Brick and mortar retailers have a number of disadvantages compared to online retailers. They have to pay rent for a suitable space to house and display products and in a location where people will feel comfortable shopping. This means rent per square foot 3 - 6 times what an online retailer can pay in an industrial or small office park.
The brick and mortar retailer has to collect sales tax, something most online retailers are not required to collect.
The brick and mortar retailer needs a number of qualified sales people while an online retailer needs one highly paid ecommerce/computer expert and a few minimum wage warehouse workers.
Then there is the inventory. A brick and mortar store needs to carry enough inventory to fill most of the needs of customers. The dirty little secret for many, if not most, e commerce retailers is they carry virtually no inventory at all. Their online inventory listing is the in stock inventory listing of a half dozen major distribution warehouses and when you place your order, they order it immediately, get it delivered to them the next day and shipped to you the same or following day. All fully automatic!
Because they are now doing more volume than the brick and mortar store, they also get better pricing. That coupled with the fact that their costs are much lower, they can sell for 30% to 50% less than brick and mortar stores.
The reason prices went up in your previous local store has to do with US hobby manufacturers shifting production to China, where labor used to be cheap. With Chinese wages now rising 20% or more per year, prices are climbing rapidly on hobby products. The increased ability of online retailers to use other people's inventory and low operating expenses has allowed them to keep their prices relatively low.
The amazing thing is that there are any local hobby shops left in the US, period.
I'm sorry to hear that Caboose Hobbies appears to be in trouble. It was always the Holy Grail of train stores. They had products no one else had. They had products I had never even heard of. I live over 1,000 miles away, but whenever I was in Denver, I would leave with several hundred dollars charged to my credit card! ETTS somehow seems appropriate.
Michael Allen
Edited 1 time(s). Last edit at 07/15/2016 01:38PM by trainrider47.
