Predictions on Discontinuing Sets and their Secondary Market Value

binaryeye

LegoFanTexas said:

CCC said:

There are of course two views but considering that this is a Lego fan site, it seems strange to refer to the wide range of current sets available as a problem.

Yes, but this is also the reseller thread. :)

That's not what it says on the tin. The discussion about when sets will be discontinued is useful to non-resellers, as well.

Dad

Here we go again. Its accepted that this is the reseller thread. It doesn't say that on the tin, you are correct. But it is the reseller thread. Period.

LegoFanTexas

It is about their secondary market value, which is primary a reseller concern.

Yes, it is true that non-resellers might want to know when a set is going, but frankly, if you are buying for yourself and you want a set, buy it as soon as you can, some sets (Zombies) go away in a flash.

mathew

For what it's worth Grand Emporium is currently out of stock on Amazon. But Fire Brigade is in stock. If for some reason GE goes before FB I can foresee it doubling in price overnight.

mathew

Like others have said, I think the modular line is getting stale. I kind of like the Palace Cinema (except for all of those stupid windows), but at the same time it feels like it was designed by a group of people rather than a singular vision like the earlier ones. It's kind of sad that I can say that my favorite part of a Lego set are the stickers (movie posters).

Lego is pumping out the sets but by doing so they are losing some of the magical quality that makes them desirable to collectors.

TheLoneTensor

mathew said:

Lego is pumping out the sets but by doing so they are losing some of the magical quality that makes them desirable to collectors.

What? 15 current sets at $200 and up is oversaturation? No way!

Dougout

I would say there is saturation because sets aren't being retired as often. They can keep adding sets every season, but the stores don't have enough space to display it all. I expect a big retirement party sometime in the future.

nkx1

^Maybe the stores wont be capable of carrying most or all current sets, but there's plenty of room in warehouses; and plenty of internet buyers. It's plausible Lego is adjusting it's historical retirement practices in general, since they're missing out on all the fun (profit) in the aftermarket. Maybe we'll be seeing a lot more Death Star-type runs of 6+ years for popular sets.

Of course, like others have highlighted, there's always the reality that sales of older sets will likely detract from sales of newer ones. So who really knows what will happen.

coolpix

The main reason for these modular sets to remain longer in catalog are the resellers. The first 3 modulars did not sell well while they were in catalog and were retired with big markdowns.

Recently resellers purchased many of these "new" modulars (since FB), plus plenty of DS, to guarantee their profits when they retire, thus increasing overall sales, which probably made TLG keep them in stock for longer to increase profits on them.

I think that with resellers tired of waiting and unloading them recently, combined with the lack of discounts on exclusives will decrease their sales so TLG will start to retire them at an increased rate than we have seen the past couple of years.

LegoFanTexas

^ The interesting thing is that it is quite possible that TLG has held off retiring FB for just that reason.

While the only retired modulars were CC and GG, many people have been buying not just FB, but GE and PS, not wanting to "miss out".

I've seen many posts here from people saying they stocked up on GE last Christmas, just in case it went out.

When FB finally does go, that bubble will burst and many casual resellers will say, "what the heck happened!?!" when FB doesn't double overnight.

I have been contacted by three different buyers wanting to buy out my entire stock of FB sets for the purpose of resale, so clearly there are still people who believe this set will do well. Only time will tell on that one of course.

Assuming that FB doesn't double overnight, and perhaps doesn't even double within a year, we might well sell resellers stop buying them across the board, in which case TLG might do a surprise retirement of GE/PS/TH all in the same year, in which case the latter 2 will likely surprise jump in price, repeating the cycle. :)

Isn't supply and demand fun! :)

dougts

That idea would seem to be self-conflicting:
1) step one: keep sets (FB, DS, MMV) in production longer to drive up hoarding, drive down the quick rise if aftermarket prices, and drive (at least seom) resellers out of the market
2) step two. do a surprise early retirement of the next batch of sets (GE,PS,TH), which will surely result in a quick rise in aftermarket values, which will inspire more resellers to enter (or reenter) the marketplace.

Makes no sense.

I have a hard time believing LEGO is purposely delaying retirement dates with the intent of toying with the reseller market. Now, i would believe that items are being kept in production because they are selling - and some amount of that is do to resellers. but it's the sales driving the delay in retirement, not the plan of trying to monkey with resellers.

I also believe LEGO is moving some of the older exclusives to a different model - online only. there are a number of items they stopped shipping to stores ages ago, yet they continue to sell online. This makes a ton of sense actually, given limited shelf space, etc. Keep the hot items in the LEGO stores for the first year or so, then slowly convert them over to [email protected] only and keep producing and selling them as long as they are moving in sufficient quantities.

Basta

LegoFanTexas said:

....a surprise retirement of GE/PS/TH all in the same year, in which case the latter 2 will likely surprise jump in price, repeating the cycle. :)

Isn't supply and demand fun! :)

Indeed it is, although TLG could always "manage" the retirement of these sets. Span it out over a year or so and add the Retiring Soon tag to each set. If they did this I think we would see a bit of a spike in reseller purchases even from some of those who had given up on these. Which would help keep the secondary market prices down, intern softening the affect of the cycle.

LegoFanTexas

dougts said:

That idea would seem to be self-conflicting:

Makes no sense.

I am not suggesting that TLG is doing it on purpose, rather that it will happen just because.

In other words, because they probably aren't managing the aftermarket, it will swing up and down until they finally decide to pay attention.

LegoFanTexas

dougts said:

I have a hard time believing LEGO is purposely delaying retirement dates with the intent of toying with the reseller market. Now, i would believe that items are being kept in production because they are selling - and some amount of that is do to resellers. but it's the sales driving the delay in retirement, not the plan of trying to monkey with resellers.

Exactly what I said. :)

FB and DS are still in production because they are still selling. Some of that is to the end customer, some of that is to resellers. How much to each is debatable.

What I'm suggesting is that when FB retires, if it doesn't rise much and takes a long time to go anywhere, resellers will stop buying the other modulars still out (GE/PS/TH) very quickly.

When those sales slow down, TLG might decide (strickly due to the sales numbers) to retire those sooner. If they retire sooner than expected, they'll rise in price faster.

Then the resellers will jump back in and buy the next batch, thus keeping them out longer.

Rinse, lather, repeat.

LegoFanTexas

dougts said:

I also believe LEGO is moving some of the older exclusives to a different model - online only. there are a number of items they stopped shipping to stores ages ago, yet they continue to sell online.

Like what? My local LEGO store still has DS and FB on the shelf. In fact, they carry almost everything LEGO currently makes, new and old.

Not every LEGO Brand Retail store can do that due to space, I'm thankful to live next to a larger than average store. :)

SirKevbags

Is it really possible that the volume of sales to re sellers is significant in keeping sets in production for longer? Now this is just opinion but for me FB and DS are still selling because they are outstanding sets and incredible value considering they have not risen in rrp since release. Of course there have been sales to re sellers but I'm not convinced there are enough of them to have any production impact.

coolpix

^ I strongly believe resellers impact TLG sales on exclusives more that most people believe. If you have 10 resellers that will stock up 15 Death Stars each, its 150 sets sold... And I have seen this happen right here on his forum several times. It would take 150 "regular customers" to buy the same amount of sets for their own personal use.

@dougts I also have a hard time believing that TLG makes any decision based on what resellers do. All they want is sell product. They could not care less if resellers buy the same product over and over for the purpose of reselling. All they do is make decisions based on numbers, that's all.

@LegoFanTexas Yes, I think we will see that "rinse lather repeat" effect sooner than most people think, specially now that sales will slow down due to the discount restrictions on exclusives.

Gavin83

This is why I'm surprised on TLG hard line stance on resellers. I honestly believe that they make up a greater percentage of their profits than they give credit for and if they wiped out resellers they would notice a serious dip in profits. I think the whole aftermarket does them a massive favour.

Some resellers (even on here) spend $100k plus a year on lego. How many new families would it take to make up that shortfall?

All TLG care about is their profit. If they feel they can make more money keeping a set out longer they'll do so.

CCC

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CCC

Gavin83 said:

This is why I'm surprised on TLG hard line stance on resellers. I honestly believe that they make up a greater percentage of their profits than they give credit for and if they wiped out resellers they would notice a serious dip in profits. I think the whole aftermarket does them a massive favour.

Some resellers (even on here) spend $100k plus a year on lego. How many new families would it take to make up that shortfall?

All TLG care about is their profit. If they feel they can make more money keeping a set out longer they'll do so.

Those resellers are not just stockpiling sets forever, they have to sell them at some stage. Who do they sell them to? New people to lego or people that missed them. That takes away money from current lego purchases. Which is why having lots of modulars out at once is a good thing for lego. People buy current direct, rather than EOL (at inflated prices) from other sellers.

SirKevbags

@coolpix I couldn't disagree with the sales that you describe. I've seen them myself although likely with less frequency with not being as involved with those threads. Would be fascinating to be able to know the facts. The reason sets were purchased etc.

I don't think the habits of people here can give an accurate market representation. All just opinion but it will be interesting to see how it pans out

CCC

coolpix said:

^ I strongly believe resellers impact TLG sales on exclusives more that most people believe. If you have 10 resellers that will stock up 15 Death Stars each, its 150 sets sold... And I have seen this happen right here on his forum several times. It would take 150 "regular customers" to buy the same amount of sets for their own personal use.

I am sure the numbers are much larger than that. But consider the lego thought process. If they spot orders of 1000 people buying 20 each, that is 20000 they know are destined for the secondary market. So resellers reckon they can shift that amount in the not too distant future once the set retires. So what does lego do? Retire the set and let the resellers fulfill those 20000 people over the next few years, or keep the model in production as there is still likely to be demand for it. They don't have to produce the 20000 all at once either. They can produce in batches and stop if demand falls off. In the meantime, they can be designing the new improved model which can come out once they finally retire the old one.

The result is then that they can fulfill demand for the older set during its lifetime and they make 20000 extra sales of it, which have gone to resellers. Then the new one comes out, and they start to fulfill demand for that. That is win for lego, win for the consumer. Of course it is idealised, and the switch from one model to another is never that smooth, and it may become uneconomical to do small batches but if it is multiple 1000s of larger sets per batch then it probably makes sense.

It won't work for every model, since not every one is replaced like for like and there will always be demand for older models too. But for any iconic model which the range just has to have, MF, DS, etc it will mean that resellers have to shift to other models or ranges - some of which will be more risky.

ecmo47

Just a quick aside from the above discussion but #6868 (Hulk breakout) is gone from SOH, Walmart.com and Target.com. My Target has a bunch on the self and they are on sale for $37.00.

CCC

^ Remember that two of the minifigs in that set have been in very widely available polys, Loki is as cheap as chips having appeared in two other sets. The set itself is OK, but really the only thing going for it is the maxifig of the Hulk.

Bumblepants

^^ Hulk was in the Sydney Opera House?

coolpix

^^^ there are a lot of "viewers" on this forum that don't speak up and comment on threads, but are just reading or getting reselling info, so we cannot underestimate te power of this forum, and I agree, the numbers are probably higher that that.

I don't think TLG scrutinezes too much what resellers are doing. One quick search on eBay is enough for anyone to see there is a resell market and for how much sets are going, so TLG might be taking in consideration their own numbers. I do not believe that the aftermarket takes away too many sales on new sets.

There are plenty of nice modulars available right now for whoever is coming into the hobby today, still Cafe Corner and Green Grocer only raises in price because after getting all current ones, some people will go after what they are missing. The same will be true for GE, FB, PS and so on. So in reality, there will aways be room for both things, and TLG will only look into their own botton line in a per set basis, making their decision to retire them or not this year or the next.

We have more resellers today then ever before, still TLG breaks their own sales record every year. I don't really think they are concerned with resellers at all. They might even appreciate them.

hendrikdejager

All stores in The Netherlands have -25% discount. What do you guys think of 42009 for 120 Euro (~162 USD)

Bosstone100

^^ I told a friend of mine (who is now an online reseller of whatever he can get cheap) about Brickset and he said this week in fact that he's told about six people ... and I'm sure they are each telling people also. The word is out.

Good thing is, if he finds a great deal, he gives me first crack at the set at his cost. :-)

rancorbait

LegoFanTexas said:

Yes, but this is also the reseller thread. :)


"You will never find a more wretched hive of scum and villainy"

I'm kidding! I'm kidding! Don't ban me ;-)

BrickDancer

^^Tell them all the important information is in the first half of this thread and to start there :)

dragonhawk

Bosstone100 said:

^^ I told a friend of mine (who is now an online reseller of whatever he can get cheap) about Brickset and he said this week in fact that he's told about six people ... and I'm sure they are each telling people also. The word is out.

Good thing is, if he finds a great deal, he gives me first crack at the set at his cost. :-)

It's the end of the world as we know it ...
It's the end of the world as we know it ...
It's the end of the world as we know it, and I feel fine ....
---R.E.M.

prevere

Aftermarket is like a yo-yo. In the meantime, I'll be building and sorting through it all, and for the rest of eternity.

y2josh

CCC said:

So resellers reckon they can shift that amount in the not too distant future...

Next Sunday, A.D.?

madforLEGO

coolpix said:

The main reason for these modular sets to remain longer in catalog are the resellers. The first 3 modulars did not sell well while they were in catalog and were retired with big markdowns.

Recently resellers purchased many of these "new" modulars (since FB), plus plenty of DS, to guarantee their profits when they retire, thus increasing overall sales, which probably made TLG keep them in stock for longer to increase profits on them.

I think that with resellers tired of waiting and unloading them recently, combined with the lack of discounts on exclusives will decrease their sales so TLG will start to retire them at an increased rate than we have seen the past couple of years.

I do not believe that CC and GG were ever heavily discounted when retiring, and that listing on LEGO.com with Green Grocers appearing for 75 bucks was a fantasy as that set was long sold out before that price appeared.
Granted I saw Cafe corners at Walmart for 120 almost permanently (thats right, Walmart was selling CC at $120 back in the day) but I would hardly call that a big markdown. As for Market street, one reason why it is so sought after is that LEGO never discounted those and and pretty sure that either the other retailers did not have those, or if they did again did not discount them.. they just disappeared one day.
But the stocks of mods now being hoarded will affect pricing but I still see FB being sought after and going up fairly quickly due to it being a fire station mod, but again that is just me.

I do agree that lack of discounts on exclusives will slow down hoarders, at least until the EOL date then you will probably have those robust sellers go an buy at retail knowing they can still make some money of them when they are gone.
But in any case that will just make it more lucrative for resellers because of less available after EOL... supply and demand.

jcb193

I wonder how many green grocers or UCS Falcons really go to completists or model builders. Don't you think a lot of it is inexperienced "investors," or other flippers? How many times have you heard some parent say outloud when buying a B-wing "Maybe this will be the next UCS Falcon, etc." It's a totally different game. Lego has to be paying attention to resellers. It doubles their sales (Buy one, keep one). Heck, they sold 20,000 technics sets in a day.

I also think that it is a much different market than it was 5-10 years ago. They didn't have nearly as many lego stores. Online purchasing was not as prevalent. They HAD to move stock. They HAD to freshen the lines. They HAD to retire sets.

These days they could theoretically leave sets around forever and simply leave them on the website and ship from a DC.

Supersympa

@hendrikdejager
it is a very good price for that beautifull technic set!

doriansdad

Yep the reselling game is nowhere near as agood as it used to be. TLG have been banning resellers, ebay has been banning sellers and offering 1 million free listings and rolled out a broken search engine and raised fees, and there are alot more folks willing to drop over 6 figures on inventory nowdays.

The end result is higher prices to acquire stock, alot more competition, it is alot more difficult to move stock and fees are higher when doing so. Personally I would not recommened reselling to anyone looking to start nowdays. 6 years ago you could be a newbie and make every mistake in the book and still rake in nice money. Nowdays unless you know how to exploit every single angle involved in a reselling operation and not make any mistakes you are going to get your behind handed to you.

cloaked7

^ Yup, I agree. Personally I'm going to gradually get out of the LEGO reselling business. It has reached it's peak. I've sold other collectibles over the years (been selling on eBay for 15+ years) and have moved on with a genre when the profit margins started shrinking. That's beginning to happen with LEGOS, and most likely profit margins will continue to shrink.

It's getting more and more difficult to get sets at great deals (which is a key aspect), have them be in demand relatively soon, and not sold by everyone and their brother (who seem to be OK with making a little profit). Generally I want to sell an item for at least 2X what I paid for it, otherwise it simply isn't worth the bother.

Lastly, I think LEGOS over saturation of sets and their no discount policy will end up hurting most everyone. Time will tell, but I don't think either of those policies will bode well for LEGO.

Pitfall69

jcb193 said:

 Lego has to be paying attention to resellers. It doubles their sales (Buy one, keep one). Heck, they sold 20,000 technics sets in a day.

If you are referring to #41999, Lego didn't sell all 20,000 in one day. I'm curious to know the numbers, but I could still order from US [email protected] almost a week after it was available. They also restocked Lego stores a few weeks after the first wave was gone.

@cloaked7 . Excellent. One less person to compete with ;)

cloaked7

"Excellent. One less person to compete with ;)"

he he.... Glad to help out! Course, I leave and 10 take my place.

jcb193

doriansdad said:

Yep the reselling game is nowhere near as agood as it used to be. TLG have been banning resellers, ebay has been banning sellers and offering 1 million free listings and rolled out a broken search engine and raised fees, and there are alot more folks willing to drop over 6 figures on inventory nowdays.

.

I think they will try to cultivate the casual resellers (the guy that buys a few sets), but try to go after the mega-resellers.

madforLEGO

The small resellers will die out. The mega resellers will always resell as long as they make money due to volume as much as profit per unit.
This will hurt not the resellers but those who miss out on EOL sets IMO, especially so if they go back to a hard 2-3 year run time for all sets, if not less.

ecmo47

^ If the reseller market remains lucrative enough, it will be taken over by the retail giants who have the ability to store massive amounts of sets. We are already seeing Target and others mark up sets to Toys-R-Us levels. It will be Walmart squeezing out all the Mom and Pops again.

Lootefisk

madforLEGO said:

The small resellers will die out. The mega resellers will always resell as long as they make money due to volume as much as profit per unit.
This will hurt not the resellers but those who miss out on EOL sets IMO, especially so if they go back to a hard 2-3 year run time for all sets, if not less.

I believe the opposite to be true. Small resellers will always exist. I'm not so sure profit margins will remain high enough for large resellers like LFT. Once bigger, better and different opportunities arise 6 figure resellers may move on to other things.

Its one thing to store a few things in your closet to fund your hobby at low profit margins and yet another to rent warehouse space and run a reselling business.

stevemack

The longer you can store discontinued stock, the bigger the advantage you have over your fellow resellers if you asked me!

CCC

^ That depends on there being buyers when you want to sell, and that the price doesn't plateau. Price rises can be wiped out by storage costs, insurance, etc.

Farmer_John

Do the comments on this thread influence decisions made at TLG regarding set retirement?

Yeah...I know that resellers are a small percentage of TLG customers, and yeah...I know that this thread only includes a small number of resellers. But as someone with experience in product management, we always look for "data points" with which to make decisions. It's easy to look at the data on how much of what product is selling. It's a little trickier trying to determine what the market is thinking about specific products you are responsible for.

If I was responsible for the decisions of a set of products, I would (obviously) use sales data...but I would also find a few sites to periodically review that have discussions of what the market thinks. This is probably the biggest thread out there on the heavy spenders and their mindset regarding specific products.

In short, we (Brickset Forum) may be influencing the EOL dates to some degree...

doriansdad

stevemack said:

The longer you can store discontinued stock, the bigger the advantage you have over your fellow resellers if you asked me!

That is true if the money locked up in stock cannot earn returns greater than which the stock appreciates. As profit margins continue to fall you will lose by holding stock. Take for example 10193. If you hold this set for 5 or 6 years and can then sell it for $200 on ebay you have done well right? No, you have just lost your shirt. You may kid yourself that your were smart, but that is all you would be doing.

TheLoneTensor

ecmo47 said:

We are already seeing Target and others mark up sets to Toys-R-Us levels.

We are?

wagnerml2

I don't sell a lot of unopened stock, but the complete used market is tanking big time. I just sold two complete used #8019 Republic attack shuttles over the past few weeks. Had sold 7 or 8 of these last year at this time and averaged $65-$75, this one sold at $26 and one sold at $35. Other SW sets tanking as well. I understand that these are not highly sought after, but the market does seem to be softening considerably.