A Critical Look: 2018 is Make or Break For Hobbies

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2018 has arrived, and with it a fresh start to a new year — but 2018 will be a tremendously important 365 days for our industry, and like Forrest's box of chocolates, there's no way to know what's in store until we experience it first hand. Plenty of stories will continue into the new year, but here is my personal list of stories from around the hobby industry that I'll be keeping an eye on throughout 2018.


Hobbico

There is probably more riding on success this year for Hobbico than any other company in the industry. As I wrote in our article 6 Terrible Things that Happened in 2017 (In The Hobby Industry), Hobbico is a company seemingly on the brink. Many items are backordered both on their consumer page, Tower Hobbies, and through their dealer arm, Great Planes, supposedly due to unpaid invoices and lack of cash flow. They laid off 7% of their staff last September, and are getting sued by Traxxas for patent infringement. Judging by what we see, they are at the very least having a difficult time keeping their heads above water.

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Since litigation with Traxxas has been ongoing since the summer of 2016, it's unlikely we see a quick settlement; Traxxas wants a permanent injunction on selling infringing products, and possibly won't agree to less — it seems they are out for blood. If Hobbico loses, I bet they file for bankruptcy to restructure. I don't see how they could continue after losing a big chunk of ARRMA and Dromida sales, especially since they are banking on those lines, along with Axial, to save them. Hobbico is essentially balancing everything on one leg while standing on a rug called ARRMA, and Traxxas might very well pull the rug out from under them.

If Hobbico wins, though, they have a fighting chance to return to some sense of normality, especially if they counter sue for court costs or something. Mind you, I'm not a legal scholar, and I have no idea exactly how this process works.

Either way, Hobbico and its continuing drama will be the big story to track this year.

Update: Just as I was about to publish this article, word arrived of a Chapter 11 bankruptcy filing by Hobbico. Looks like I was correct in my earlier guess, but far, far sooner that I thought. We'll have to see how this shakes out, but it's looking worse and worse all the time.

RedCat

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I'll go on record as not being too hot on Redcat. Ever. For a very long time they were the epitome of a junk online brand that didn't offer decent customer service or well-built vehicles. I've even had a couple of customers tell me they were cursed out by Redcat Customer Service people over the phone, though this was a couple of years ago.

Last year, though, they gained some legitimacy by being picked up by Great Planes, and at the very tail end of the year, also by Horizon Hobby. Now Redcat is being offered through the two largest hobby distributors in the world, and it seems they have transformed, at least somewhat, into a true hobby brand worthy of consideration.

I'm not ready to eat crow just yet, but I'll be keeping an eye on Redcat throughout 2018. If they have truly turned a corner and are starting to put their consumers first, there's even a remote possibility you could see their boxes on our shelves. Remote, but possible.

Traxxas Direct

Last year, Traxxas made the bold move to sell their new TRX-4 Defender only through Traxxas Direct — meaning dealers like us could not purchase them through any of our distributors like Horizon Hobby or Great Planes. Instead, we had to buy them directly from Traxxas, which was a first for the Texas-based behemoth.

That announcement was quickly followed by more exclusivity proclamations, from the Ford GT on road cars to Traxxas' new paddle tires, and most recently, their battery-and-charger-less Bandit and Rustler models — all are exclusive to Traxxas Direct.

The prevailing theory is Traxxas will eventually abandon distribution altogether and sell direct to hobby shops, cutting out the middlemen and making more money along the way. I doubt we'll see those savings in the form of cheaper vehicles, but that's always possible.

Traxxas is a company that likes to throw its weight around, whether through lawsuits or cutting off the supply of their connectors to battery suppliers, and this is yet another example of Traxxas deciding they are big enough to force dealers to play their game. Sadly, they are probably correct.

I can't predict whether 2018 will be the year Traxxas goes solo, but they will be ones to watch for sure.

Clicks or Bricks

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Online sales are surging, while retail stores across the country are closing. As Amazon becomes an even more dominant force in retail, they have hobby shops like us worried. We weathered Tower Hobbies, both as a mail order company and then as an online competitor. HobbyKing was a problem, and in some ways still is, but we don't hear much about them anymore either. Amazon, on the other hand, we largely ignored as being like Wal-Mart — they weren't going to go after our market.

Until they did.

Amazon is now our biggest competitor. We don't have any real local competition, as there isn't another true hobby shop (Hobby Lobby, you don't count) within 20 miles. The exclusive hobby online retailers, like AMain Hobbies and RPP Hobbies haven't been a problem for us at all (that we know of, anyway). Flite Test and other recent startups have impacted us a bit, and HobbyKing is still an issue, but none of them have the impact that Amazon does.

2018 will be the first year Amazon is a problem we focus on, and you can be sure we'll be formulating ways to take on the internet's biggest retailer, at least in our local arena. It's a fight we may well lose, but it's battle that must be fought.

 

 

What are you looking at in our industry this year? What big stories did I forget? Let us know on our Facebook page!