Predictions on Discontinuing Sets and their Secondary Market Value

ringleheim

I'm still getting caught up reading this thread (it's fascinating) and am on page 70.

I have a question for those who are actively engaged in buying (and selling) Lego as an investment.

Let's say you bought a given set x 20 waiting for it to become discontinued. A few years have gone by and current asking price is as high as it is likely to get (you reckon). You decide it's time to unload the 20 sets. How long does it take to do that? Can you count on finding enough buyers, no matter how many you need, to unload the stockpiled sets?

One nice thing about stocks is that when you decide it's time to sell, you can sell them instantly. Lego is not necessarily like that.

I wonder how long it would realistically take to dump 20 or 50 or 100 sets of a given type in a reasonable amount of time.

BrickDancer

Wow the piece count for the WV Cottage has me excited already. That makes it bigger than Helm's Deep, UCS Y-wing or UCS X-wing and 100 bricks less than Kingdom Joust.

pharmjod

If you price something at the low end of its range, you can sell a lot of sets quickly if it is a desirable set. You might not make "max" profit, but as long as you are ok with that, it's not difficult to move a lot of sets. At some point you have to ask yourself do I need to quadruple my money, or even double my money, or is 50%+ profit acceptable. Every person will decide differently

Pitfall69

BrickDancer said:

Wow the piece count for the WV Cottage has me excited already. That makes it bigger than Helm's Deep, UCS Y-wing or UCS X-wing and 100 bricks less than Kingdom Joust.

Yes, I'm very excited to see the set. I think I'm more excited for the Haunted Mansion though no matter how nice the Cottage is.

BrickDancer

^Oh yes on HH also for me, my GF has already asked to get that early enough to make a Halloween layout for decoration. Haunted House is the 20th biggest set and the incoming WV Cottage will be about #31. My guess at RRP would be $139.99. A touch higher than usual, but my feeling is Lego is bumping up the RRP on new releases now to adjust for currency/inflation for the next 3-4 year period.

Pitfall69

ringleheim said:

I'm still getting caught up reading this thread (it's fascinating) and am on page 70.

I have a question for those who are actively engaged in buying (and selling) Lego as an investment.

Let's say you bought a given set x 20 waiting for it to become discontinued. A few years have gone by and current asking price is as high as it is likely to get (you reckon). You decide it's time to unload the 20 sets. How long does it take to do that? Can you count on finding enough buyers, no matter how many you need, to unload the stockpiled sets?

One nice thing about stocks is that when you decide it's time to sell, you can sell them instantly. Lego is not necessarily like that.

I wonder how long it would realistically take to dump 20 or 50 or 100 sets of a given type in a reasonable amount of time.

We will have to let our resident hoader...ahem I mean reseller @LegoFanTexas tackle this one. I have sold a lot of sets and I'm sure it depends on how popular the set is and how expensive it is. Even though UCS MF, CC, GG are highly sought after sets, their price tag may have them sit in ones inventory for awhile. Popular medium size sets may fly out of your inventory faster, but you probably won't make so much money. If a set has reached its max secondary market price the longer you sit on the set the more money you will lose due to inflation.

cbaker1974

ringleheim said:

I'm still getting caught up reading this thread (it's fascinating) and am on page 70.

I have a question for those who are actively engaged in buying (and selling) Lego as an investment.

Let's say you bought a given set x 20 waiting for it to become discontinued. A few years have gone by and current asking price is as high as it is likely to get (you reckon). You decide it's time to unload the 20 sets. How long does it take to do that? Can you count on finding enough buyers, no matter how many you need, to unload the stockpiled sets?

One nice thing about stocks is that when you decide it's time to sell, you can sell them instantly. Lego is not necessarily like that.

I wonder how long it would realistically take to dump 20 or 50 or 100 sets of a given type in a reasonable amount of time.

Check completed listings on eBay and you can get a feel for how long it would take to clear them out at max price...it really depends on the popularity of the set. Usually there are at least 5-10 of the same sets ending on the same day, for the very large and expensive sets less than that. But you could still probably sell one every other day and not worry about competing with yourself...just depends on the past sales volume. Smaller sets (like polybags), you can usually sell several per day without price deflation. Something more towards #10030 you'll need to space them out a bit (every 3 days or so would probably work).

CCC

ringleheim said:

One nice thing about stocks is that when you decide it's time to sell, you can sell them instantly. Lego is not necessarily like that.

I wonder how long it would realistically take to dump 20 or 50 or 100 sets of a given type in a reasonable amount of time.

That's not quite true. Some stocks are not so popular that you can sell them instantly at the price you want. For high volume stocks, buyer and seller prices are typically close. or very low volume stocks, you can wait a long time to sell. Lego is similar. Some sets are popular and are easy to find buyers for. Some are not so popular, and you can wait weeks, months or years at what you consider a reasonable price.

Bandit

^ I'm pretty sure you're arguing just for the sake of arguing here. His point is valid for pretty much all stock any average person buys.

LegoFanTexas

Bandit said:

^ I'm pretty sure you're arguing just for the sake of arguing here. His point is valid for pretty much all stock any average person buys.

Yes, that is true, because listed stocks on the major stock exchanges have market markers, who are there to make sure there is always a market for the stock and always a reasonable bid/ask spread.

http://en.wikipedia.org/wiki/Market_maker

There are over two thousand market makers in the USA.

gmpirate

Lego is no different than anything else. The higher the price, the lower the volume and vice versa. And obviously certain times of the year are better than others.

Farmer_John

Where's the link for the Winter Village cottage? Anyone know???

samiam391

No pictures, but: http://www.eurobricks.com/forum/index.php?s=e49d0267f75bcbc973a93975f75fe0cb&showtopic=72048&st=0

Farmer_John

Thanks...

Bandit

Haven't been to eurobricks in a while -- wow that Friends skin is terrible. :)

prevere

Survey Question: Will the HF sets on clearance at [email protected] still be there by BF? LOL

LegoFanTexas

prevere said:

Survey Question: Will the HF sets on clearance at [email protected] still be there by BF? LOL

:) I doubt it...

BrickDancer

Looking at last year's EOL sets, some are doing quite well already like EN, IF both at about 50%-75% over RRP. SW sets like AT-AT #8129 and Tantive IV #10198 are both at about 50% over RRP also. But I think the Ninjago dragons are still head of the pack at about 150% over RRP. What other sets have done well since going EOL this past December?

prevere

WTS is about 100% over.

LegoFanTexas

8129 has done very well... 10198 also has done better than I thought it would, considering how many times it was on sale and how fragile it is.

pvancil27

10198 looks very nice if you throw it up on a pair of stands though. I actually like its look better then the #10019 despite being a bit smaller.

Regret missing out on the 8129. It's sadly the "one that got away"

y2josh

8129 isn't much of a surprise, as the AT-ATs always seem to do very well after EOL. 10198 is more surprising, though not completely unexpected.

j0rdantay10r

Amazon has 10193 MMV in stock for 99.99. They'd previously been out for a while. 22 left as of 7:22 p.m. ET 7/28

http://www.amazon.com/gp/product/B001USHRCK

LegoFanTexas

j0rdantay10r said:

Amazon has 10193 MMV in stock for 99.99. They'd previously been out for a while. 22 left as of 7:22 p.m. ET 7/28

http://www.amazon.com/gp/product/B001USHRCK

That has happened several times over the past month or so, they'll find a handful in the warehouse, then sell them, then be out for awhile. I doubt they are actually getting shipments of just 30 or so, that isn't enough for Amazon to bother with I'd think.

That is the set that just won't die. :)

Farmer_John

They might as well take the MMV and repackage it as LoTR Brandywine...

mathew

^ You know that's really not a bad idea. It apparently still sells well. They could just update it with new soldiers from the Kingdoms theme. That and numbered bags.

Legofanscott

Its been out for so long and its still a big seller?

Is it the hoarders that are still making it a big seller?, considering it is relatively cheap and an exclusive do they think its maybe a safer bet than say the imperial shuttle or tower bridge?

brickupdate

With regards to MMV, I think the consumer market is drastically larger than the collector or reseller market. That "hoarders" could turn a set into a big seller is probably unlikely, except in very certain circumstances, such as a particular set selling out quickly right around a Black Friday sale, etc.

As far as MMV being a better investment, the "problem" is that because it is less expensive to invest in, more people do so. Whereas many can't afford to stock up on $250 sets and hold them for a year or two or three. This is why the Republic Dropship was a "surprise" hit on the aftermarket. It didn't have as mass appeal and was pricey, so lots of potential resellers largely ignored it, or bought 1 or 2 or 3, not 10 or 20 or 30 as they would with MMV.

That said, MMV just has to rise in value $100 in the aftermarket for you to double your money. Imperial Shuttle has to go up $250 for you to double your money.

roxio

^IS is a banker, even today I can buy sealed copies for under £150 i.e nearly £100 off rrp and resell today for around £215. Or wait a couple of years and resell for £300 ? £400 ? £500 ? ????

Pitfall69

Resellers make up a small percentage of the people buying Lego sets. MMV is just a very popular set and for what you get it's a great value for the money.

richo

^ it is great value for money.

LegoFanTexas

Pitfall69 said:

Resellers make up a small percentage of the people buying Lego sets. MMV is just a very popular set and for what you get it's a great value for the money.

It is, which makes me wonder why it is still out. 1,601 parts for $99 will really start to make the newer sets look out of place, given the price and content.

Jabba's Palace, 717 parts for $119 will look rather silly next to it.

Pitfall69

I wouldn't mind if they made something similar with the new Knights Minifigures and the new goat and chicken molds. Even if it went for $110, it would still be a great value.

hoyatables

Update: according to Adam Smith's invisible hand, a complete but used version of Market Street goes for $660.

prevere

^^If Lego released MMV today it would be at least $150.

mathew

^ I was thinking more like $120 similar to Joust. I'll be honest though, the recent price hikes have me re-thinking this hobby. I get more joy out of MOC'ing than I do building a big set just for display. I just wish Lego would sell the individual bricks cheaper. Pick-a-brick is so over priced for a lot of pieces.

prevere

I think the price of the hobby is forcing many to become "part-time" resellers - just to maintain a budget for new sealed sets.

The_Mack

It took me awhile to figure out why MMV is so popular. I think one of the reasons is the building close to make four walls, and make a full model. This isn't really illustrated or shown in screen shots. That makes it very popular among AFOL's. It's a great play/display piece. I didn't understand why it was until I saw that.

prevere

^Agreed. Once you build it, you fall in love with it. I opened one and sold the buildings, tree, oxen, etc individually to double my money and buy a second "free" so to speak. So much fun to put together.

FollowsClosely

prevere said:

I think the price of the hobby is forcing many to become "part-time" resellers - just to maintain a budget for new sealed sets.

Yep.

madforLEGO

LegoFanTexas said:

Pitfall69 said:

Resellers make up a small percentage of the people buying Lego sets. MMV is just a very popular set and for what you get it's a great value for the money.

It is, which makes me wonder why it is still out. 1,601 parts for $99 will really start to make the newer sets look out of place, given the price and content.

Jabba's Palace, 717 parts for $119 will look rather silly next to it.

Any Star Wars set sitting next to a 'regular' LEGO theme set, that should be a comparable price to parts included, will look silly.
LEGO overinflated SW set prices will always make sure of that.

Farmer_John

Am I imagining or are there more sets and themes available from TLG than ever? It seems like there are almost too many selections and that EOLs are being pushed out further and further from the release date.

One example is the Indiana Jones theme. Most of the sets available from IJ were only out about 1 year. Compare that to the PotC, which have had many sets out for almost 1 1/2 years and still going. Even sets from the Cars theme are on sale longer than IJ and other themes from a couple years ago, and I just can't believe Cars is that big a seller. I could also mention MMV and DS, but those may be special cases of hugely popular sets. There also seems to be more SW sets available than ever before as well...

I am wondering if I'm wrong on this, and if not, how this will impact the aftermarket in general?

LegoFanTexas

I think Cars and PotC have been around because they aren't selling...

I still find Space Police III sets on the shelf from time to time, those didn't sell either.

IJ was probably gone quickly because it is a popular theme. Rest assured, when MMV and DS go, they'll be gone very quickly. They are special cases, or at least DS is, I don't know why a CASTLE theme is still here, but whatever... :) If Joust retires before MMV does, then that must set some kind of record, MMV, a CASTLE theme would have outlived its replacement, KINGDOMS, and continued...

There seem to be a lot of one and done themes, Dino comes to mind, as does Monster Fighters....

On the other side, Ninjago has been a huge hit, and Friends is all new... Superheros has done very well...

Yea, there are a lot of sets out, tons of choice... I think buying them all is probably no longer realistic, when it might have been at one point.

Legofanscott

Surely it makes more sense to EOL stuff thats not selling than it is to get rid of stuff that is selling?

CCC

Legofanscott said:

Surely it makes more sense to EOL stuff thats not selling than it is to get rid of stuff that is selling?

The problem is that they plan and manufacture ahead. They don't make 1000 sets and sell them, then see how they do and make another 1000 if they sell. They make 100000s of sets, then try to sell them. If they don't sell well, then they hang around.

EOL'ing is more about clearing one set, to make way for another set from the same range. Why EOL Cars when it doesn't have much impact on, for example, Ninjago. Whereas they will EOL a popular Ninjago set for another Ninjago set, to keep the line with a limited number of sets out at any one time.

turtle1173

I talked with a manager friend of mine at TRU today. They did a lego "reset" the past couple days. He had to increase the space for lego product so they could put the new sets out. He was frustrated because headquarters was sending him more black pearls and QAR's. He could only guess that these were sets that would be heavily discounted for Black Friday.

Farmer_John

@LegoFanTexas - As you said in an earlier post (at least I think it was you), shelf space equals $$$ for companies such as Walmart, TRU, Target, and even TLG B&Ms. Who wants to have something on their shelves that isn't selling? The opportunity costs are extremely important for these important for these companies, and having unsellable lego sets taking up space seems like it would catch their eye rather quickly.

Another thought is that the duration of licensed themes (Cars, IJ, PotC, LotR, etc.) are agreed to before hand, and who knows what's in those contracts. Perhaps Cars was a two-year agreement and TLG has to produce those products per the agreement. I would love to see the legalese of a typical licensed agreement with TLG.

LegoFanTexas

^ You're quite right, every foot of shelf space in Walmart has to pay for itself... to a point...

There are multiple ways to pay for shelf space, one way is via sell-through, another way is by selling the shelf space outright. There is a reason Frito-Lay owns 75% of the chip isle in Walmart and most grocery stores, they buy it... That is one reason why the Frito-Lay guy comes in and stocks those shelves (not the only reason, but one of them).

Ditto with breakfast cereal, soda, crackers, etc...

If TLG wants Friends in the girl isle, they can work that into their deal with TRU, Walmart, etc. If they want 3 months of endcap space, that is worked into the deal as well (what, you thought endcaps were FREE?!?) :)

I don't know if TLG must produce a certain number of sets, but I'm sure they have a minimum per set license fee, so they might as well make them. Some will be a hit, others won't, but you roll your dice and take your chances.

Keep in mind that Cars is really Disney, which is also PotC, Disney Princess, Toy Story, etc. So it probably is a multi-property licence with all kinds of terms and options. Some lawyers probably got paid good money to write it. ;)

Pitfall69

I think regardless how bad POTC does in retail, it should still do well in the after market, at least the QAR and BP.

While we are still talking about MMV...Is Lego going to release another castle theme set at the end of the year like they did with Kingdoms Joust? I'm surprised Mill Village Raid hasn't done well in the after market. I thought it was one of the better sets released other than KJ. It is the only set that has goats and the white chicken.

LegoFanTexas

^ BTW, that is of course how TLG honors the 30% discount for ALL resellers. They can do a deal with me, sign a contract with me that says that I will get basicly "most favored trading status", meaning I'll get the lowest offered prices for LEGO sets. No one will pay less than me, not even Walmart.

So Walmart really does pay 70% of RRP for the sets, just like I would. But then TLG turns around and buys shelf space, end cap space, floor advertising, newspaper circular advertising. You know those things you get in your mailbox from the local paper that have a Walmart insert, guess what? Walmart doesn't pay for those, the companies with products inside them do.

That is how Walmart and TRU and Target really gets the sets for 50% off RRP (more or less).

Which makes it all the more remarkable that TLG is making a profit, given that for the average $100 set, they really get about $50 of that. For that $50, they have to design it, produce it, print the box and instructions, box it all up, and ship it half way around the world.