Hattons Model Railways to close

[br-nse-fan]

I've begun to receive my final order from Hattons.. and this is where I am having to... shall we say... question how things were being done?

 

Granted, this order was over 100 items, but thus far I have received five(!) parcels from Hattons over the past week, but have only received a little more than a third of the items ordered.

The first parcel had 4 EFE buses.  The 2nd parcel had 8(?) Oxford cars and a Base Toys BR lorry.  The next three parcels arrived yesterday, and again..  they were all small/medium sized packages having only a smallish number of items... 5 more EFE buses, ten 4 wheel Bachmann wagons and the last one with some Oxford buses and some packages of Bachmann NEM couplers.

 

A couple weeks ago I received a single package from Kernow, weighing less than the package with 5 buses, and it cost me £45 to ship.  There is no way Hattons could be shipping the volume they have been to me for the £38 that I paid.

[Steamport Southport]

6 minutes ago, br-nse-fan said:

I've begun to receive my final order from Hattons.. and this is where I am having to... shall we say... question how things were being done?

 

Granted, this order was over 100 items, but thus far I have received five(!) parcels from Hattons over the past week, but have only received a little more than a third of the items ordered.

The first parcel had 4 EFE buses.  The 2nd parcel had 8(?) Oxford cars and a Base Toys BR lorry.  The next three parcels arrived yesterday, and again..  they were all small/medium sized packages having only a smallish number of items... 5 more EFE buses, ten 4 wheel Bachmann wagons and the last one with some Oxford buses and some packages of Bachmann NEM couplers.

 

A couple weeks ago I received a single package from Kernow, weighing less than the package with 5 buses, and it cost me £45 to ship.  There is no way Hattons could be shipping the volume they have been to me for the £38 that I paid.

 

Hattons would have had a deal with the courier like many other large distributors do.

 

What you are paying isn't what they are paying. How do you think those online booksellers can sell you books for cheaper than what the postage would be?

 

 

Jason

[andyman7]

1 hour ago, Steamport Southport said:

 

Hattons would have had a deal with the courier like many other large distributors do.

 

What you are paying isn't what they are paying. How do you think those online booksellers can sell you books for cheaper than what the postage would be?

 

 

Jason

Yes, but the comparison is with another business (Kernow) which suggests that even at business rate the Hattons charges weren't sustainable

[Colin_McLeod]

2 hours ago, br-nse-fan said:

I've begun to receive my final order from Hattons.. and this is where I am having to... shall we say... question how things were being done?

 

Granted, this order was over 100 items, but thus far I have received five(!) parcels from Hattons over the past week, but have only received a little more than a third of the items ordered.

The first parcel had 4 EFE buses.  The 2nd parcel had 8(?) Oxford cars and a Base Toys BR lorry.  The next three parcels arrived yesterday, and again..  they were all small/medium sized packages having only a smallish number of items... 5 more EFE buses, ten 4 wheel Bachmann wagons and the last one with some Oxford buses and some packages of Bachmann NEM couplers.

 

A couple weeks ago I received a single package from Kernow, weighing less than the package with 5 buses, and it cost me £45 to ship.  There is no way Hattons could be shipping the volume they have been to me for the £38 that I paid.

Were these all separate orders or did you use the trunk facility?

[Morgenergy]

I managed to grab one of those kitbuilt Class 17s the evening before the deadline. Arrived today, it's an interesting thing. I opted for the non-runner with loose wires as it was cheaper and I planned to wire it for DCC anyway.

 

'Twas my only ever package from Hattons; I feared I wouldn't have a chance to receive one. Being something I was after - and missed out on via eBay - is a bonus. I can now say ''that's a Hattons job'' if somebody asks about it.

 

RIP indeed.

[Gridiron]

I don't think the problem was the courier or postage costs which would have been easily fixed by simply increasing the charge in their software to reflect the actual cost plus a margin to cover the packing and in the case of overseas shipments compliance. In fact in the Hattons statement on their website they inform

 

"Increased cost of compliance has become a large factor. Brexit, GST and other operational costs of running an international business have all increased dramatically over the past few years."  

 

This compliance issue could have a massive impact on the business, take for example the issue of the GST. In another thread Hattons to charge local taxes on overseas purchases there is a quote for Tom at Hattons from November/December last year as follows.

 

"There appears to be a slight misunderstanding regarding when GST should and should not be charged.

 

For orders under $1000, the merchant is responsible for collecting GST and paying it to the Australian Government.

For orders over $1000, the merchant is NOT required to collect the GST as this will be done at the border.

 

https://www.ato.gov.au/businesses-and-organisations/international-tax-for-business/gst-on-imported-goods-and-services/gst-on-low-value-imported-goods

 

We have been required to collect GST since 2018 and have effectively subsidised customers up to this point as we have not been charging it, this is no longer sustainable for us to do so."

 

This statement admits that for five years they have subsidised the GST which is 10% of the value on all orders up to A$ 1000.00 (about GBP500.00) shipped to Australia alone. But it does not end there. I am assuming from the comments expressed in this thread and elsewhere the majority of these orders were sent by a courier service which means each shipment would attract a clearance charge and a fee for paying the GST, so that 10% is now suddenly edging up to a considerably higher percentage of the value of the sale.  

 

The Hattons closure statement also refers to Brexit, and here it's worth looking at their website page for EU customers which explains how the system operates, https://www.hattons.co.uk/list/eventdetails?eventid=113

 

Thus in Belgium, France, Germany, Ireland (Republic of), Italy, Netherlands (Holland) and Spain (mainland) they went to the expense of registering an entity to pay the VAT on the import shipments to these countries allowing them to recover the VAT in full irrespective of the value of the order. However, for all the remaining EU countries the buyer was responsible for the local clearance and VAT when the value is over EUR150.00 with the VAT being refunded by Hattons presumably the day after despatch.

 

The problem for Hattons would be keeping up to date with all these global customs regulations which is very often not just a question of paying the VAT or GST and clearance fees, but also ensuring the goods comply with local labelling regulations

which products intended for the UK market may not carry. Then there is all the additional administration in providing the the necessary paperwork and data for the UK export declaration and the destination country declaration, plus the additional management of the accounting of the invoices being  received from the courier companies possibly weeks after the shipment was despatched. If thirty percent of their business was to overseas customers even a small number of despatches every day would likely require extra resource which is going to add to the overheads with the inevitable result of affecting the bottom line.

 

 

 

 

 

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[GWR-fan]

3 hours ago, br-nse-fan said:

I've begun to receive my final order from Hattons.. and this is where I am having to... shall we say... question how things were being done?

 

Granted, this order was over 100 items, but thus far I have received five(!) parcels from Hattons over the past week, but have only received a little more than a third of the items ordered.

.................................................................

 

For several years now I have been receiving regular shipments in the 6 - 8 kg range via DHL Express and trunk packages were never separated.  Possibly the store has run out of larger packing boxes and is using what is onhand.  However, not very cost effective.

 

Normally I opted for DHL Express for shipments to Australia,  but seemingly coinciding with the imminent closure of the store,  a new Royal Mail selection appeared, which,  for packages less than 2kg,  was several British pounds less expensive than previously for the same weight and was tracked. 

[Andy Hayter]

@Gridiron

I am not sure that different labelling and regulations would apply within the EU.  The "CE" mark should cover the entire EU.  Other countries would however have different requirements.

 

I was not however aware that they had registered in 6 EU countries.  I thought it was just Ireland.  As I have previously posted registering a business in the EU was estimated at roughly €25,000 per country per year.  So  6 countries would mean around €150,000 per year - and those costs were based on 2010 prices, so have risen since.  That is one hell of a fixed cost to carry.  

[br-nse-fan]

2 hours ago, Colin_McLeod said:

Were these all separate orders or did you use the trunk facility?

 

The Trunk. I emptied it and ordered it all shipped together, and thus far it's been coming piecemeal over the past week.

[St Enodoc]

10 hours ago, andyman7 said:

the reason everyone abroad loved Hattons was because they were effectively taking a loss on international shipping given the issues of GST, VAT/IOSS payments etc. 

Speaking for myself, the "reason I loved Hattons" was the second-hand side of the business. For new items I use a range of retailers and, as it happens, Hattons was not my preferred supplier.

 

5 hours ago, andyman7 said:

if serving overseas customers can be done profitably and cheaply, why isn't anyone else appearing to be able to do it?

They do, for new items.

[jaym481]

My last order was split as well. I especially thought it odd that the one locomotive I ordered was shipped separately, yet there was more than enough room in the box containing the rest of the order. As for the charges, I suspect they decided that absorbing the postage for the final push was a loss they could take.

[melmerby]

1 hour ago, Andy Hayter said:

@Gridiron

 

I was not however aware that they had registered in 6 EU countries.  I thought it was just Ireland.  As I have previously posted registering a business in the EU was estimated at roughly €25,000 per country per year.  So  6 countries would mean around €150,000 per year - and those costs were based on 2010 prices, so have risen since.  That is one hell of a fixed cost to carry.  

The simple solution, if it was a significant hit on their profit margin, would be to stop selling to overseas completely.

Many companies have done this, both UK & EU

 

A company I had dealt with several times (not model railway related) located in Germany stopped selling to the UK completely.

When I queried it they hinted it was the extra hassle and would not be resuming in the foreseeable future.

Several other companies have done likewise and exclude the UK, whilst still selling to other non EU states.

 

 

[sandwich station]

5 hours ago, andyman7 said:

Brexit, the changes import rules requiring VAT to be paid upfront, GST, the huge increase in overseas shipping charges are all recent events. As you say, why would a business take a regular loss? They put up with it short term but I don't think they could sustain it. Put it another way, if serving overseas customers can be done profitably and cheaply, why isn't anyone else appearing to be able to do it?

 

Rails shipped me a Bachmann 4-BEP which was on offer minus the VAT and no postage charge either.

[andyman7]

27 minutes ago, sandwich station said:

 

Rails shipped me a Bachmann 4-BEP which was on offer minus the VAT and no postage charge either.

But that's because Rails don't do enough business with Australia to have to register for GST. Hattons did, and they had to charge GST to customers down under. So that doesn't particularly encourage anyone else to build a big business in shipping abroad,

[Gridiron]

12 minutes ago, Andy Hayter said:

@Gridiron

I am not sure that different labelling and regulations would apply within the EU.  The "CE" mark should cover the entire EU.  Other countries would however have different requirements.

 

I was not however aware that they had registered in 6 EU countries.  I thought it was just Ireland.  As I have previously posted registering a business in the EU was estimated at roughly €25,000 per country per year.  So  6 countries would mean around €150,000 per year - and those costs were based on 2010 prices, so have risen since.  That is one hell of a fixed cost to carry.  

The legislation requires the distributor to check the product carries the "CE" labelling and that the necessary certifications and assessments have been completed by the supplier which potentially would require Hattons to hold and maintain this information for every product line they exported to the EU. CE marking - GOV.UK (www.gov.uk).

 

That's some interesting numbers but I am guessing they are based on a full entity registration?

 

Under normal circumstances in the EU,  when the import declaration is presented the consumer would be deemed the buyer and thus the importer of record (IOR) and the process would be completed as a private sale, ie a trader without an EORI number (European Organisation Registration Identifier) which is separate from a VAT registration. EU customs rules require the declarant (typically a courier or customs broker) to declare the type of representation, either direct or indirect. Direct representation would involve the IOR providing an instruction to the declarant and would be legally liable for any duty or VAT as well as other EU regulations and would normally be resident in the EU. Under indirect representation the declarant assumes liability for the duty/vat and EU regulations usually on behalf of a third party such as overseas shipper, such as Hattons. Couriers usually operate under simplified customs procedures but the liability remains, and thus the risk which is then reflected in the cost to party it is working for, ie Hattons in the EU States were Hattons are registered for VAT. The Eori registration is also separate to the local equivalent of Companies  House registration in the UK where the Eori number and VAT number are basically the same, albeit for former has three extra digits usually 000.

 

In the UK and EU the accounting of the VAT on the customs declaration is achieved by the declarant stating the VAT number and in the EU a method of payment as VAT is liable at the time of import. Couriers and customs brokers usually are prohibited from using their EORI or VAT number for this purpose as they are not the owner of the goods, so one alternative available to Hattons would be to employ an intermediary known as a fiscal representative to act of their behalf. The fiscal representative  could hold VAT registrations in multiple EU states enabling them to arrange all the EU tax affairs of Hattons including reclaiming that Import VAT and payment of taxes on profits etc, for an agreed fee.  

 

Whilst the present EU customs rules have been in place since 2016 the EU rules on online and distance selling in the EU changed in 2021 so with the additional administration caused by Brexit, it's easy to see how the costs increased steadily in recent years. With other countries now beginning to implement similar rules it's perhaps understandable why Hattons reached the conclusion that their retail model was unsustainable especially if it was also having to fund it's purchases some of which had been on the website for many years. I did notice one item in the sale that I think was taken into stock over ten years ago.  

 

[sandwich station]

42 minutes ago, andyman7 said:

But that's because Rails don't do enough business with Australia to have to register for GST. Hattons did, and they had to charge GST to customers down under. So that doesn't particularly encourage anyone else to build a big business in shipping abroad,

 

I had used Hatton's since about 1984 and from 2000 onwards in Australia and have never been charged GST even on the couple of occasions that they said they were going to start.

[kevinlms]

3 hours ago, melmerby said:

The simple solution, if it was a significant hit on their profit margin, would be to stop selling to overseas completely.

Many companies have done this, both UK & EU

 

A company I had dealt with several times (not model railway related) located in Germany stopped selling to the UK completely.

When I queried it they hinted it was the extra hassle and would not be resuming in the foreseeable future.

Several other companies have done likewise and exclude the UK, whilst still selling to other non EU states.

 

 

So it was Brexit that has finished such trading off. Which also means that non-EU countries are less of a problem.

[kevinlms]

2 hours ago, andyman7 said:

But that's because Rails don't do enough business with Australia to have to register for GST. Hattons did, and they had to charge GST to customers down under. So that doesn't particularly encourage anyone else to build a big business in shipping abroad,

So things might change if ex-Hattons customers start buying from Rails or any other business that gets pushed over the threshold?

[kevinlms]

4 hours ago, andyman7 said:

So that doesn't particularly encourage anyone else to build a big business in shipping abroad,

I doubt that too many businesses set up exclusively to deal with overseas buyers, with the likes of Hattons, it probably just happened that way. Probably on the basis, that overseas customers don't just buy one item at a time, but compile a worthwhile parcel. At least that's the way I did in the 1980s.

[ERIC ALLTORQUE]

Everything to do with this country is bogged down by paperwork shuffling with numerous people needed to do a simple job,the saying is you dont miss something until its gone, well in the next few months a lot of you overseas guys will find out if thats true, everything is changing and not for the better i would guess.

[kevinlms]

24 minutes ago, ERIC ALLTORQUE said:

Everything to do with this country is bogged down by paperwork shuffling with numerous people needed to do a simple job,the saying is you dont miss something until its gone, well in the next few months a lot of you overseas guys will find out if thats true, everything is changing and not for the better i would guess.

Overseas people had nothing to do with the B vote! A severe own goal, that allegedly was going to fix the country.

I'd better not say more!

[GWR-fan]

I do wonder with the closing of Hattons if other stores will be anticipating a "windfall" of new customers.  Seemingly, unlike many others, I basically stuck with the store for almost all my purchases.  I did make the occasional purchase from Rails and Kernow and while the service was excellent at both of these stores,  I preferred Hattons.  With Rails what turned me off was not knowing the cost of postage until after I had been charged for it (twice I was slugged a very expensive courier shipping cost when each time the items ordered could have easily been sent in packages less than 2kg by Royal Mail at roughly half the cost.  With Kernow I was aware of how much postage would be but then I had to estimate the actual weight of a package as the store broke down postage cost as either 1kg or 2kg.  So when adding items to a cart I had to be extremely conservative lest I exceeded the weight range.  As far as I was aware only Hattons actually displayed the weight of each item,  so maximising the amount I could fit within a given weight range was very simple and accurate. 

 

I am reasonably confident that I will not be patronising these other stores with the volume that I have had with Hattons in the past.  Most likely any further purchases will be only an occasional special interest item, if at all.  The closure of the store has highlighted the confidence that I felt buying from the site in the past and while I have the confidence that the other stores will provide a friendly efficient and professional service,  in my mind,  they are not Hattons.

[jjb1970]

I don't think anybody knows the full story of why Hattons decided to close other than those who made the decision. It will almost certainly be down to multiple causal factors.

 

Losing access to Bachmann (a huge part of the UK outline model railway market) and being messed over by the Hornby tier system can't have helped their position. And their traditional deep discount 'stack high, sell cheap in high quantity' was killed off by manufacturers acting against big discounts to help smaller shops and their brand value. They seemed to be carrying a lot of costs too. I think these factors probably counted a lot more than added export costs.

 

On the other hand, there are still plenty of shops offering excellent service and which appear to be doing OK. And many of them serve export customers. Hattons closing is a big loss to the hobby but it's not the end of the hobby and I really don't think we should extrapolate too much to start jumping to conclusions about anything else.

[Ian J.]

8 hours ago, br-nse-fan said:

 

The Trunk. I emptied it and ordered it all shipped together, and thus far it's been coming piecemeal over the past week.

 

I wouldn't mind guessing that they're just trying to clear the decks now, and working through different piles of things as they do so, with whatever delivery materials they have to hand. Being highly efficient in the final days is not going to be top of their agenda.

 

Edit: Just to add, this is sad to see this actually happen. RIP Hattons, it was good knowing you.

Edited February 4 by Ian J.

[johnofwessex]

It seems to me that the obvious losers are going to be British outline modellers abroad which in turn suggests that there is a business opportunity somewhere.

 

Given that many UK suppliers are either owned abroad  = Bachmann or have European brands - Hornby  setting up a EU based shop may be quite straightforward