Five Questions with Shawn Palmer
We have been reporting on the news of Schumacher USA Closing it’s doors, and I decided to sit down and talk with Shawn Palmer (formerly of Shumacher USA) and ask him a few questions about what he’s up to and what went down.
1. So I find it a bit quixotic that Schumacher decides to close down its office in the good ole’ USA, but that’s my opinion. From talking to you a few days ago, the news didn’t seem to throw you into some funky existential crisis, but just what are your feelings on the closing of the US office?
Well, Adam Bailey and I kinda precipitated this. We both get job offers/inquiries fairly regularly and we have turned them down equally regularly over the last few years. However in January we were approached with something we just couldn’t ignore. I hate to say things like this, but there were a great deal of things in play for Schumacher USA at the time that I just cant expand on publicly. Suffice to say that the more Robin Schumacher and I talked about the past present and future of the office in relation to the opportunity on the table for Adam and I, over time it became clear that this was one of those rare instances where everyone involved was going to be better off after parting ways professionally. I gave a verbal commitment to King Golden (parent company of Speed Passion, Speed Power and etc.) in January, and after some deliberation Robin decided to service the USA dealers and customers directly from the head UK office just as they have done for the rest of the world since the inception of the company.
But you asked about feelings…
I’m just home after cleaning out the final shelving and misc. from the office. It was completely empty when I left. After serving USA customers from that same location for 20 years, I’m a little sad it’s gone. I’m also a little frustrated that I didn’t get done what I set out to accomplish there – bring Schumacher legitimately to the forefront of the RC car market in the USA. I got really close, and we could have made it there this year with the economy finally turning around, and I can’t help but feel like I’m leaving unfinished business. But those feelings are tempered with a great deal of excitement and energy for what we’re going to do for King Golden, the local shops, and our customers in the USA. I can’t wait to start crack-a-lackin and spreading the word this Monday morning!
Read the rest of the interview RIGHT HERE. It’s a good read, and has some interesting incite to the current industry.
2. Your are arguably the best marketing man in the rc biz today. I can easily think of two west coast rc companies that could desperately use your services, why did you decide to go with King Golden?
Wow – you are far too kind. KG and I go back quite a few years. I spoke to the owner shortly after I joined Schumacher, and my first impression was that this guy is WAY out there. He was talking about doing things that no ESC could do at the time (running sensored and/or sensorless, and therefore opening up all sorts of software goodies like advance, throttle response, punch and etc.) and I wondered if he was plain nuts or just had really high hopes? We were getting calls or emails about bringing on new speed control and motor lines almost weekly at the time, and my standard reply was “send me a sample and we’ll go from there”. Man did we drive some ugly stuff during that time. I’d send them the feedback on what it would take at the very least make them saleable, and then what they needed to improve on for the future. I can’t remember ever getting a reply other than ” That costs too much” or “We’re not interested in changing anything”. When the Speed Passion proto stuff showed up, it was a bit more polished than most but still needed a lot of work. I sent the feedback in expecting the same reply as usual, but was shocked when I got the mail. They wanted more detailed info, they wanted market analysis, they wanted sales forcasts and most importantly they wanted to fix everything I pointed out, and start working on the future stuff immediately. They asked if they sent a corrected sample in a few days could they get more feedback and development help? That was the start of the last few years of a beautiful relationship with them, and also a great snapshot of the company and their management style. Sure they want to sell a billion units a week, but they know that’s not possible without a truly great product with great people supporting and continuously developing it.
But the main reason this opportunity really got my attention was the sales model. Robin and I have talked since day one about going factory direct or consumer direct but that model doesn’t work well with the Schumacher product line of top level race platforms and stoopid fast nitro parking lot missiles. King Golden’s lineup however gives the USA consumer the best of all possible worlds. We’re starting something here with this business model that’s never been done before, and we’re right on the edge of turning the first phase of it loose March 1st.
3. This industry, like most, isn’t as much about what you did for me yesterday, as it is what can you do for me tomorrow. So just what are you going to be able to do for Mr Joe Smith consumer in the weeks/months to come? What can Mr Joe Smith hobby shop owner expect from you?
This all centers on the hobby shops. I have a solid history at Schumacher of not competing with my dealers for sales. The price on the website was what we sold for, and the dealers made great margins because their distributor let them have that margin and didn’t discount the product themselves to capture consumer sales. Here’s an interesting factoid – since the dawn of the internet purchasing era, Great Planes and Horizon’s consumer sales have steadily risen from almost none, to around 33% the last time anyone would confide those numbers to me several years ago so it’s most likely even higher today. The hobby industry in the US at that time was around a billion dollars a year in sales. So the LHS’s own distributors were taking 330 million dollars worth of sales out of their own dealers’ pockets. Is it any wonder the local shops are drying up like a puddle in Death Valley?
Another product of the internet is the globalization of the market. No brand actually needs a traditional distributor in the USA anymore. And furthermore, we’re all well aware of the awesome prices on hobby goods coming out of Hong Kong the last few years. So the local shop isn’t competing with the shop down the road anymore (mostly because they’ve closed down), they’re competing against every Tom Dick and Harry with a website willing to shell out product for 1% less margin than the next one (including their own distributors).
So lets look at an ideal situation:
1) Some folks want name brand stuff, and some are willing to take a chance with something they’ve never heard of, but this market always comes down to the price point. We all want to have fun for as little cash as possible. Hong Kong pricing can be silly low on both of the above, so we want:
Hong Kong Pricing
2) Everyone needs some service before or after the sale. Either picking the right power system, finding out battery specs or which dealers have parts. And what happens if your new ESC blows up, or gets crunched in a crash? Where does it need to go to get fixed, and who do I talk to? (and will they speak English, how do I call Hong Kong, and what time is it there anyway?). So we want:
USA Staffed Support/Service Office
3) I would hope that most of us are interested in keeping our LHS in business so we don’t have to wait 3 days or pay overnight shipping for that wheel nut we lost or those body clips we dropped into the grass the night before a race or bash session right? Plus, a lot of folks want to fondle, smell and taste something in person before they plunk down the cash for it. And here is where the real kicker comes in – what if your LHS had it right there on the shelf for the same Hong Kong price as the internet? AND he’s actually making bucks selling it. So we want:
Hong Kong Pricing Right In Our LHS
This is exactly what we’re doing at King Golden for Speed Power batteries starting March 1st, and Speed Passion and the other lines shortly afterwards. Silly low pricing on name brand stuff, I’m heading the USA support/service office, and your local dealer can stock it at that very same pricing and make margin on it. Honestly I can’t think of a better sales/distribution model than to cut out all the middle men (except the LHS) to keep the pricing low, but still have fantastic support and customer service right here in the USA.
4. The writing seems to be on the wall that there is a big change coming in the way hobby products end up in consumer hands, the internet is finally making it’s mark, in more ways than one. More people are buying on-line than ever before, and many are buying on-line from companies overseas. How can this new distribution system benefit American consumers?
The obvious benefits are spelled out above, but I think the most important one is very subtle. Imagine hanging out at your LHS and someone comes in and sees a King Golden product on the shelf. He asks the most hated question of every shop owner “Do you match prices?”. “Because I can get this from Hong Kong for only… wait! Its the same price! This is awesome, I’ll take it!”. I think it’s time the shop owners can have their cake and eat it too. Bring on a line that they aren’t forced to squeeze all the margin out of just so they can move it, AND benefit from the consumer attraction that the great pricing will give them.
We will also be expanding our race team, sponsoring local and national events, putting together a points series here in Florida and then moving it nationwide. There are some big name USA companies doing much less than that right now to support and grow our hobby, much less anyone overseas. We’ve also been expanding our advertising presence, which again benefits the LHS by creating consumer demand for the products.
5. How much design input will there be from you and other Americans in the new product?
There has already been a ton of design/spec/development from me and our USA team from day one. I told Speed Passion I wouldn’t bring on a product to sell at Schumacher USA unless I was fully satisfied with it, and that always seemed to volunteer me into helping them on the development side. That time was limited however, because Speed Passion was just one of many lines we carried aside from the core Schumacher product. Now that I’m full time onboard with KG, that role will magnify to a large degree as well as advertising creation, user manuals and email online and phone support in addition to the dozens of other hats everyone who works in this industry always wears.
5a. Can you spill any beans about the rumors of a Short Course Truck and Sprint Car?
The RTR Short Course truck is nearly ready. We showed it at Nuremburg and it was so well received we got orders for multiple containers going all around the world right on the spot. I’m working on one with one of our top offroad drivers for the finishing touches at the moment. The price point on this one is going to blow your shorts off! I’ve been working with Backyard Chassis for an electric Sprint for quite a while now. It was originally going to be based on the new Schumacher Cougar SV, and that still may happen but it’s a little up in the air at the moment and may end up being a personal side project. When things settle down a bit after the initial rollout of the new sales model, I may get turned loose on a KG project of my own and my first choice would be something new for dirt oval.
6. Thanks for the interview Shawn, it is much appreciated. Who would you like to thank out there?
The pleasure is all mine Cubby. You and Brian have been very kind and supportive of me over the years and I sincerely appreciate that.
I want to thank my wife and kids for tolerating a husband and dad who works too long and hard. Thanks to Adam Bailey for being the most beloved man in RC racing and having a huge part in building the brand and making this whole thing come together. Thanks to Robin Schumacher for the opportunity to further one of the most storied and respected RC companies in the world. Thanks to Dawn Sanchez for being my constant sounding board and confidant through the ins and outs and possibilities. And special thanks to all you Speed Passion users out there – because of you, everyone will soon get to experience the smoothest speedos and motors in the biz at an awesome price and still have the best support possible. Get your local shops to contact me and get set up!