Estes: betting the business and the hobby on... retail?

[Art Upton]

Most (or a significant portion) of us here on TRF are BARs, right? What "conception event" allowed us to become born again to this hobby? I'm betting it wasn't online advertising and instead, it was seeing a product in stores or being reintroduced to the hobby b/c a kid, friend or family member was engaged in model rockets (or something close to model rockets).

For me personally, it was a combination of seeing a model rocket kit in person for sale (at a yard sale) and my child being fascinated with stomp rockets that he was initially exposed to from in person experiences.

Well, there are also a considerate amount of Ars , Always Rocketeers; that always kept flying even if it was only a few a year. So while there are Bars, there is also ARRRS say like a Pirate

 

[mh9162013]

Well, there are also a considerate amount of Ars , Always Rocketeers; that always kept flying even if it was only a few a year. So while there are Bars, there is also ARRRS say like a Pirate

I imagine so, but "ARs" don't have a recent "conception event" to look back on.

 

[Rschub]

Most (or a significant portion) of us here on TRF are BARs, right? What "conception event" allowed us to become born again to this hobby? I'm betting it wasn't online advertising and instead, it was seeing a product in stores or being reintroduced to the hobby b/c a kid, friend or family member was engaged in model rockets (or something close to model rockets).

For me personally, it was a combination of seeing a model rocket kit in person for sale (at a yard sale) and my child being fascinated with stomp rockets that he was initially exposed to from in person experiences.

I am sure it is different for everyone, for me it was seeing a video of a full size rocket that I thought was very cool, that brought me back to the hobby from my youth.
Elon Musk has done more for the hobby in that way, sort of a Mega influencer, advertisements are just road signs on the way to the already decided destination.

 

[Art Upton]

I imagine so, but "ARs" don't have a recent "conception event" to look back on.

No, but there is so much different things to do in rocketry, just like radio, that their attention can get diverted from one sub section to another as time progresses.

Like Buying the new rash of Scale models that Estes put out over the last years or enjoying 29mm Black powder motors again. It had been a long time since 29mm BP motors could be found outside of collections.

I have built and flown a lot of rockets made just for those 29mm Fs. [and lost, worn out, or broken a few]

No they won't lift a near HPR rocket like an AeroTech will, but I have AT motors to do that. Sometime the Fun and Smell of a BP F is just something that is, well Fun.

Meanwhile, "I Need My B14s"* ; waiting for those to be on sale real soon.

*Sing to the old MTV intro when MTV came out. "That's the way to do it."

 

[SolarYellow]

The cheapest way to get the product in our hands is to ship directly.

The cheapest way used to be to ship them to ACSupply and me to order >$100 of stuff.

The new way costs me way more, it just puts more money in Estes' pocket.

Personally, I'm sitting on "launch 2024" and waiting for BF. If Estes doesn't do a significant stackable discount on everything on the site around then, they probably aren't getting more of my money this year. Not because I'm butthurt, but because I'm patient, thrifty, and have already bought more than enough stuff to keep me busy building rockets into next year.

In my previous role/other hobbies, I've seen plenty of examples of someone who was very successful in business coming in and taking over a business that was very well established in a very unique market niche, and just turn it upside down to the point of bankruptcy/failure. There are businesses that are not like other businesses, and have evolved to be the way they are because that's what works in the microcosm of the odd ducks who are its customers. Forcing the business into a template of what worked in a different customer ecosystem & culture often does not work.

 

[jhill9693]

I do find the original poster's experience troubling - regardless of the circumstances, the actions taken by Estes were at the least unfocused and seemingly arbitrary. Those are indicators that leadership is either conflicted or capricious - neither thing being a good thing.

Conflicted, yes. I mean when you execute a major shift to your business plan and some of your apparently doesn’t even know about it, that indicates major internal issues to me. I realize top brass is probably pushing against some organizational inertia, but still, it’s the leader’s job to make the plan, communicate it to and train their people, and execute the plan.

The way things went down for me was NOT fair but I do not at all think it was capricious, malicious, or intentional. Please don’t think that. There was quite a lot of regret expressed on their part for what happened and for how it happened.

 

[Rschub]

The cheapest way used to be to ship them to ACSupply and me to order >$100 of stuff.

The new way costs me way more, it just puts more money in Estes' pocket.

I would suggest that you are looking at it from a narrow perspective, and that Estes is looking at it from a strategic outlook using information not available to the general public. Van's screwup was on the technical side anyways, to your point about other hobbies.
If you get emotional about what money ends up in who's pocket, you can always try to take it with you. I don't want to get political, but in the coming years choices are going to narrow in a lot of ways for everyone.

 

[samb]

Thanks for sharing this @jhill9693 . All of the recent anecdotes about poor, mis and/or no communication is concerning. We do live in interesting times as the old saying goes. I imagine any kind of business that relies on disposable income is having a time. @Initiator001's insider insight on the big picture is always helpful. KEEP CALM AND CARRY ON FLYING A ROCKET.

 

[astronwolf]

I've always made purchases of Estes products at discount outlets like AC Supply. Forcing MSRP so that there is no discount to be found, anywhere, is for me like raising prices by 20-30-40% depending on when you started watching these events play themselves out. How elastic is the demand for Estes products, even for this crowd? You going to cut back on "how much" flying you do by 20-30-40%? Maybe initially, and then for a little while... Will the perceived increase in price even make any difference to us in five years? Just wondering out loud...

 

[SolarYellow]

I've always made purchases of Estes products at discount outlets like AC Supply. Forcing MSRP so that there is no discount to be found, anywhere, is for me like raising prices by 20-30-40% depending on when you started watching these events play themselves out. How elastic is the demand for Estes products, even for this crowd? You going to cut back on "how much" flying you do by 20-30-40%? Maybe initially, and then for a little while... Will the perceived increase in price even make any difference to us in five years? Just wondering out loud...

Going from a 20 percent discount to no discount is a 25 percent increase.
Going from a 30 percent discount to no discount is a 43 percent increase.
Going from a 40 percent discount to no discount is a 67 percent increase.

We've been told many times before by the insiders that Estes makes its money on motors, not rockets. Estes motors at MSRP make APCP at the "street price" far more attractive than they have been up to now.

 

[Initiator001]

I used to agree with that, but now I'm not so sure. I imagine the 80/20 rule (aka: Pareto Rule) applies to model rockets, at least to some extent or in some shape or form? In other words, people like "us" (hardcore and consistent customers) make up a minority of the number of customers, but a disproportionate percentage of their revenue/income...maybe.

If it's not us, it might be "group" leaders, such as camp counselors, Scouting America leaders and teachers that fit the 80/20 rule. I'm going to try to estimate Estes' sales. I could be very wrong and I encourage others to provide their estimates.

For every 100 Estes kits or engines sold, I imagine:
- Customer 1: 40 are sold to parents, grandparents or anyone else who think a model rocket kit will make a great gift or pathway to an intereset in STEM for their kid, grandkid, neice, nephew, etc. The primary characteristic of this group is that they are one-time "organic" buyers Estes kits. What I mean is that they might continue buying more kits, but it's because "Little Timmy or Maggie" is asking them to, not because they want to themselves.
- Customer 2: 30 are sold to people like us.
- Customer 3: 30 are sold to teachers, Scout leaders, etc.

For every $100 in income (not revenue) generated by Estes, I imagine:
- $25 comes from Customer 1
- $45 comes from Customer 2 (it's because we buy more engines!)
- $30 comes from Customer 3

So Customer 2 is what Estes wants more of. But to do this, they need more of Customers 1 and 2 to introduce rockets to potential Customer 2s. And Estes believes having more retail sellers is better than having more online sellers in order to do this.

Traditionally, Estes sales have been 70% Hobby Distributors (which goes to Hobby Shops and other B&M outlets), 25% schools/Scouts and the last (roughly) 5% to hard-core enthusiasts.

Estes currently has an exclusive sales program with Horizon Hobbies which generates the most money for Estes. Horizon sells to hobby shops and other B&M outlets. The MAP is to protect the hobby shops which buy from Horizon and therefore protect Estes' largest source of revenue. If Estes was to lose Horizon as a buyer not all the other 'dealers' (Wildman, Chris', Belleville, Discount Rocketry, etc.) combined could make up for that loss of revenue. Unless and until the hobby industry changes that is the way things will be.

Personal story.

I expect some of you will remember Ross Dunton and Magnum Rocketry.
Ross was a good guy and I liked him.
He used to call me at AeroTech and comment about how he was AeroTech's biggest dealer and he should get some additional 'benefits'.
There were times I wanted to tell him, "Well Ross, Great Planes just placed a $50K order. How much will YOU order for a better deal?"

It's all about numbers.

 

[mh9162013]

Traditionally, Estes sales have been 70% Hobby Distributors (which goes to Hobby Shops and other B&M outlets), 25% schools/Scouts and the last (roughly) 5% to hard-core enthusiasts.

What's your source for these numbers? (just curious, I believe you).

 

[Initiator001]

<snip>

We've been told many times before by the insiders that Estes makes its money on motors, not rockets. Estes motors at MSRP make APCP at the "street price" far more attractive than they have been up to now.

Actually, Estes makes money on everything they sell.

How they make money on the motors is their research has shown that for every kit purchased 'X' amount of motors will be sold to fly it.
I've seen folks in hobby shops buy one rocket kit and two-three packs of motors for it. If they lose the rocket after one or two flights then the hobbyist will return to buy another kit and, maybe, some more motors.

Having those Mabel machine is like printing money.

 

[astronwolf]

Estes motors at MSRP make APCP at the "street price" far more attractive than they have been up to now.

Good. Maybe this move will raise all ships.

 

[Initiator001]

What's your source for these numbers? (just curious, I believe you).

Over the years I've had industry contacts and industry information about hobbies.

Here's a piece of information everyone might find interesting. I don't know if it is still true but 30 years ago 10% of hobby rocketry products were sold in the state of California.
That's right. A state with some of the most restrictive fire laws in the nation still managed to account for 10% of sales.
That's the reason companies like Estes, AeroTech/Quest, CTI, etc. put up with all the regulations in California as none can afford to lose 10% of their income.

 

[Art Upton]

Over the years I've had industry contacts and industry information about hobbies.

Here's a piece of information everyone might find interesting. I don't know if it is still true but 30 years ago 10% of hobby rocketry products were sold in the state of California.
That's right. A state with some of the most restrictive fire laws in the nation still managed to account for 10% of sales.
That's the reason companies like Estes, AeroTech/Quest, CTI, etc. put up with all the regulations in California as none can afford to lose 10% of their income.

Thanks Bob. I can only guess but I suspect it is the wide open areas that were great for flying rockets that I was always envious of seeing in old news letters; then when CompuServe or Rec.model.rockets started in the 80s for two way conversations it was even better to see.

 

[mikec]

I guess I'm confused. The OP said that Estes was forcing MAP pricing on everyone and also cutting off some online dealers for no apparent reason even if they were following MAP?

 

[tjkopena]

Estes currently has an exclusive sales program with Horizon Hobbies

@Initiator001, would you elaborate on what that means? Estes has other distributors, i.e., Emery, Heartland, HobbyTyme, and HRP (*), so I'm not understanding what an "exclusive sales program" means. I searched around a bit and didn't find any news blurbs.


(*) Potentially related, I did recently notice Stevens International had dropped off Estes' list sometime in the near past.

 

[astronwolf]

I don't know if it is still true but 30 years ago 10% of hobby rocketry products were sold in the state of California.
That's right. A state with some of the most restrictive fire laws in the nation still managed to account for 10% of sales.

No doubt, that was thanks to Jerry Irvine, God rest his soul...

 

[jhill9693]

We've been told many times before by the insiders that Estes makes its money on motors, not rockets.

Heidi M. (VP at Estes) straight up told me the opposite is true.

 

[OverTheTop]

I got into rockets by seeing kits and motors at a LHS. I was in there looking for something else and came out with a kit, a RTF and motors.

 

[grillsjosephbus]

I got into rockets by seeing kits and motors at a LHS. I was in there looking for something else and came out with a kit, a RTF and motors.

I wonder how long her nose grew after that remark

 

[Cape Byron]

I have to say I'm glad my business isn't run by accountants. That said, I wish I made more money from it.

 

[Fishhead]

So, after reading this thread this morning, I made a trip to my local hobby shop today. Since Hobby Lobby only sells A3 and A10 mini motors now, I thought I'd check with Hobby Villa to see what kind of stock they had. As I was walking in, I was greeted by a sign on the door announcing that they would be closing up shop in August. Gut. Punch.

 

[Tom Flint]

Aerotech is in no position to fully replace Estes. As seen in the Aerotech open thread, they are already struggling to meet the current demand for their motors. In my experience, Q-jets are a cool niche product but they are more expensive and nowhere near as user friendly or reliable as good old black powder in the small sizes that beginners use. Estes failing due to poor business decisions and incompetent management would be catastrophic to the hobby. I hope they get their act together.

 

[Blast it Tom!]

Glory, I must be a lucky guy. Here in Western Pennsylvania, maybe a mile from the intersection of the PA turnpike (I-76) and I-79, sits a destination hobby shop, Hobby Express. The guy is a rocketeer. He carries Estes and LOC Precision kits and a few others (Sunward, Quest) in smaller quantities. He has a reasonable motor supply (I just bought an Enerjet F there). And he has danged near anything else you want - RC cars, boats, planes, drones, and a knowledgeable staff and an RC simulator. Scale models, die-cast cars small and large, slot cars, trains in all scales and plenty of scenery, finishing and weathering; scientific toys for kids, even the role playing games and miniature figures. You need balsa, plywood, servos, plastic stock, architectural plastic deatils, he's got it. God knows how much stock he has on hand, and he has to pay for retail space and keeping it neat; I'm sure stuff grows legs from time to time, too, you know. I asked him one time how he does it, and he said, it's tough - his suppliers are his competitors!

Now he's not going to have the raw parts stock for our hobby that soemone like e-rockets has. But man, what a shop, I could spend hours (and many $$$) there!

Not meaning to antagonize anyone on this thread; But this guy is doing it somehow, and doing it well. I just wish more would. I think retail is a very tough place to be these days.

 

[MarsLander]

Hobby Express

Thanks for that...next time I go to space command launch, I'll stop...

 

[Blast it Tom!]

Thanks for that...next time I go to space command launch, I'll stop...

May 19th, I'm praying for good weather!

 

[MarsLander]

May 19th, I'm praying for good weather!

Depending, I may come and do my L2...we'll see...might be too much.

 

[AGP707]

I recently turned my side hobby into a side hustle and officially started up New Century Rocketry (newcenturyrocketry.shop).

It was easy at first. Just go to b2b.estesrockets.com, sign up, and boom, within 2 business days I was an approved dealer with access to purchase at wholesale. No one said a word about MAP pricing, and I wasn't asked to sign anything other that what was in the web form. There was a check box that made some vague reference to "terms" and so I inquired by email what those terms were. The response: "minimum order is $150, and free shipping over $750." That was it. So for about 4 weeks I did my thing. Ordered a couple cases of catalogs. Sponsored TRF. Started a catalog promotion and getting the word out.

I already had some stock, mostly from people who were getting out of the hobby and/or getting out of the hobby business. I placed an order or two for additional items from Estes, and received the first order.

By the time the new Shuttles came out, Estes started giving me the run-around. First, I was asked to sign two new documents, one of which is their MAP pricing policy. Happy to do that. I was rewarded with the news that "you didn't follow our MAP pricing policy, so you're no longer a dealer." Well, I complied immediately (same business day) when I was told, so you can imagine how chafed I was.

I attempted many emails, eventually culminating in visiting Estes HQ in person in Penrose, CO. I didn't have an appointment. No one would see me. But... I scored some biz cards for Estes top brass. So I reached out to the president, and got referred to the vice president. After a couple days, I finally got to speak with her on the phone.

It was a good, amicable conversation. But the answer was clear: no. Because, Estes is pivoting. They have a new business plan. And that business plan is retail.

They specifically are cutting off many e-commerce only dealers, and I expect more in the future.

They almost cut off Hobby Lobby. It's no accident that you saw massive clearance, and now their stock items are less, and the clearanced items will never be coming back.

I would love for the days of my youth to return, when you could find a reasonable amount of Estes product stocked in every Wal-Mart, Toys 'R Us, K-Mart, oh and there were not one but THREE really awesome hobby shops (HobbyTown USA, and the like) within an hour's drive.

It does seem like Estes is trying to go back there. But so far, I can't name a single Estes retailer other than Hobby Lobby within a THREE hour drive of me. I can only name TWO really awesome well stocked retail hobby shop within FOUR hours of me—HobbyTown USA in Augusta, GA, and Atlanta Hobby in Cumming, GA. I happen to be about equidistant between both. Surprisingly, nothing much in any other major city in SC, GA, or NC that I have found.

This, and the fact that no vendors regularly and reliably patronize ROSCO/ICBM in SC, were reasons for starting up New Century Rocketry.

Only to have Estes cut me off.

Unless I open a retail store.

Which I can't afford to do unless someone has some languishing retail space somewhere that they are willing to essentially donate.

And even then, Estes Global Sales Director made it clear that they screen applicants for "good product-market fit"—meaning, they reserve the right to still say no, even to retail businesses.

I debated whether to say anything. I LOVE ESTES. I really do. But I hate that they are trying to be the only e-commerce game in town, at a time when the market has moved on from retail categorically, and shipping prices are very onerous and getting worse.

This ad in the latest issue of Sport Rocketry couldn't be any clearer: estesrockets.com is the only place they want you to order online.

View attachment 644532

Note the bottom right: "Available at your local hobby store (??) or EstesRockets.com"

It's not just me that have been cut. I can name two others you'd recognize that have either had their dealerships revoked or downgraded recently. And a third one that is doing massive clearancing which suspect is for the same reason.

As of right now, I have no available sources for new Estes products. Luckily, I have quite a bit in stock, and will no doubt continue to find more. But without being able to order from Estes, the time may come when I have no choice but to drop them.

And what of the retail? Is WalMart, Ace Hardware, or some other retailer in my town and nearby towns going to start carrying Estes? That would be nice, but it hasn't happened. And I don't think it will, after Hobby Lobby's partially unsuccessful re-negotiations, which the other big retailers probably know about.

Add to that Estes ongoing and very obvious internal communication and execution issues, from approving vendors only to reject them days later, to sales personnel being on three different sheets of music, to the near-impossibility to get anyone at Estes on the phone, to their very inconsistent and often unsatisfactory customer support request handling—these things have me legitimately worried about the future of this company that has been the cornerstone of the hobby for so many decades.

It's really hard for everyone in this business. Those who are doing it are doing it primarily because they want to. I want Estes to succeed. I want to see their products more widely available from a retail perspective. But I also think they are ignoring some clear signals in the industry and have some internal laundry to sort out.

I hope they can make this work.

I hope they don't take this wonderful hobby down with them on a bad bet poorly executed.

Please, do not use this thread to air all your random grievances with Estes. I don't want to start a bash-fest. I'll be asking the moderators to keep this thread on topic.

And especially, if you have any USEFUL advice for those of us in the business, I'd love to hear it!

New to the forum here. Speaking of Ace Hardware I was at mine in Northern California last weekend and on my way to the checkout there was an Estes display off to the side with a few kits, motors and wading. It definitely shocked me but now it makes sense