.

The bottom line is that models are typically announced well before their actual availability – and don’t always show up when they were promised.

Limited runs

Most model manufacturers have small margins on many products, meaning that if they produce a large quantity of a particular product and many of these items do not sell relatively quickly, they do not make money on these products. (It costs money to warehouse inventory, which manufacturers try to keep to a minimum.)

So, a large part of the business of manufacturing model railroad items consists of trying to predict how many copies of a particular item are likely to sell. This projection is based in part on how popular a particular prototype is among railfans and how many modelers focus on that particular railroad and era.

Of course, if a model requires entirely new tooling for molds and other major preparations, the manufacturer will also consider whether future variations with different paint schemes or lettering or slightly different applied exterior details (for example for the same model in different eras) make sense and would lead to additional sales.

Manufacturers also know that some models will not sell in huge numbers. Yet, they do not want to pass up these possible sales, particularly if a model can be produced largely with existing toolings.

In this case, the manufacturers announce a limited run that is largely based on pre-orders. In other words, the manufacturer does not begin the production run until he knows how many orders have been placed for this particular item – and then that manufacturer only produces enough copies of that model to fill those orders. If you miss the ordering time window, you are unlikely to find the item in stock at a retailer.

If you see an item announced as a “limited run,” that’s an automatic flag alerting you that you will have a limited time within which to place your order to get this item – even if the actual availability of the item is schedule for many months later.

Not all limited runs are announced as such. So, if a manufacturer announces a model that you really, really want, it’s best to order it when it is announced – in order not to be disappointed when you order it later and find it is no longer available.

Retailers try to help you out here by offering you pre-order discounts (and not charging you until the model ships). This means that the retailer will not incur any warehousing costs as the model will sell as soon as it arrives.

Additional factors

Retailers, for good business reasons, have minimum shipping and handling costs for even small inexpensive items – making it illogical to order a $2.00 item by itself when the shipping costs would be $10.00. So, manufacturers also need sufficiently large orders from retailers/importers to offer them good discounts and advantageous shipping costs.

Yes, retailers will try to keep many standard items, such as track components and small accessories (that are era and railroad independent) in stock. But, if they run out of one of these items, it does not make sense to order it by itself from the manufacturer. Instead, the order to replenish that item will be combined with the next larger order from that manufacturer.

The larger the retailer/importer, the more frequently he is likely to place large orders with the manufacturer, so the more likely you are able to get these small items quickly. That, of course, also applies to larger items, such new model locomotives.

The bottom line

The bottom line is that in the model railroading world, particularly for someone modeling European railroads from outside Europe, you often have to live a year or more ahead in planning and making your purchases – and then wait for those purchases to arrive.

Yes, it’s frustrating having to wait, but there’s also additional joy in having a long-anticipated item finally arrive.

###ehr###

2 Responses to Pre-orders and backorders

  1. Rey P. says:

    Great article Ernest!!

  2. Gordon P says:

    Well written, and a good explanation of the process! I feel a great deal of sympathy for Rey & Roman, caught between frustrated customers and dilatory manufacturers. At the 2015 Toy Fair Kato/HobbyTrain announced renewed production of Rail Jet passenger cars & control cab. I ordered in June, the first day that orders were being taken. Still waiting. Sigh. There is not a darn thing that Reynauld’s can do about it, but it sure is frustrating – and scary not to see it offered on the manufacturer’s web site anymore!

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