Hattons Model Railways to close

[andyman7]

Just now, kevinlms said:

ONE reason not THE reason. 

 

If they really weren't charging overseas customers, the true costs, then they only have themselves to blame and not the end buyer. 

I don't think anyone has blamed the end buyers, and as for Hattons,  in terms of their orderly decision to close and the process that they have followed, as far as I can see they have been very responsible in taking accountability for their business.

[JohnR]

4 minutes ago, kevinlms said:

ONE reason not THE reason. 

 

If they really weren't charging overseas customers, the true costs, then they only have themselves to blame and not the end buyer. 

What we can assume is that they considered that it was not possible to pass on these costs and maintain the level of custom to make it worthwhile. But as I said, it was definitely a factor. 

[adb968008]

Hattons was a very multi facit company.., its a totality of exports, domestic new retail, plus self manufacturer and a sizeable second hand market.

 

The only other retailer I see filling all that is Rails, but noteably their second hand medium is ebay.

 

its the sum of the totality, not just the parts.

 

New retail will simply filter across the rest of the retail trade, with some attrition. But I do think its in a slump, and Hattons exit has merely deferred the pain for everyone else… many Hornby, Bachmann customers will have moved on from Hattons a long time ago, the smaller suppliers will have seen some shift at the same time by osmosis… Divvying up Hattons New sales across the nations shops would only be average a few £k per shop uplift, and in i’m guessing many customers will have moved to the big hitters anyway.

 

But I do wonder, with the loss of Hattons, what now for second hand….?
They were a prolific buyer of second hand… those sellers need to find a new buyer, just as much as those Hattons customers need to find a new supplier.

 

Thing is, its the secondhand market where I expect the demand to be, as its cheaper than the inflation affected new trade, and there will be more post covid buyers seeking to drop their excesses... right now I only see ebay as the winner, the manufacturers may be the losers, but not solely down to Hattons, but to the market conditions….  This is what happened in the 1990’s… remember the swapmeet culture that sprang up ?.. Oddly the demise of Warley may promote this locally a bit more too… people will still want to go somewhere…and to add fuel, Swapmeets needed ABGee as wholesale but Hornby cut that off, so indeed swapmeeters could use the s/h supply that may amass too…

The issue is getting the s/h to the international buyer, as many domestic ebayers dont like using international options and an heir apparent to Hattons isnt clear, but the demand is (noted by the volume of overseas buyers in this thread).

 

 

 

 

 

Edited February 4 by adb968008

[Gridiron]

Unless somebody steps up, Ebay looks to be the winner for the secondhand market. As a regular buyer in recent years on Ebay as well as Hattons and certain other traders it never ceases to amaze me the variety of stock that does appear on Ebay and it seems to that very few retailers could afford to offer the variety and volume of stock the platform stocks and that the beauty for the owners of Ebay. The whole concept it that Ebay does not own the stock so does not have all the supplier issues that a manufacturer or distributor incurs running their business let alone the financial gamble of stocking a huge amount of stock, some of which can be slow sellers.

 

With this in mind an observation, my own preference is 00 gauge so I noted this morning that a simple search of UK stock of 00 gauge stock showed by about 78000 items, by early afternoon it had reached 79000 plus items, whilst in the run up to Xmas the same search reached 100000 items. Ok, let's be fair, there is usually a fair amount of junk items, which would never would have appeared on the Hattons website but presumably must have been included in some secondhand purchases. As a veteran of the original Hattons shop, I can remember seeing the same sort of stuff on offer as a bargain somewhere in the shop, along with huge stocks of three rail Hornby Dublo track that never appeared to go down.  Most UK sellers in the secondhand market seem to take a similar view leaving the only source of spares for some items a handful of specialist traders or Ebay, 

 

 

[br-nse-fan]

8 minutes ago, Gridiron said:

Unless somebody steps up, Ebay looks to be the winner for the secondhand market. As a regular buyer in recent years on Ebay as well as Hattons and certain other traders it never ceases to amaze me the variety of stock that does appear on Ebay and it seems to that very few retailers could afford to offer the variety and volume of stock the platform stocks and that the beauty for the owners of Ebay. The whole concept it that Ebay does not own the stock so does not have all the supplier issues that a manufacturer or distributor incurs running their business let alone the financial gamble of stocking a huge amount of stock, some of which can be slow sellers.

 

I will agree, that no retailer could possibly hope to compete with eBay in terms of volume and selection.  The problem is us oversea modelers get absolutely shafted by exorbitant shipping fees, or the seller just not posting overseas in the first place.

Edited February 4 by br-nse-fan
photo borrowed from a FB group I am in

[Dunsignalling]

Two things spring to mind.

 

1. Turnover

 

In the model railway trade, as in all branches of retailing, turnover is king, and everything else hinges upon it. Hatton's sales of new Bachmann product ceased altogether, but I consider that Hornby's placing of the firm into Tier Three would have been much more damaging. It effectively excluded them from the pre-order market, and it was clearly evident from the "New Stock" page of the website that Red Box deliveries in general had been decimated. Such a double whammy might have been overcome over time, but perhaps not in time to halt the decline. 

 

2. International sales.

 

Reading between the lines, I strongly suspect that Hatton's decided to subsidise the true costs of sending goods abroad in order to maintain sales volumes in the face of the above factors. Nobody else showed any willingness to compete for that trade by doing likewise, and expat purchasers became ever more dependent on Hatton's for supplies. if I'm right, that gap is likely to be filled in due course, but the terms will look significantly less attractive.

 

John

Edited February 4 by Dunsignalling

[adb968008]

12 minutes ago, Gridiron said:

Unless somebody steps up, Ebay looks to be the winner for the secondhand market. As a regular buyer in recent years on Ebay as well as Hattons and certain other traders it never ceases to amaze me the variety of stock that does appear on Ebay and it seems to that very few retailers could afford to offer the variety and volume of stock the platform stocks and that the beauty for the owners of Ebay. The whole concept it that Ebay does not own the stock so does not have all the supplier issues that a manufacturer or distributor incurs running their business let alone the financial gamble of stocking a huge amount of stock, some of which can be slow sellers.

 

With this in mind an observation, my own preference is 00 gauge so I noted this morning that a simple search of UK stock of 00 gauge stock showed by about 78000 items, by early afternoon it had reached 79000 plus items, whilst in the run up to Xmas the same search reached 100000 items. Ok, let's be fair, there is usually a fair amount of junk items, which would never would have appeared on the Hattons website but presumably must have been included in some secondhand purchases. As a veteran of the original Hattons shop, I can remember seeing the same sort of stuff on offer as a bargain somewhere in the shop, along with huge stocks of three rail Hornby Dublo track that never appeared to go down.  Most UK sellers in the secondhand market seem to take a similar view leaving the only source of spares for some items a handful of specialist traders or Ebay, 

 

 

Ive been monitoring ebay loads for years, the average in 00 is c100k items, going back a decade. Most I saw was 160k items during covid.

 

What I did note however was the decline in s/h auctions and correlating increase in BIN new stock. Indeed tonight the 00 gauge locomotives for auction, that are not new is just 3400 locomotives… 3.4%… no one is selling… ive seen this in excess of 24k a few years back.

 

Whilst its definitely cyclical, during the year, my personal feeling is everyone had a party and filled their boots in the last decade, now the prices have gone up, were into consolidation, but theres no pressing reason to divest… But I do feel consolidation will lead to an amount of horse trading between collectors etc.

 

Edited February 4 by adb968008

[F-UnitMad]

15 minutes ago, br-nse-fan said:

The problem is us oversea modelers get absolutely shafted by exorbitant shipping fees, or the seller just not posting overseas in the first place.

As a UK modeller of American 2-rail O Scale, trust me it's exactly  the same in the other direction, too.

The phrase "Ships only to the Lower 48" really grates, I'm afraid. 

[andyman7]

46 minutes ago, br-nse-fan said:

 

I will agree, that no retailer could possibly hope to compete with eBay in terms of volume and selection.  The problem is us oversea modelers get absolutely shafted by exorbitant shipping fees, or the seller just not posting overseas in the first place.

It's a problem not just confined to people buying from the UK - many things I search for that turn up in the US have similarly absurd shipping charges. However, in such cases I can see an emerging opportunity for intermediaries who can obtain items domestically and then ship abroad. 
I was very happy to ship abroad for many years but the escalating costs and paperwork mean that generally I only use GSP for ebay exports (expensive for the buyer). It's simply not worth the detailed form filling to send an item overseas whilst running the risk that I'll be on the hook if they get it and decide they don't want it.

[Ighten]

Some of these exorbitant fees from the US are simply because the seller forgot to turn off international and eBay went to default..

 

You can walk into any towns FedEx store and buy a shipping box with air for a fraction of these costs fully insured.

[Gridiron]

6 minutes ago, andyman7 said:

It's a problem not just confined to people buying from the UK - many things I search for that turn up in the US have similarly absurd shipping charges. However, in such cases I can see an emerging opportunity for intermediaries who can obtain items domestically and then ship abroad. 
I was very happy to ship abroad for many years but the escalating costs and paperwork mean that generally I only use GSP for ebay exports (expensive for the buyer). It's simply not worth the detailed form filling to send an item overseas whilst running the risk that I'll be on the hook if they get it and decide they don't want it.

 

And this is why I think we may well see a Hattons 2 but not directly as a retailer, rather more the as the platform provider. By all accounts Christine Hatton has or will retire for the business when the current trading company is wound up leaving Richard Davies as the sole director and thus able to take the entity in a different direction.  At 46 years old he is I doubt going to sit back and count his riches, and perhaps more importantly he has an IT background as was responsible for taking the company to a major online trader having previously been involved in a consultancy IT specialising in the retail industry, Owning the platform and then partnering up with a suitable third party fulfilment operation potentially might make a very viable niche platform that could be tailored to other business types were the customer might want the benefit of a trunk system which does appear to separate the platform form the likes of Ebay and Amazon etc. 

[Keith Addenbrooke]

Having placed my ‘final’ Hattons Order a couple of weeks ago, just after the closure announcement, I have now also received my ‘final final’ Order - the one placed on the last trading day when the last few items were being cleared, just before the website shut down: An H0 Bachmann Continental Signal Box (Stellwerk):

 

 

I do need a signal box, but would have expected to kit build one.  Although much more of my recent trading has been with Contikits and Rails of Sheffield (and bits elsewhere), there is still undoubtedly a sentimental aspect to this purchase though - a final final farewell to a good friend of many years.

 

My own take on the discussion around the economics of Hattons Closure - and how it has influenced my current purchasing decisions - is in a blog I posted yesterday if anyone wants a look.  Thanks, Keith. 

 

Edited February 4 by Keith Addenbrooke
(add link and edit)

[St Enodoc]

3 hours ago, Gridiron said:

Ebay looks to be the winner for the secondhand market.

You've never had to use the Global Shipping Program, have you? For a typical second-hand item, it typically results in a cost about three times the price of the actual item.

 

3 hours ago, br-nse-fan said:

I will agree, that no retailer could possibly hope to compete with eBay in terms of volume and selection.  The problem is us oversea modelers get absolutely shafted by exorbitant shipping fees, or the seller just not posting overseas in the first place.

That's not a great example, because if you order direct from that supplier they charge a MINIMUM GBP30.00 for overseas shipment, which is what I think you can see there (ordinary post, not the GSP).

[MarkSG]

4 hours ago, Dunsignalling said:

Two things spring to mind.

 

1. Turnover

 

In the model railway trade, as in all branches of retailing, turnover is king, and everything else hinges upon it.

 

Other way round, surely. The old adage that "revenue is vanity, profit is sanity, but cash is king" still applies. Obviously, you can't have cash without profit, and you can't have profit without revenue (turnover), but turnover is always only ever a means to an end rather than an end in itself. Chasing turnover at the expense of lower profit is a common cause of business failure.

 

(Not saying that's what happened to Hattons, because as far as I can tell it wasn't).

[Michael Hodgson]

27 minutes ago, MarkSG said:

 

Other way round, surely. The old adage that "revenue is vanity, profit is sanity, but cash is king" still applies. Obviously, you can't have cash without profit, and you can't have profit without revenue (turnover), but turnover is always only ever a means to an end rather than an end in itself. Chasing turnover at the expense of lower profit is a common cause of business failure.

 

(Not saying that's what happened to Hattons, because as far as I can tell it wasn't).

Tbey haven't failed.  They're just pulling out of the market.  They're still solvent.

[GWR-fan]

For Australian customers eBay will not be the answer for many for new or particularly secondhand goods.  Hattons were popular, not just for the economical shipping costs,  but also VAT was removed from the selling price,  making the deal more attractive.  There will be no VAT reduction on eBay and on top of that eBay will automatically add the 10% GST.  Add to that the ridiculous Global Shipping Program cost and the deal is dead in the water.  The Australian market will not dry up with the closure of the store,  but it will take a hit.

 

Edit: as regards shipping costs,  Peters Spares want a minimum GBP39.99 to ship a few tiny Hornby spare parts,  whereas in the past the same items would ship for GBP7.00.   I used to purchase a lot of spares from the store but since covid when the store attracted a few negative feedback responses on their eBay site they increased the cost of postage dramatically and this translated over to their web store as well.  

 

Several years ago I wanted to purchase two small decals from an eBay seller who used GSP.  The cost to ship two small decals was GBP23.95.  When I queeried the seller he relisted the items with "normal" shipping and the cost was GBP1.93.  His reponse was he had no idea how much the GSP cost his buyers.

Edited February 4 by GWR-fan
Additional information

[Gridiron]

19 minutes ago, St Enodoc said:

You've never had to use the Global Shipping Program, have you? For a typical second-hand item, it typically results in a cost about three times the price of the actual item.

 

 

 

True perhaps I should have added for the UK domestic market for UK outline models. I'd agree there is an issue with cost of Ebay Global Shipping Program from what I have read, being in the UK I have not had cause to use it myself.

 

However, I do for a relative who models N Gauge Continental and I buy directly from sellers in Europe. One regular seller used offers free UK  shipping on orders over EUR300 and event throughs in a free gift so the German VAT is also waived. My orders are all over this limit and are usually despatched the same working day and on most occasions the shipping service is excellent. An order sent last Sunday was acknowledged by 0800hrs UK time Monday morning and by close of business I had an email from UPS with the tracking reference. By 2100hrs I had an email to confirm the parcel had been collected and was on the way to the hub, and delivery to Liverpool was planned for the next day between 1045hrs and 1315hrs. As a failsafe I sent them a copy of the commercial invoice and clearance instructions by email to the UK hub at East Midlands airport. The following morning I had an email notification that the the delivery was due a little later than previously advised pending payment of the outstanding VAT and clearance charge of GBP12.50. This was paid online by 0930hrs on the Tuesday morning and the UPS driver turned up about ten minutes later than previously notified at 1650hrs the same day, just about 23 hours after the parcel was collected for the sellers warehouse near Cologne. I will eventually get an official invoice from UPS in the post which has the UK customs clearance printed on reverse in a week or so time for my records.

 

From a trade point of view Brexit I would whole heartedly agree it was the biggest own goal any UK government could have made, but what I think my seller in Germany shows, is that the red tape can be overcome and the process can be more or less seamless with the correct paperwork and partner infrastructure. For small UK sellers and buyers Brexit has been a nightmare of bureaucracy and here I speak from personal professional experience as effectively trade between UK and the EU has gone back to prior 1993. The only difference between then an now  is that all the customs paperwork is done electronically rather than using half a rainforest of paper. For the sellers it's also an opportunity to sell to the rest of the world as the same basic procedure applies as far as UK compliance is concerned, the real challenge is dealing with the overseas customs arrangements if the orders fall below the minimum values were the seller becomes responsible for local taxes and charges and the possible exchange rate risks. This is probably explains why the Ebay Global Shipping program is seen as being expensive for smaller shipments and were the Hattons Trunk system comes into it's own as I suspect they priced the overseas shipping very competitively because of the volume discounts they could negotiate from likes of DHL etc.  

 

 

 

 

[MikeB]

I wonder if part of Hatton's demise was caused by all the IT investment?  The product database, the marketplace, trunk, wishlist, proforma for purchasing second hand items, dealing with overseas sales and the complex website were all good for customers but must have been a heavy overhead to build and maintain.  Was it too much without lots of sales from the two major UK outline suppliers?

 

 

Edited February 4 by MikeB

[Gridiron]

13 minutes ago, GWR-fan said:

For Australian customers eBay will not be the answer for many for new or particularly secondhand goods.  Hattons were popular, not just for the economical shipping costs,  but also VAT was removed from the selling price,  making the deal more attractive.  There will be no VAT reduction on eBay and on top of that eBay will automatically add the 10% GST.  Add to that the ridiculous Global Shipping Program cost and the deal is dead in the water.  The Australian market will not dry up with the closure of the store,  but it will take a hit.

 

Edit: as regards shipping costs,  Peters Spares want a minimum GBP39.99 to ship a few tiny Hornby spare parts,  whereas in the past the same items would ship for GBP7.00.   I used to purchase a lot of spares from the store but since covid when the store attracted a few negative feedback responses on their eBay site they increased the cost of postage dramatically and this translated over to their web store as well.  

 

Several years ago I wanted to purchase two small decals from an eBay seller who used GSP.  The cost to ship two small decals was GBP23.95.  When I queeried the seller he relisted the items with "normal" shipping and the cost was GBP1.93.  His reponse was he had no idea how much the GSP cost his buyers.

 

UK and EU VAT registered sellers should be zero rating their supply when supplying a customer outside the UK and EU respectively, as the custom/VAT rules allow this. Private, unregistered sellers should not be charging origin VAT in the first place. If the value of order is below the local customs minima which may or may not include the shipping cost depending on local customs rules, they should be including the local taxes (ie VAT, GST etc.) and customs clearance fee(s). If the value is over the minima the local taxes and clearance fee should not be included by the seller and instead these should be paid locally to by the customer to the service provider.    

[MikeB]

48 minutes ago, Gridiron said:

 

True perhaps I should have added for the UK domestic market for UK outline models. I'd agree there is an issue with cost of Ebay Global Shipping Program from what I have read, being in the UK I have not had cause to use it myself.

 

However, I do for a relative who models N Gauge Continental and I buy directly from sellers in Europe. One regular seller used offers free UK  shipping on orders over EUR300 and event throughs in a free gift so the German VAT is also waived. My orders are all over this limit and are usually despatched the same working day and on most occasions the shipping service is excellent.

 

 

 

 

International sales depend on the seller. I buy most of my new Swiss-outline items from Modellbahnshop Lippe, who deduct German VAT, have a standard €12.90 flat rate for shipping to the UK and use Fedex.  Fedex submit an invoice for UK VAT and their charge to me by e-mail once they have the item in their system and by paying onine there is no delay due to customs clearance etc. Order to delivery in less than a week.   Compare this to some other sellers who keep the German VAT on and use DeutschePost / DHL which becomes Parcelforce or Royal Mail in the UK. Then items can sit waiting customs clearance for a week or more and the charges letter takes another week to arrive by post. 

Edited February 4 by MikeB

[johnofwessex]

9 minutes ago, MikeB said:

I wonder if part of Hatton's demise was caused by all the IT investment?  The product database, the marketplace, trunk, wishlist, proforma for purchasing second hand items, dealing with overseas sales and the complex website were all good for customers but was must have been a heavy overhead to build and maintain.  Was it too much without lots of sales from the two major UK outline suppliers?

 

 

 

Richard Davies said that the Hattons Management could not find a way to make any bits of the business profitable.

 

I would assume that they would have looked at the option of simplifying the offer/overseas services/website as part of this 

 

 

[Andy Hayter]

@Gridiron

I like your analysis on shipping SE Asia to Europe and the ability of the shipping lines to take up slack.  

How do you see container availability in your analysis?  By my reckoning something like 20-25% additional containers are going to be needed going the long way round on this route.  Maybe other routes can make up some of the shortfall but not all.

 

I have been out of the business ten years now but after the 2009 banking crisis, the shipping lines resorted to slow steaming, which had the same impact as going via the Cape - an extra 10 to 14 days on the water.   The result was a year or more of struggling to get container availability plus augmented demurrage and detention charges.  

[Bucoops]

50 minutes ago, GWR-fan said:

His reponse was he had no idea how much the GSP cost his buyers.

Absolutely true - all you see is UK postage paid, and it goes to a hub for whoever has the contract with ebay. You don't even see the purchaser's address, just the hub. 

[Dunsignalling]

1 hour ago, MarkSG said:

 

Other way round, surely. The old adage that "revenue is vanity, profit is sanity, but cash is king" still applies. Obviously, you can't have cash without profit, and you can't have profit without revenue (turnover), but turnover is always only ever a means to an end rather than an end in itself. Chasing turnover at the expense of lower profit is a common cause of business failure.

 

(Not saying that's what happened to Hattons, because as far as I can tell it wasn't).

Turnover can indeed be a double-edged sword in that it magnifies the effects of either increases or decreases in margins, but another adage is at work in that a good big 'un will always beat a good little 'un. 

 

Hatton's were clearly in the former category, but if the capacity of a good big 'un falls substantially, and fairly suddenly, it may not be able to transition to becoming a good little 'un quickly enough to maintain a healthy trading position.    

 

We know from what's been published that something has been eating away at Hatton's turnover rather than them cutting margins in an effort to increase it. My interpretation (which is unlikely to be the whole story) is that a fair proportion of their problem may have been rooted in losing supply from the two dominant players in OO r-t-r. One in it's entirety arising from the "shedgate" dispute, and the other a substantial reduction resulting from the "Tier" in which the firm was placed.

 

In short, the goalposts shifted... 

 

John

 

 

Edited February 4 by Dunsignalling

[johnofwessex]

What was the dispute with Bachmann?