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Comments
Oh and no, Im not bitter - I wasn't after a minecraft set this christmas, i didn't miss out on the resale frenzy. I actually had a few myself - passed them all on to friends who couldn't get hold of one for whatever reason and sent one to a bricksetter in Canada as even with the postage it was cheaper than what the resellers were asking for.
I know I'll be the outnumbered voice here as I'm sure a lot of the hobbyists no doubt jumped on the minecraft bandwagon (certainly seeing them at the AFOL and Brick friday event buying up arm fulls of them would lead me to believe it).
I generally agree, the ban won't make any practical difference (other than perhaps to scare off a few hobbyist resellers without a store nearby) but if LEGO want to be seen to be doing something (and I think we have to agree they do) then this is doing something. Telling LFT or anyone else, well if its OK with you you can only buy 2 of each item every 6 months, or spend only $400 a month, that just looks soft. If they want to go after resellers they should go after resellers, and this is about the least they can do.
Why are people who were reselling being totally banned from buying ANYTHING via S@H rather than S@H simply adding limits on how many copies one person can buy per transaction and per account?
There is no logical, business case to be made for banning these people from buying online and clearly a negative effect from such a lazy, arbitrary and poorly communicated change in policy.
Words on the Internet don't come with the inflection and tone that they do in real life, so it might sound like I'm coming across harsh or combative.
I'm really not trying to, my primary concern here is that I believe TLG is making a bad business decision. My own business will continue on regardless, this doesn't hurt me, which is really the point. For all the ruckus, this accomplishes nothing.
I actually WANT to help TLG with this problem, I do understand there are business concerns for TLG. I get it, I understand your points, and I realize that LEGO customer service probably did get hundreds if not thousands of complaints about Minecraft (and perhaps Lloyd).
That is why I was offering solutions, ways to work with people like me, rather than kicking me to the curb.
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Think of it this way... If I have an ongoing relationship with TLG, then I have something to protect, I'll be more concerned about my long term dealer relationship than I will be with any one-off "deal" that I find.
I'm willing to meet them in the middle and work to protect the long term brand and image of the company, in return for them working with me.
Kick me out, and why would I continue to care? The closure of the ITD accounts just says, "we don't care about you", which means why should I care about them?
Is that good business?
http://www.fastcompany.com/54763/man-who-said-no-wal-mart
That is well worth a read to anyone who thinks all salvation for a manufacture requires that you sell to Walmart.
Snapper and LEGO have something in common, and if TLG isn't careful, they'll go down that path that Snapper did not.
If I was CEO of TLG right now, my primary focus would be on keeping the quality product and image that LEGO has. I would never dream of opening a factory in China, reducing my product quality, etc.
In fact, I'd be going the other way, making sure I made a premium product that stood the test of time.
You're not alone and I'm not talking about other resellers. LUG members who spend heavily on both time and money for no reward to promote the brand have had several slaps in the face recently. Again it is perceived that we are not needed right now. I consider LUG treatment a much more disturbing development.
Big buisnnes are in it for the money just like resellers, I really don't think a reseller is any worse (and in most classes they are probably much better) then a large multinational company. Just something to think about. It's all good, it helps create interesting discussion.
Oh right, you can't...
Ok, go ask China how well their system worked in the 60s...
http://en.wikipedia.org/wiki/Great_Leap_Forward
Oh yes, it sucked and tens of millions of people died from starvation because of it, until of course they reversed those insane policies and followed capitalism.
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Many people in the world think like you do, anytime they actually have any power and get in charge, it is a disaster, because while it sounds great on paper, it doesn't work in real life.
And no amount of wishful thinking will ever change that.
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Side note: I do respect your right to think any way you want, that is freedom and I do believe it is very important that people are able to have their own thoughts and beliefs, but I also think it is equally important that people educate themselves before forming opinions.
Many people in this world hold beliefs and opinions that are just plain wrong. Heck, there are still people who believe we didn't go to the moon in the 60s, and no amount of evidence will convince them otherwise.
Im all for capitalism, but capitalism doesnt provide a moral code on what we should do, rather than just what we can do according to capitalism. Thats left up to ourselves. Morals/social responsibility and capitalism aren't mutually exclusive and whilst I totally accept that you can see it as morally acceptable just as I see it as morally bankrupt, that you feel the need to denigrate it to a form of communism is bizarre in the extreme.
You also dont need to look do far, just at the lowest 25% of the US population if we want to look at an economic model failing pretty awfully too.
Why should they meet you in the middle. It is their company, their image. You may have ideas, but they don't have to listen to them. They don't need you. They don't need other resellers.
You know that you can continue reselling buying stock from other sources. I reckon Lego knows that too. You will continue buying grey goods for resale no matter what your relationship is with them. So why bother entering a relationship with you and the thousands of other small time dealers.
The question becomes, "how much profit is acceptable"? If there is any limit, then I believe you're going down a very dangerous path.
So I'm allowed to resell a kids toy for 2x rrp, but not 3x rrp?
Do you really want to live in a world where governments use threat of force to control that type of behavior? That same government then might tell you that you need to go do something else for a living, "for the good of society".
That is what China did in the 60's, and it was a disaster, and it is where such thinking leads.
The road to hell is paved with good intentions, and that is really the problem with socialism. I don't have a problem with you feeling that what I do is morally bankrupt, what scares me is that if enough people think like you do, then you'll elect political leaders who will decide to make such "beliefs" law.
That is the real problem. You can think whatever you want, so long as it doesn't get in my way. The minute you want to prevent me from charging whatever I want for what I have to sell, that is where the problem is. That is a straw-man argument, you're implying that open and free capitalism is responsible for the bottom 25% of the US population.
It isn't, they are there due to a lack of education, lack of good parents, lack of drive/desire, and sometimes just plain bad luck (after all, bad things do happen to good people sometimes).
Changing the economic model of the US won't fix that.
Some people are winners, some people are losers, most people fall somewhere in the middle. That isn't very politically correct to say, but it is the truth.
Their production issue is simple: they are producing at maximum capacity, selling everything they make, and it's apparent they could sell more. The solution, which they have been addressing, is to increase production capacity and streamline the chain.
Your solution: to paraphrase, "Let me choose what I want to buy and when I want to buy it."
So you want other retailers, including LBR, to advertise and essentially perform market research for you by stocking a product for its entire life cycle, so that you may swoop in at the end and maximize your benefit by allowing others to assume much of the cost and risk?
That makes this following statement hypocritical if that is your idea of a mutually beneficial relationship:
The principle is the same... I don't mind if someone doesn't like guns, no problem. Where I have a problem is when they want to take mine away.
Don't take away my ability to earn a living, and I won't take away your ability to think and believe whatever you want.
Live and let live... :)
But isn't that the source of most problems in the world, when one group of people wants to control how another group lives? More acceptance of other people's beliefs would bring more peace and understanding, I believe...
You're right, they don't have to listen to anything I have to say. Why bother? Because then they are offering me something that alters my behavior. If I have a relationship to protect, then I won't always be so selfish in my business decisions, I'll have my relationship with TLG to think about.
I always thought the purchase limits were way too low for ITDs. That is perhaps what went wrong there, they were selling to anyone who could purchase $10K of product.
Alter the limits to $100K per order, $1M per year, and you'll be left with the large full time resellers. If I'm doing a million or more in business with TLG directly each year, then a few Minecrafts or Lloyds are not going to make me willing to risk that business relationship.
There are two primary factors that have created the type of reseller market that TLG is trying to curb.
1. Short supply of popular sets
2. Price discrepancies between national markets
We have already discussed (1) a fair amount.
On point (2), resellers whom have found it profitable to become an exporter of goods are directly reducing LEGO's bottom line. I'm not passing judgment on whether it's fair or wise for TLG to continue disparate pricing, but it's what they seem to want to do.
The ITD agreement seems to have these two points very much in mind. To address only selling popular sets, it requires that you purchase and sell the entire LEGO product line. To limit or restrict international sales, it requires a B&M store front and prohibits internet-only dealers.
They are not offering me a ITD account, in fact I was a few days away from buying one last year, when they pulled the rug out from under all the on-line ITDs.
They will only offer a ITD to someone who has a B&M shop, sells locally in a retail store, carries other toy lines (LEGO must be less than 50% of the product carried), etc.
So they really aren't offering anything, since I don't have a B&M shop. My solution is an answer to the age old comment, "if you can't beat 'em, join 'em".
TLG can't stop me from doing what I do, so they might as well take advantage and profit. Yes, but in return, I'll give them 6 months notice of what I want to buy so that I'm not sucking up all their inventory right at Christmas. It allows them to better manage production and plan for such things.
Right now, I already have a pretty good idea of what I want to stock for this coming Christmas. Where and when I'll find the "deals" is unknown, but I know what I'm looking for.
I can buy it at retail, from "other sources", or directly from TLG. One way or another, I'll find it. Wouldn't it be easier for everyone involved, including both TLG and their big retail customers if, instead of sucking up product from retail at unknown times, if I just placed an order now for delivery in November? Then TLG can plan for that production and I'll leave their other supply alone. (after all, I only have so much money to spend on inventory, that isn't a bottomless well of cash) I'm going to do that anyway... Look at all the people in the reseller thread here, cleaning out Walmart and Target during clearance time, taking all the "good stuff".
Trying to stop that is like tilting at windmills, a waste of time.
Of course, I also posted the other path they could take, which is to rerelease sets doing very well on the aftermarker, and that would have more affect on resellers than anything else they could do.
This year, it is almost nothing because of the recent US Postal Service price increases.
For example, last year I sold several SSDs overseas, deboxed that set perfectly fits into a modular size box (24x20x4"). The price to ship that overseas to most countries went up by about 30%, haven't sold one yet this year (despite several requests, including two recent ones). After shipping, it just no longer makes sense.
So shipping costs are fixing #2 already, at least for large sets.
Right now, I already have a pretty good idea of what I want to stock for this coming Christmas. Where and when I'll find the "deals" is unknown, but I know what I'm looking for. There's a difference.
If you are buying from a third-party retailer to whom TLG already sold their product, i.e. Walmart, TRU, that's fine by them. They've already made the money they planned with those sets. The third-party retailer might increase subsequent orders, which is beneficial for TLG.
If you are buying from a LBR channel, while it's true they aren't losing out on profit, they haven't gained anything either because the assumption -- which is currently correct -- is that they would sell the product anyway. With that being the case, prohibiting sales to you might cause you do the former, or to enter into an ITD agreement, which are both more beneficial for them.
That just about says it all. Every reseller they've banned from S@H they've referred to their Authorized Lego Retailer program, which, given its rules, are a recipe for losing your shirt. TLG offers you only a broken business model. On a similar note, I just noticed my local Kohl's has stopped carrying Lego sets. Seems even Kohls can't profit off Lego, despite their high foot traffic. They still carry a few toys, though. I guess Mattel and Hasbro don't make Kohls jump through so many hoops, or make them beg for their products.
So you want to buy Lego at wholesale and sell it at retail? TLG has made that all but impossible. But what we really need to do is ban those evil resellers, right, Lego?
So perhaps Snapper is happy to sell to Walmart on their own terms, selling at a higher price point, but not interested in the $99 model.
After all, if I buy a million dollars worth of LEGO directly from TLG, why would I need to find other sources of product?
But they aren't OK to sell to me, even though they would have "already made their money" selling directly to me?
Uh, there is a hole in that logic my friend... :)
Money is certainly not the issue here.
I'm sure Lego received plenty of complaints about the lack of availability and price gouging from Minecraft. It wouldn't surprise me if they are after Amazon too because they allow reselling. No doubt Lego underestimated the popularity of Minecraft, but they have their set ways of managing inventory that are much more complex than you probably imagine.
Bottom line is that even though you may have spent $100K's on Lego over the years, it is negligible compared to the wrath of 1,000's of parents who complain regularly to Lego about price gouging. There are Megablocks and KREO competing with Lego for the almighty dollar. You may never buy a MB set, but there are plenty of parents who might just because they feel burned by their perception of Lego price gouging. Next they need to go after Toys R Us.
If you don't own a B&M toy store and strictly sell on internet and just sell lego, what difference are you compare to lego.com?
There is no way I could actually buy up all the supply if TLG would produce to demand. Imagine for a minute what it would take to buy up all of the City Police Stations to try and control that market. :) I have Imperial Shuttles for sale and LEGO.com does not. :)
So in that case, Walmart relented rather than Snapper.
Right now they'll offer me a ITD account, but under terms that make no sense, thus we aren't doing business together.
That's ok, life moves on.
The whole thing bothers me more on principle of sound business decisions than anything else, I already wasn't sourcing most of my product from them anyway, so I can continue on as before. Instead, this is more reflective of a business that is making lousy decisions and not taking care of its customers.
The prior comments regarding LUGs and how they are being treated is another point on how they are taking care of, or rather not taking care of, their best customers.
But you're missing the key difference that I was highlighting. Buying from Walmart doesn't cause an inventory problem in their LEGO Brand retail channel, while buying from S@H or LEGO store does.
Whether they sell 50 copies to a reseller or one copy to 50 individuals, they make the same money. They are not losing on that sale in isolation, but since they have shown that they can sell virtually everything they have anyway, they are not turning away additional revenue that some seem to think they are.
The difference is that the former route leaves a swath of customers that are disappointed that the item is out of stock. They lose any additional sales that might have otherwise resulted from customers coming to buy the out-of-stock merchandise. And they are allowing the scenario where the ultimate cost for the consumer is higher -- dollars that TLG will never see. Sure, they can't stop it from happening universally, but they can try to limit it in their own retail operation, and it appears that they are.