By Rick Henderson LSOL.com Associate Editor

Author  Bio Walthers primary purpose is NOT to sell directly to consumers. Well then, What, Why and Who are they? Read this week's article to find out the answers to these and other questions you may have.

Today it seems that everyone expects a discount on everything in order to consider buying anything. Many people misunderstand the role Walthers Inc., a hobby train manufacturer, wholesaler and distributor, plays in the model train industry.

Walthers primary purpose is not to sell directly to consumers; it is to supply products from over 300 manufacturers to the thousands of hobby shops around the world that are the backbone of the hobby. The fact that you may buy direct from Walthers is an option most wholesalers do not even offer; actually most modelers never hear of all the other wholesalers in the business, and there are quite a few.

In the 1980's, when the economy was in good shape, I managed two different hobby shops in Northern Virginia and ordered from Walthers and other distributors constantly for customers. When selling to a hobby shop, wholesalers do so at a discount, quite often at only 10% above their cost from the manufacturer. The hobby shop can only stay in business for you if they can pay their operating overhead with the profits they receive from selling the item directly to the consumer at close to the manufacturers Suggested Retail Price (MSRP).

The primary reason people even know about Walthers is that they are a manufacturer of some very high quality items in smaller scales and secondarily as a service to the hobby, they produce a catalog of over 200,000 items available from all manufacturers they work with, for customers to select from.

The catalog helps the hobby shop and customer because no hobby shop can carry everything for customers to look at. The "Walthers Catalog's" have been the best resource for many to plan out their hobby goals by knowing what is available and as such, may have been the most effective marketing tool for many manufacturers as free product advertising. Walthers recognizes that not everyone lives close enough to a hobby shop to obtain hobby supplies so they offer the option to order direct, but sell at MSRP so as not to undercut the hobby shops they supply. If they sold below the MSRP, then the hobby shops would not be able to remain in business for you or others to obtain those little additional hobby items such as paint, brushes, X-acto knifes, etc.

Other wholesalers/distributors have come and gone that offered hobby shops some small additional discounts for ordering through them; however, they did not always offer as full of a product line and targeted the high volume items for quick, although short, profit sales. This is also what the discount mail-order houses do and they are only successful in the end if they can sell in large volumes so they can get a larger discount from wholesalers/distributors or directly from manufacturers.

There are two main reasons hobby shops may be unable to receive products from Walthers. One is that most of the time, Walthers is waiting on the manufacturer to send the requested items, especially if it is a low demand, specialty item such as a detail part. Beyond the large manufacturers like Aristo Craft, LGB and USA Trains, most other manufacturers are very small operations and do not mass-produce items and only make items as they are ordered. Even the large companies do "runs" of an item and then switch to another item(s) and may not produce a particular item again for a year, if ever.

The other main reason a hobby shop may not be able to get what they ordered is that, as a retailer, they need to make a minimum order or they need to order items in case lots. Another reason may be financial. Some shops may need to pay off the last order; Walthers will not "run a tab" and retailers need to keep current on their bills. Walthers is not in business to discount to individuals. For over 75 years now, they have been in the business of supplying hobby shops, manufacturing items and helping the hobby to survive.

The announcement that Walthers was selected to distribute Lehmann Gross Bahn (LGB) products in North America illustrates Marklin, Inc., who has been in the hobby business for over 140 years, recognizes that Walthers has the experience, resources and stability to properly handle the LGB product line. Marklin has also announced it is providing everything necessary for Walthers to do warranty and service work on LGB products.

I hope that this clears up some misconceptions and expectations.

Rick Henderson

Walthers

I was questioned by the president of Chicago LGB Club, here was my answer: I started to collect M?rklin probably 40 ? 50 years ago. At that time Reeves Intl. was the US distributor at that time F.A.O. Schwartz in the east was the only large retail store. When I was NYC I would go on a buying spree. Then I found a pharmacy in Lake Forest that had a reasonable inventory. Then M?rklin put Walthers on as a distributor. The service didn?t change much. Then I found that the pharmacy in Lake Forest didn?t get many repair parts from Walthers, because they rarely shipped anything, so they ordered from Germany. Then they started M?rklin USA. I know the local sales rep, Jeff Stimpson. I saw him regularly at Downers Grove Hobbies and in Lake Forest, as wall as in Milwaukee at his office and the fall Trainfest. Parts availability improved with M?rklin USA, but Jeff occasionally complained about problems he had with Germany. Jeff ended up as Sales Manager and brought on many more dealers, as well as being responsible for getting M?rklin to publish their magazine in English. Then as a cost savings M?rklin Germany closed M?rklin USA and went back to Walthers. Since then sales have decreased and service reduced. If you have ever noticed, Walters invests their money in printing a catalog, and then waiting for orders. They don?t seem concerned about inventory or service.

Walter M Sheldon Jr - 12/31/2008 - 07:00

Rick Henderson

M?rklin?s diminished sales in the US has little to do with Walthers and is mostly due to their product line, which is primarily European prototype trains that are not as popular among American modelers as US prototypes are in Europe. I always admired the quality of M?rklin at train shows and now that they have the LGB with its wide variety US prototypes, we may see M?rklin itself expand their 1:32 line to include more US prototypes.

Marklin & Walthers - 12/31/2008 - 09:07

Walthers

I have been in trains since 1968 as a builder and before that as a user(a kid).I don't think any thing has changed for Walthers in all that time. The supply from them at times has seemed either very limited or not at all.No kidding I just had their BIG TRAINS REFERENCE BOOK out looking at it to see if I needed anything .I note that about One Third of the items listed are hard to find.I wonder how the supply they receive from Marklin will be doled out ? are there favoried suppliers? or is it first ordered first shipped?.Like anything the economy is making it very difficult to find and buy items.I just seen a used Bachmann B&O passenger car on E-Bay starting at $ 100.00 is this the way of the hobby if it is, I think that we are in trouble.

Roger - 12/31/2008 - 09:45

Availability at Walthers

As Walter M Sheldon Jr said "Walters invests their money in printing a catalog, and then waiting for orders." I have had local hobby shop owners tell me the same thing. They do publish a pretty catalog, but when I was in HO I rarely was able to get what I wanted out of the catalog. One hobby shop ordered for me a set of machine tools in HO (drill press, lathe, milling machine) every month or so for 2 years and it was never in stock BUT was in 3 consecutive Walthers catalogs. I had another shop order an HOn3 Shay and it wasn't in stock, and I had another hobby shop order some LGB cars that also weren't in stock, but all this stuff WAS in the catalog. The company line may be what you said, but from my experience they rarely have in stock what I want, and that is frustrating! I understand not having something in stock once in a while, but 2 years of ordering and fruitlessly waiting for something I wanted has given me a bad opinion, the other examples just reinforce my opinion. Hopefully they will do better with LGB, or that line is essentially dead in the US.

David A. Maynard - 12/31/2008 - 15:56

Pricing on Hobby equipment

Having been a collector of model trains for over 40 years (Flyer,LGB,and Lionel), I find the present pricing of said material very high. The economy usually drives pricing but as far as hobbies are concerned I have not seen companies dropping pricing to stimulate those of us to spend our hard earned money. Having been in business for over 40 years I for one do not intend to spend my money at present levels. For my part I have been buying stock from the hobby stores going belly up because their margins were too high to start and now they do not have customers. Maybe Walthers need to view what is happening in our economy today. In my business we deal material from the factories at a 10% margin over real cost not a 30%+ mark-up.

Tom Loughridge - 12/31/2008 - 16:00

Big vs small

Having been in the wholesale and retail industry for more years than I wish to count, it should be noted some things will never change and should bew considered business law. As a wholesaler who expects to have the most popular items, you must maintain certain levels on the financial end with manufacturers. For instance, a vendor purchasing several hundred thousand dollars of merchandise per year, will always receive most of what they order. A small "once and while" vendor will not received the "hot" items until they raise the bar order wise (or fill up on hard to sell merchandise). This forces consumers to purchase from the biggest who also charge the highest. Common economics; take care of the big guys who support your operation. I had many small vendors call and request hot items, and when asked what else do you need; they replied "nothing". It is not rocket science to figure out who was shipped the hot items. This merry go round basically establishes msrp or as some say, price fixing. It is not uncommon to be "spanked" by manufacturers for discounting items, orders get "lost" or misplaced as a reminder. The larger stores had a bit of leverage, but in the long run, the consumer must pay the long dollar to get what they want. Remember to get the "hot" items you must also purchase the "not so hot" materials, which boosts and enhances the hot item costs. So...now you pay high prices for the hot item and must take on additional stock that you really don't need and can't sell. Welcome to the retail world of NO DISCOUNTS. You can not stay in business on 15%-20% mark up, overhead will eat you alive. Everyone is cutting back, dismal holiday sales paint a picture of "bad rail" ahead.

Chuck Weigand - 01/04/2009 - 09:01

Top of Page