A New Way to Support Local Hobby Stores

In my case the vendor was from a nearby state.

If all the paint, models and supplies came from one vendor that would be great. For example, Testors doesn't sell Tamiya kits or Ecxel supplies.

What may work is if local shops had online stores that only sold within their local region. That would help keep shipping costs down and help build customer relations with those you can't visit the LHS on a regular basis.

Just a thought.

Danger

That is just it, you hope to have more larger orders than smaller ones to offset the time involved and hope it balances out in the LHS favor.

I know when I have purchased items online from various manufacturers, they in order to set great customer service standards will often drop ship from retailers or fulfillment companies close to the customer. I ordered a flash unit from a company and I received it the next day, as it was shipped from a warehouse/business nearby. Typically these contracted services are paid a fee, or percentage of the sales. It helps them to turn their inventory, but it isn't necessary a cash cow proposition. They still have to get out and lure their own customers the old fashion way...by marketing themselves.

Also shipping costs are passed on to the customer...there is no such thing as free shipping. The shipping is either directly paid by the customer or the fee for it is included in the mark up of the items. That is build into the selling price you and I pay.

Item MSRP: $6.99 Shipping $4.80  net difference $2.19. Cost of the item wholesale $4.19 less cost of postage $2.00 net.  If the retailer used his standard pricing, say 15% off list then his net would be $1.14.  So the price of the shipping needs to be recouped. If not by charging for shipping it has to be added into the prices of the items being sold. They discount less on their most profitable items to gain most if not more of what they don't earn on those that aren't as profitable. Balancing the scales in business isn't necessarily easy.

So when you see a claim that shipping is FREE for orders more than "X" amount, it really isn't you and others are paying for the shipping directly and indirectly.

I see your point Gerald, and you didn't even figure in the cost of shipping.   For a retailer to buy from a company and then pay shipping to sell it to someone in another state may not be the most efficient way.  Maybe they figure they'll get a few extra dollars if they get enough bulk orders?

Dave

Do the math, take the list price of the kit and deduct 30%-40% off to get the LHS cost. Typically a LHS doesn't sell for list prices (though some do) they typically mark the price down 10%-20% to be competitive.

Example:

MSRP Kit: $36.00

Dealer Cost $21.60  40% OFF List

Dealer Selling Price $28.80 ($29.00) 20% OFF List

Net to LHS $7.20 or equal to about an hour of one employee's time.

MSRP Paint: $3.99

Dealer Cost $2.39

No Discount on Selling Price.

Net to LHS $1.60  The store would have to sell 5 bottles of paint to match that of what the kit equaled in labor.

The variable in your question is what are the prices of the items you purchased. The greatest profitability isn't the kits, but the consumables such as paints and cements, items that need to be replaced frequently by consumers as they use them. When a store sells an item and restocks it, it is called a turn. The more turns a product produces the more profitable it is. Store owners need to have products that turn at a minimum of 3x (fair) but 6x or more (is excellent.) This is generally a per year bases. As a hobby shop manager I like to see the paint racks need refilling monthly, with the most popular colors refilling each week.

Sure there will be orders that only have one item, but they are offset by those with multiply items...the goal is to have lots of orders not just a couple per day/week/month or well if it reaches beyond a month things are likely terminal.

For a single bottle of paint I see your point, but suppose I bought 12 bottles of paint, 3 models and supplies?

From the LHS perspective, it isn't profitable, just a means to an end of staying alive a little longer. One bottle of paint per order doesn't offset the costs involved...labor for one. Even at minimum wage it takes 10-15 minutes to process. Given they probably only make a buck profit on the item it doesn't offset the costs.