Well, thankfully that's over with. 2017's in the books, and, well, there's no mincing words here: it was a God-awful year. In fact, it was so bad that we couldn't think of a single stand-out hit this year - so we settled on six misses instead. Make no mistake, 2017 will go down as one of the worst years for the hobby industry in decades — and particularly so for small hobby shops like ours.
Miss #1: Reward Revocation
September of 2016 saw us introduce a rewards program designed to help us attract more customers while maintaining our current customer base. It enabled us to not only offer in-store coupons for regular customers, but also reach out to nearly everyone who signed up through either text messaging, email, or push notification using the Five Stars app on most smartphones. It should have helped push us into new earnings and better customer interactions.
Instead, after seven months with the program, we realized that not only was it not providing those things to us, it was costing us far, far more than it was bringing in, which forced us to discontinue the program after a three month wind-down. As frustrated as some of our customers were (and are), believe me, we're just as upset as you guys, if not more so. We really wanted this to work, and the fact that it didn't earns our Rewards program a spot on this list.
Miss #2: TRX-4 Fails to Move Mountains
When it was announced that Traxxas was coming out with a rock crawler, we had high hopes that their name and influence would bring the standard Traxxas crowd into the crawling world. Despite our best attempts, rock crawling has failed to catch on for our clientele, which we were hoping Traxxas' entry into the genre would change.
Sadly, It did not.
While the TRX-4 is undoubtedly an impressive truck (one of our customers even wrote a positive mini review), the anemic sales it generated for us are underwhelming at best, and while there's still time for the TRX-4, in all it's incarnations, to improve, for now, it's inability to make the same seismic shift that the T-Maxx, the Slash, and the X-Maxx made upon launch is disappointing enough to make it onto our list of misses for the year. Maybe 2018 is the year of the crawler; 2017 certainly wasn't for us.
Miss #3: Missing Margins
2017 saw a sustained and widespread decrease in margins for hobby shops as the industry began to feel the effects of reduced demand for hobby products. This squeezing of hobby shops (by charging them more for the products they sell and yet not raising the price for consumers) is bad for everyone, as it makes owning and operating a brick-and-mortar hobby shop cost-prohibitive in all but the most densely-packed regions of the country. Shops like ours will be the hardest hit if this trend continues, espcially if sales continue to decline.
Hopefully distributors and manufacturers, like RPM, Testors, DuBro, and Revell will realize the stakes and this practice will fade away as we ease into 2018. There are some signs that the worst may be behind us, like Horizon Hobby reinstating normal margins and implementing a Minimum Advertised Price (MAP) policy, but the big pinch on hobby shops is easily a huge miss for 2017. If you want to read more about this, I wrote a blog post about it last month.
Miss #4: Axial Falters; Vaterra Doesn't Notice
Very early this year, it slowly became obvious there was a stock problem at Axial. It was later revealed that Axial had somehow lost their primary parts maker overseas (whether it was due to a contract dispute or the maker closing their doors isn't publicly known). The net result, though, was a sharp decline in availability for nearly all of Axial's parts and trucks. From motors to axles, "back order" was the phrase of the year for Axial. It's a problem from which Axial still has yet to recover, despite taking the time to release another couple versions of the SCX10 II. Since most of the parts we are having trouble getting are from the original SCX10, it might be the case that Axial intends to remove those models from the market and only sell the SCX10 II platform.
Despite all that, Axial's issues are only the second-biggest whiff in the crawler industry, as Vaterra didn't seem to notice their adversary was on the ropes. It was a huge missed opportunity. They could have pushed their brand to hobby shops across the country and made real gains in market-share as a result. Instead, Vaterra is still an also-ran company, as in: there's Axial, now Traxxas, and... oh, yeah, Vaterra too. The release of their Bind-N-Drive Ford F-100 in December was far too little, too late, and Vaterra's misstep is a miss in 2017.
Miss #5: Hobbico
It's hard to say when it all started. I suspect the catalyst was a lawsuit filed by Traxxas against Hobbico in July of 2016 over patent infringement of certain shock designs, sealed receiver boxes, and LED-lighting for drone frames. There may be more, but my eyes glazed over after the eighth or ninth page of impenetrable legal jargon. That suit probably led to Hobbico deferring payments to former employees at the end of 2016, and the suit continues to this day, more than 500 hundred days later. In September, Hobbico laid off 7% of its staff, and products continue to be backordered and unavailable through their distribution arm, Great Planes (GP).
The reason why it's been hard to get products from GP was revealed when it became clear they couldn't pay their bills. Companies have been steadily leaving the hobby giant, beginning with Traxxas themselves late June. Team Associated was forced to seek out alternative distribution in the form of Horizon Hobby, who owns rival Team Losi Racing. HPI struck a deal with HRP out of Utah, and MIP dropped Hobbico altogether. Sullivan Products, STRC, and others have, either publicly or privately, directly or indirectly, spoke out against Hobbico and their inability to place, and pay for, orders.
With Axial still in trouble, everything looks really, really bad for Hobbico. The question for now is whether or not they can recover from this terrible year, but with that lawsuit still hanging over them, it doesn't look like the worst is over yet.
Biggest Miss of 2017: Traxxas' Connector Crisis
Back in May, we learned that Traxxas was enacting a major new policy that would reverberate through the industry, as they were clamping down on their connectors and refusing to let any third-party company produce batteries or chargers that came equipped with their titular connectors. Traxxas claims this move had to do with protecting themselves from lawsuits, but anyone can see this is an anti-competitive move to eliminate competition from the market where their trucks are concerned. All of which might be less of a problem if Traxxas could actually produce a decent LiPo battery, but given the number of customers complaining about puffing only Traxxas' LiPos, I'd say that isn't the case.
Since then, it hasn't gotten better, as Traxxas has also removed the ability for owners of their batteries to charge them on anything other than a Traxxas-branded charger, again, sighting lawsuit concerns, which again seems a strange arguement at best, since every other company I've discussed this issue with said that lawsuits are, and always will be, part of the hobby landscape. Traxxas is tired of competition, and are trying to eliminate as much of it as possible — and because of their position in the industry and the sheer amount of wealth they already possess, they're going to get away with it.
Traxxas still makes some of the best, if not the best radio controlled cars, trucks, and buggies around, and their vehicles are still a tremendous value. Even so, this move is so incredibly bad for consumers that Traxxas may, in a few years time, find their customers flocking away, end-user and hobby shops alike. They say it's lonely at the top, and I can only hope Traxxas realizes its mistake before they fall from grace.