Originally Posted by
Hydro Junkie
Hobby shops have closed due to three things:
- internet retailers being able to sell at lower prices
- brick and mortar stores having higher prices due to having the overhead an internet site doesn't
- being forced to change from kits and building supplies to ARFs, ARCs and PNPs.
No matter how you look at it, the hobby industry has "evolved " away from "hobby" and into what the latest generation wants, an instant gratification source. When you look at the craftsmanship that used to be seen in an R/C model and compare it to the "cookie cutter" ARF or PNP aircraft you see on the flightline, it kind of shows how the hobby has gone from being required to build it yourself to buying what amounts to off the shelf toys that are bought, usually, on a whim.
Definitely on the right track here Hydro. The other aspect is that both Hobbico and Horizon have themselves pushed out the retail dealers. Long story short, in order to match the prices that Tower and Horizon offered customer direct the retailer would have to drop his profit margins down to as low as 15% on some items and 20%-25% on others. This covers engines, motors, electronics, kits and ARF’s. When a new item is released, it is released for direct purchase before a retailer can purchase. Imagine placing an order for a new EFlight ARF and it going directly to back order and at the same time one of your customers come in with the same model. Then if you don’t call to cancel the back order, when customer direct sales die down, your back order is automatically filled. By then there is less demand. There is a bit more going on but I think you get the idea. Compared to a clothing store where profit margins are in the 200%-300% range.