Predictions on Discontinuing Sets and their Secondary Market Value

prevere

^I believe he doesn't mean officially through LEGO, but generally committing some money to resell it.

SumoLego

It bears reminding that despite whatever nonsense occurs on the secondary market, Lego is only in the business of selling product to the primary market.  (And managing their licensing and other sources of revenue.)

ryjay

Lego loves the secondary market....it fuels the primary

Pitfall69

Selling Lego is just like selling anything else; you always want to get the highest margins possible, but the margins on Lego are quickly shrinking. The smart reseller will adjust their strategy snd find a way to keep their margins from shrinking too much. There are plenty of resellers that are happy with small profits. If they have large sums of cash to buy huge amounts of Lego, they can sell below what everyone else is selling and possibly push the small time resellers out of the market. 

ryjay

Another huge factor that small resellers face is shipping cost. Often, that cost alone is much higher then what a bulk shipper pays, and I think many small sellers subsidize that cost to be, or look, competitive.

Pitfall69

^That's all built into the margin. Initial cost of the Lego, packaging, shipping and fees. In some cases there are storage fees. 

You also hsve to realize that a "legitimate" reselling/selling business will not have to pay tax, in most cases, on their purchases, so those resellers will have a slight advantage over casual resellers.

ryjay

+/- on both sides.  "Legitimate" dealers wont pay sales tax on purchases, but they will pay income tax, and other business taxes.  And sometimes they must collect a sales tax.  I'm sure many little sellers pay a sales tax when buying, but skip on all the other  taxes.

How many times will you hear people complaining about ebay, paypal fees and such, but have little clue that retailers also pay fees on credit card purchases.

When selling a commodity item, it really comes down to what you bought the item for.

77ncaachamps

Make TOO MUCH money off it (there's a minimum, I forgot what it was), and PayPal will send the Feds how much you reaped via PayPal.

I figure Toy Shows/Lego shows will become more popular due to cash transactions.
(Then again, who carries cash with them?!)

ryjay

Many toy shows require a business permits or sellers license now, even a temporary event licenses may be needed.   Some let you sell once a year without requiring one, but they will take your DL # and personal info, and that can be reported to state boards or equalization.  For temp ones, you estimate what you will sell and pay the tax amount.  

I think the paypal amount is over $20,000 then they report it to the IRS

pharmjod

As I understand it Ebay/Paypal only reports if you have over 200 transactions AND over $20,000 in sales. I know for a fact several members of this forum that have WAY WAY over $20,000 in sales but don't get close to the 200 transactions or just stop selling once they get close so that they don't trigger the auto reporting. Then it is just up to what you think is right or wrong to do. 

Pitfall69

Let's just put it out there...Whether you make $100 or $100,000 during the year selling anything, you must pay taxes on that income, unless that $100 is your only income for the year...lol. In the US, if you are under the age of 65 and are single you don't have to file a tax return if you made under $10,150 last year. I do not know what the exemption number is for 2015. 

prevere

FYI, called [email protected] about an order issue, and they are taking order "limited to 1" for Santa's Workshop now.

Pitfall69

Eventually, EVERYONE will have to collect/charge sales tax when selling items online. Starting in October, Michigan will require all residents to pay sales tax on Amazon purchases. You always had to pay tax at the end of the year on all online purchases, but it was never enforced. There is even a section on the Michigan 1040 tax form for online purchases. Now, they won't have to worry about enforcement. 

goshe7

^and adding you to their watch list for potential reseller ban. ;)

ryjay

California automatically charges you a user tax for on line purchases based on your income.  If you think the charge is too high, you must prove it with documentation and list all that you bought showing it is less.  It is far easier to just accept the default charge.  They know we are all buying more on line then the predetermined schedule.

Pitfall69

^That is the schedule that is on the MI-1040 I was referring to. If you don't have receipts, you can use the schedule to figure out how much tax to pay based on your income.

ryjay

BTW, has anyone taken a look at how many Pet Shops are in stock in Europe and how many sold over the last two weeks?  I think that is all driven by speculation towards the secondary market.

SumoLego

ryjay said:

Lego loves the secondary market....it fuels the primary

It doesn't, not one bit.  It's the other way around.  In the late '90's when Lego was on the ropes, there was no secondary market to fuel anything.  

It's akin to Hess Trucks, Precious Moments and trading cards.  

Frankly, most of the millions and millions of dollars worth of sets purchased are for kids, and they're played with.  

If Lego were to disappear today, it would take awhile before the antique collector market would re-establish itself.  And that market pales in comparison to the TRU and volume-driven consumer toy market.

I'm sure Lego would prefer for their product to have a three-year playability window, so everyone would have to buy new sets or replacement bricks more often.  

Instead, they have to continually market, strategies and innovate to keep their customers coming back and to get new customers in the door.

I mention this all the time, but if Lego were interested in the secondary market, it would own Bricklink.

You think no one at LEGO has considered re-releasing the UCS Falcon?  If they could sell a sufficient number at a profitable margin, they would.  Problem is - they can't... so they won't.

They'll sell a bazillion of the new $100.00 Falcon at an 88% profit margin next year.  

ryjay

@sumolego....I disagree

Basta

Pitfall69 said:

Let's just put it out there...Whether you make $100 or $100,000 during the year selling anything, you must pay taxes on that income, unless that $100 is your only income for the year...lol. In the US, if you are under the age of 65 and are single you don't have to file a tax return if you made under $10,150 last year. I do not know what the exemption number is for 2015. 

In Australia it's a little different, the ATO (Australian Tax Office) doesn't want to process someone's buisness tax return for a $100 profit. It will cost them more than the $30'or so they'd collect in tax.

Interestingly the differance between a "Hobby or Buisness" has it's own page and video on the ATO's web page. Even then the wording is still a little vague, they use a lot of "may be" "mostlikley" etc.

Basically I think they prefer not to know about people selling a few thousand dollars worth of goods. The ATO realises that if most of these people actually have to go to the trouble of documenting and filling out a bunch of forms they will either not bother at all or end up running at/or close to a loss (after all the deductions they potentially could claim).

This just ends up costing the ATO money and reducing the amount of money being injected into the economy. 

SumoLego

Another good example is the Death Star playset.  It sells well enough to stay in the catalog in apparent perpetuity.  

They could have retired it five years ago - I'm sure the aftermarket would be very lucrative.

A primary producer wants to meet the retail demand, and not service a comparatively miniscule market of collectors.  Auto manufacturers don't make cars today expecting they'll be worth more in the after-market.  

Nonetheless, we can agree to disagree.

Pitfall69

@Basta , That's what I am saying. In the US, if you make less than $10,150 and meet certain criteria, you don't even have to file a tax retur. The IRS couldn't be bothered. So, that's why I a made the joke about $100 :)

juggles7

SumoLego said:

ryjay said:

Lego loves the secondary market....it fuels the primary

It doesn't, not one bit.  ABSOLUTE STATEMENTS, LIKE ALL, NONE, 0%, 100%, ALWAYS, NEVER, ETC. ARE USUALLY WRONG, INDICATIVE OF SOMEONE OVERSTATING THEIR CASE. It's the other way around.  In the late '90's when Lego was on the ropes, there was no secondary market to fuel anything.  YOU'RE COMPARING APPLES AND ORANGES, BAD TIMES WITH GOOD TIMES.  NOW THAT LEGO IS DOING WELL, THE SECONDARY MARKET COULD BE FUELING IT, AT LEAST TO SOME DEGREE. LEGO LOVES WHATEVER FORCES ARE CAUSING THEIR LARGE EXPENSIVE SETS TO FLY OFF THE SHELVES. YOU'LL JUST NEVER GET THEM TO ADMIT THEY LOVE THE SECONDARY MARKET.

Frankly, most of the millions and millions of dollars worth of sets purchased are for kids, and they're played with.  GRANTED. BUT THERE'S ALSO A SECONDARY MARKET FOR LOOSE, 100% COMPLETE SETS.

I mention this all the time, but if Lego were interested in the secondary market, it would own Bricklink.  THAT DOESN'T FOLLOW. I'M INTERESTED IN APPLE STOCK, BUT I DON'T OWN ANY BECAUSE I THINK IT'S OVERPRICED. BECAUSE I DON'T OWN IT DOESN'T MEAN I'M NOT INTERESTED.

Pitfall69

^First off @juggles7 are you EVER GOING TO ANSWER MY PM'S?

Second, that is an awful analogy ;)

SumoLego

Companies invest in enterprises that generate profit.  Companies also seek to distribute risk. 

Lego got themselves in trouble with Galidor, television, theme parks, t-shirts, pens and all sorts of ancillary products.  Strategically, they believed controlling the means of production and distribution (vertical integration) for non-core products would positively supplement their core business (bricks).  This meant they had to become experts in a wide variety of industries.  They were accustomed to controlling all aspects of production and distribution of bricks.  Doing the same in non-core products seemed a good plan as well.  It was a costly and a nearly fatal mistake.

This is not comparing apples to oranges.  The 'bad' time is precisely the time to analyze what works and what doesn't.  There is little to mask the relevant factors.  When times are good - that's when identifying relevant market factors is much more difficult.

The secondary market for bricks and sets at the 'bad' time was a non-factor.  If they could have dusted off older sets based on the secondary market prices - they'd have done just about anything to help save the company.  They didn't because the secondary market was a non-factor.
  
Similarly, Lego had to make the decision to reduce costs to service the Asian market.  Thus, factory and production facilities in China were built.  Is there a ton of theft - yes.  But it is a drop in the bucket compared to the increase in retail sales, and reduction in distribution expenses.  The days of shipping all of the product from North America and Europe are long gone.

(The company had similar reservations with moving their North American production to Mexico.  But money talks and the prospect of lost profits walks...)

Lego is doing well because they produce a product that provides exceptional value and jnterest to the retail public.  Not because they produce sets that post-retail secondary resellers make a few bucks on.

Let me put it this way - if we all believe that the Town Hall is 'worth' $1000.00 on the secondary market.  Why wouldn't Lego just sell the set itself for $1000.00?  They would then get to keep ALL of the value.

Why would they ever reduce the price on a set if it will inevitably be worth the same or more on the secondary market?  I've already answered this rhetorical question repeatedly.

Your proposition that the secondary market fuels the retail sales is analogous to arguing that the cart is pushing the horse... uphill in a windstorm...

I'll end this lengthy post with agreeing with your position with regard to Apple stock - 'I'm interested but it's too expensive'.  Apple stock is too expensive because it will not make me money with an acceptable amount of risk.  If Apple stock were $10.00 a share, I would expect lots of potential profit with little risk.

This is true with Bricklink.  If Lego perceived vast profits with minimal risk, they would be involved with their secondary market.  They are not.  Their money is better spent on innovation and finding the NEXT product to sell, not stepping over dollars to pick up pennies on products they already sold...

SumoLego

Is it possible Lego watches set prices on eBay, Bricklink and other secondary markets?  Of course.

Is that information going to have any impact on anything the company decides to do going forward - no.

Another example are the low-production exclusives i.e. SDCC, SW Celebration.  They are promotional items intended for and to draw attention to that particular event.  Mr. Gold is another good example with respect to the CMF line.  

If Lego believed there was a sustained market for those figures, they would just produce more of them and collect the profit themselves.

Too much economic theory for one day...

doriansdad

SumoLego said:

Let me put it this way - if we all believe that the Town Hall is 'worth' $1000.00 on the secondary market.  Why wouldn't Lego just sell the set itself for $1000.00?  They would then get to keep ALL of the value.

This analysis of Nike and their collectibles will answer your question and also show you why TLG is very concerned about protecting the secondary market of its products:

http://blog.campless.com/2014/08/19/an-inquiry-into-can-nike-get-that-resell-cash/

SumoLego

^  This story confirms my position, but does confuse that those 4% purchasing for the secondary market are part of the primary market as well.  The conclusion paragraphs are inconsistent with the analysis.

"But Nike has too much to lose by going after resell profits."

I posited the same for Lego.  My question was rhetorical.  It makes no sense for Lego to charge $1000.00 for a set, just as it makes no sense for Nike to charge $265.00 for a pair of sneakers.  It will hurt the PRIMARY market.

*That was my point as to why Lego and Nike ignore the secondary market.*

SumoLego

Nike and Lego are not adjusting their strategies to capitalize on the secondary market.  

'Protecting' is not the right word.  They are basing their production on primary market factors.  (As they should as producers.)

Brickaholic

The secondary market helps to increase the whole Lego brand perception as a premium product in a way, similar to the likes of Nike, Apple, Rolex, Gucci etc. Imagine what they would have to spend on advertising to boost and sustain that.

Speaking of advertising i can't think of a premium brand that advertises as little as actually Lego does.

CCC

It may increase the perception of the brand to those that know about the secondary market, but you'll be surprised how few people do know about the secondary market.  Most primary market sales go to kids. Their parents don't tend to know about bricklink and on eBay will tend to think sets are either second hand or new mainly from retailers.

Couple that with kids tend to want current sets. They want the ones that are in the current catalogue or club magazine or TV advert. Those kids' parents do not need the secondary market. Sure, there will always be examples of kids wanting older sets but the majority want current.

The AFOL population has grown in the last 10 years, or at least people are more aware of lego. No doubt the secondary market has also grown. But multiply the number of orders on BL by some average order value, and it is nothing compared to primary Lego sales.

CCC

As to advertising, it depends what you include. Lego club magazine, TV shows even the Lego movie are all forms of advertising.

Basta

Pitfall69 said:

@Basta , That's what I am saying. In the US, if you make less than $10,150 and meet certain criteria, you don't even have to file a tax retur. The IRS couldn't be bothered. So, that's why I a made the joke about $100 :)

Yes, we have a $18,200 Tax free threshold.

I was more talking about if you have a full time job and pay income tax etc. then on top of that you go and sell 5k of Lego on eBay. There is a bunch of stuff that is some what up for interpretation and you don't necessarily have to payTax on those sales. 

Brickaholic

CCC said:

It may increase the perception of the brand to those that know about the secondary market

So it does add to the brand perception as a premium product in a way then.
 

Pmh

Think that for some sets it is good that they hold their value on the secondary market,the potential for a rise is only important for traders.  On most sets like city the secondary market has no impact.

People are less prone to buyers remorse when set keep their value and this might be important for some of the adults who buy expensive sets. For me personally it did make it a bit easier to spend and I did buy one or two sets that I maybe would not have bought if they would be worth 50% or less in 2 years like city sets,even though I will never sell them.

There are also negative effects for lego, for example when the secondary market is very volatile. And every dollar spend in the secondary market is not spend at [email protected] Resellers and lego both compete for the same budget that people have to spend on toys.

Not sure how it would work with taxes in the Netherlands,its not something I have to worry about. Couldn't it be capital gains tax as its basicly an investment? lol.

Pmh

Maybe lego misses an opportunity to cater to wales. Wales are becoming increasingly important in the sales strategy of lots of different merchandise. In the gaming and gambling industry they are well known. They are very rich people who spend huge amounts of money on their toys. It is a very small group but because they can and will spend 1000 times as much as the regular customers it is worth catering to them for many businesses

With lego wales have no means to spend 1000 times as much as the average customer. If the average customer buys for 100 dollar worth then the whale would have to spend 100.000 wich is impossible at [email protected]  Lego resellers do partially fill this niche and I do think that there is an opportunity for lego to do the same. Maybe not with rehashes of old sets but maybe with very big and explusive sets costing well over 1000 dollar.

Dougout

So Lego is concerned with the aftermarket but doesn't have too much control because it can't really increase prices or it will lose primary sales.

Nike seems WAY more manipulative in their marketing schemes.  Example:  you can't get the shoes because they only sell to inside buyers.  Does Lego really prevent access to their products like this?  They don't advertise much, especially not their exclusives, but I don't think Nike does either.

I think the problem with Nike is that it is much more centrally focused on branding as a superficial idea vs branding with quality.  I've used other construction toys like Lego and nothing really compares.  To me though, shoes are shoes and branding is far less important when it comes to them especially when they reach over $90.  There are way too many people selling shoes, if I want branded shoes I will buy DCs and have the option of either a cheaper pair for $50 or the more expensive, yet better designed pair for $90.  In both cases I've avoided the irrational purchase of $170 shoes that is solely sold on it's brand.

The only reason people buy those shoes is the idea sold into their head by their friends or whomever they get the impression from that those shoes are "cool".  $30 Reeboks would do fine if they realized it.  I also suspect the people usually buying don't have the money to buy the new Nikes that come out every week but maybe are willing to afford $200 every 6-12 months for snazzy new shoes.  People are being dumb and following the herd.  This type of strategy is much easier to break down rapidly.  The one thing that will kill attention is frustration and it seems like some people might be a little frustrated with all those twitter posts.

Farmer_John

^Agreed! Nike seems to be a marketing company (you too can play basketball like Michael Jordan, etc.) with quality being secondary in my opinion. That and the fact that I've never found a pair of Nike shoes that actually fits me.

Alternatively, I do love my Reebocks - they fit great!

SumoLego

Lego does a significant amount of television advertising in the US.  (Mostly skewed towards their own properties - Friends, Elves, City and Pirates.  Very rarely are there ads for licensed products.)

The brand perception is that of unparralled quality and relevant themes.  In their space, they are clearly the quality and value leader.  Most civilians hang onto their Lego because of the initial cost and perceived staying-power of the toy.  

The secondary market is a positive thing, please don't misunderstand that I'm not saying it doesn't exist, but in terms of strategic planning, I can guarantee that there are zero meetings at Lego discussing eBay or Bricklink's effects on how much they should price or produce the 2016 Superhero sets.

I'm sure they spend more time checking eBay to see what tangible challenges to their IP exist, and whether truckloads of stolen product from the Chinese and Mexican production facilities end up on the market.

SumoLego

Crap, I did it again.  Post was way too long...

^  If this isn't disturbing, I still have one pair of my 1995 'Frank Thomas' Reebok cross-trainers left from the 20 pairs I bought when they discontinued making them.  The best sneakers ever made...

Aanchir

SumoLego said:

Lego does a significant amount of television advertising in the US.  (Mostly skewed towards their own properties - Friends, Elves, City and Pirates.  Very rarely are there ads for licensed products.)

Might just be the channels/shows you watch, because I see LEGO Star Wars ads all the time. Other licensed themes too, but never as frequently as LEGO Star Wars.

SumoLego

There you go - someone over in the Lego marketing department is doing their job!

(As I help my daughter put together an Elves set...)

mathew

Been out of the "Lego loop" for a bit.  Just took a driving Florida Disney vacation with the family and hit a couple of Lego Stores on the way.  Here are some observations:

Downtown Disney Lego Store:  Aside from the awesome outdoor displays I was slightly disappointed with with the actual store.  The store is a giant oval with lots of space within to help with the flow of foot traffic.  Unfortunately there were very few sets on display inside the store.  Lots of stock and damaged box discounts (you have to ask).  Store staff was very friendly.  Pick-a-brick wall was disappointing.  Was expecting more variety.  No rare sets to be found.  Red-Five was missing from action (no biggie for me).  No Tower Bridges, Pet Shops, Cinema Palaces.  My guess is that these sets sell quickly as soon as they receive stock.
Regarding Downtown Disney as a whole:  Lego store is towards the back.  It rains almost every day in Orlando.  Sometimes for hours at a time.  Go early in the morning to avoid the crowds and the rain. 

Lego Store at Opry Mills in Nashville:  I was pleasantly surprised.  Large store.  Not too crowded.  Lots of sets on display.  I finally saw the Death Star built and I now want one.  They had three Red-Fives in stock (possibly more in the back).  Also plenty of Cinema Palaces.  No Tower Bridge or Pet Shop.  Pick-a-brick wall was ok, but nothing rare.  Store staff was ok.  Not as friendly as Downtown Disney but not bad.  

Pitfall69

Displayed Lego sets; that's another form of advertising. The Death Star is impressive when built and displayed. When people come yo our place of business and see the Lego display, there are always people that say "I did not know Lego made trains" and "I did not know Lego made such detailed building sets (Modulars)." 

Pitfall69

Another thing about Nike; you don't see people walking down the street with Lego and get beaten or killed for their Lego set. 

tamamahm

CCC said:

It may increase the perception of the brand to those that know about the secondary market, but you'll be surprised how few people do know about the secondary market.  Most primary market sales go to kids. Their parents don't tend to know about bricklink and on eBay will tend to think sets are either second hand or new mainly from retailers.

Couple that with kids tend to want current sets. They want the ones that are in the current catalogue or club magazine or TV advert. Those kids' parents do not need the secondary market. Sure, there will always be examples of kids wanting older sets but the majority want current.

The AFOL population has grown in the last 10 years, or at least people are more aware of lego. No doubt the secondary market has also grown. But multiply the number of orders on BL by some average order value, and it is nothing compared to primary Lego sales.

I want to echo this. I started this forum a few years back as a means to understand where sales on sets could be located. Much of my purchasing is for my kids, although some of it is for me and seasonal/holiday displays.

I have sets that I bought at discount to save for an upcoming Christmas or birthday. What I have found is that that these sets come out of my stash very, very slowly. Why? Because there is always a newer set that my kiddo sees that is advertised, or at a store, that is displayed, that is in a club magazine. That suddenly becomes THE top set for the holiday or for Christmas for my kiddo. While I might have had intentions of using that older set I picked up during clearance, it really is seldom used. (Thus I am an accidental holder of sets like zombies, townhall,  etc.) @CCC is dead on in that parents really do not need the secondary market, because there is always something new and shiny that is an option. (yes, there will be exceptions), but I have found I have really cut back on clearance sets because of this reason. 

Now,  I have bought an occasional smaller sets from the secondary market for my kid right as they were phasing out. The prices were within reason, and I was willing to pay that small Mark-up. I also have bought an occasional set months after they were gone on less popular lines, but one that my son loved (power Miners). Again, the mark-up was small, and not out of my range. On the flip, a friend suddenly was looking for fire brigade for her son, not realizing it was no longer being sold by Lego, and she did not understand why the price was so high. She was not aware of the secondary market (nor are any parents I am friends with). When I explained why she could not find it at a cheaper price,  she simply went back to the main Lego site to buy something else. 

mathew

Pitfall69 said:

Displayed Lego sets; that's another form of advertising. The Death Star is impressive when built and displayed. 

Yes it is.  I always thought it looked a bit of a mess from pictures.  In person it really resembles a giant Star Wars dollhouse.  I've had a dry spell with Lego lately as none of the new stuff really appeals to me (aside from the Sandcrawler) but seeing the Death Star finally built has re-ignited interest.  The question is if I can afford to purchase one before the holidays.  I think this really might be it's last hooray and it's currently easy to obtain.  

madforLEGO

The secondary market was really fueled, and started, by eBay. Obviously if there was no primary market there would be no secondary market.

However I think the secondary market DOES help those who left LEGO easily get back into it. Which will drive more business, however 'small' relative to current, into buying LEGO again. Maybe for themselves, maybe for their kids, maybe for friends and relatives kids. It would be interesting to see a survey of how many folks who are buying LEGO now are doing so because they initially went and found their old LEGO sets on eBay/ BL/craigslist, etc. of their youth and it then opened the door to buy LEGO from the source again.

So they can go a bit 'hand in hand' IMO, but LEGO does not need a secondary market to be successful (just the SW license apparently, and now the Marvel and DC licenses), and I'm sure that LEGO feels the same way or they would not be trying to take steps to stop reselling of product (even if that reselling is EOL sets after they no longer sell those sets).
What is amusing is that I hear LEGO employees tell customers that if they are looking for a set that is no longer made to go to sites like bricklink.com or eBay to find it, same with parts (if LEGO does not make them anymore that is).

SumoLego

Death Star as Lego dollhouse.  Great quote...

The fact that the customer service folks direct people elsewhere is a function of their philosophy.  They make the sets, sell the production amount and move on.  If I'm missing Smaug's head or it breaks three years from now, Lego is not sitting on a pile of extra parts from antique sets...

I'd love to see an experiment where Nike decides to sell their sneakers at secondary market value and see how quick that market disappears...

juggles7

SumoLego said:

 
HEY, @SumoLego WE AGREE FOR THE MOST PART. I APPRECIATE THE TIME AND EFFORT YOU SPENT TO EXPLAIN FURTHER. JUST A LAST COUPLE OF THINGS...

Let me put it this way - if we all believe that the Town Hall is 'worth' $1000.00 on the secondary market.  Why wouldn't Lego just sell the set itself for $1000.00?  They would then get to keep ALL of the value.  LEGO COULDN'T EVEN SELL OFF THEIR FIRST AND ONLY PRODUCTION RUN OF TOWN HALL'S AT $200, SO OF COURSE THEY WOULD NOT HAVE BEEN ABLE TO SELL ANY AT $1,000. WEAK DEMAND LED FEW RESELLERS TO ACCUMULATE THE SET, THEN IT RETIRED EARLIER THAN EXPECTED, LEADING TO THIS PERFECT STORM. YOU KNOW ALL THIS, SO I MAY BE MISSING YOUR POINT.

Why would they ever reduce the price on a set if it will inevitably be worth the same or more on the secondary market?  BECAUSE WHILE THE ITEM IS IN FULL PRODUCTION, WITH GOOD AVAILABILITY AT RETAIL, IT'S WORTH NO MORE THAN ITS SUGGESTED RETAIL (OR "GOING" PRICE). IT IS ONLY WHEN THE ITEM IS DISCONTINUED AND NOT WIDELY AVAILABLE, THAT THE ITEM INCREASES IN VALUE. THEY WOULD REDUCE THE PRICE ON A SET TO MOVE IT, TO GET IT OFF THEIR SHELVES OR OUT OF THEIR WAREHOUSES. WHEN SUPPLY EXCEEDS DEMAND FOR A CERTAIN SET, THEY ADJUST PRICE IN ORDER TO MOVE OR SELL THE PRODUCT. AGAIN, I BET YOU KNOW ALL THIS, SO I MAY BE MISSING YOUR POINT.

Your proposition that the secondary market fuels the retail sales is analogous to arguing that the cart is pushing the horse... uphill in a windstorm... EARLIER YOU WROTE THAT THE SECONDARY MARKET DOES NOT FUEL THE PRIMARY MARKET "NOT ONE BIT". CERTAINLY IT DOES, TO SOME DEGREE. EVERY TIME A RESELLER MAKES A PURCHASE ON THE PRIMARY MARKET, WITH THE INTENT TO LATER RESELL THE ITEM, THAT IS A PURCHASE THAT IS FUELED BY THE SECONDARY MARKET.