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Predictions on Discontinuing Sets and their Secondary Market Value

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Comments

  • floridabrickfloridabrick Central FLMember Posts: 158
    ^ I disagree with you regarding thier announcing set retirements.  It's a fact that's simply a marketing tool.
    MattsWhatBumblepants
  • floridabrickfloridabrick Central FLMember Posts: 158
    Don't be a fool as I once was, thinking Retiring Soon, Sold Out, Temporarily Out of Stock actually meant something.
    stluxSumoLego
  • TigerMothTigerMoth Member Posts: 2,343
    Batman said:

    Disagree. The secondary market eliminates the need for LEGO to conduct aggressive inventory sales. It's simple economics.
    No it doesn't. It just means that TLG include it in their calculations when determining production runs - as they would with any other factors.
    To further the point, if they didn't care they wouldn't announce set retirements. 
    They announce retirements to promote sales - to whoever might be interested. It is not an invitation to resellers to stock up.
    SumoLego
  • dougtsdougts Oregon, USAMember Posts: 4,129
    lordzarak said:
     See comic books, sports cards and Beanie Babies for examples.  
    oh not this again.  How many times does this terrible comparison need to be discredited on this site?
    madforLEGOBumblepantspharmjodYodaliciousTheLoneTensorSumoLegoOmastar
  • prevereprevere North of Bellville, East of Heartlake, South of Bricksburg, West of Ninjago City Member Posts: 2,876
    Totally fair comparison. These cards really tanked.


    Pitfall69YodaliciousSumoLegogmonkey76OmastarLEGOFan2
  • bandit778bandit778 Docking Bay 94. Member Posts: 1,960
    Going back to the Superheroes, at the other end of the scale to the Ant-Man set, how long do you think the1966 Bat Cave has got?
  • starwars4everstarwars4ever The Forest Moon of EndorMember Posts: 477
    I'd say a year and a half or two. It sell pretty well so it shouldn't be gone too soon.
  • BatmanBatman VaMember Posts: 20
    TigerMoth said:
    Batman said:

    Disagree. The secondary market eliminates the need for LEGO to conduct aggressive inventory sales. It's simple economics.
    No it doesn't. It just means that TLG include it in their calculations when determining production runs - as they would with any other factors.
    To further the point, if they didn't care they wouldn't announce set retirements. 
    They announce retirements to promote sales - to whoever might be interested. It is not an invitation to resellers to stock up.
    Who benefits the most off of retiring sets? Consumers or resellers? I've never seen consumers driving to every TRU at open buying 4+ sets of the same. 
  • TigerMothTigerMoth Member Posts: 2,343
    Batman said:

    Who benefits the most off of retiring sets? Consumers or resellers? I've never seen consumers driving to every TRU at open buying 4+ sets of the same. 
    Do you really think that any manufacturer or retailer is interested in anybody but themselves? Any action they take is for their benefit.

    They declare stuff as being retired to get rid of any remaining stock. They just want to get rid of what's left, and they don't care where it goes. They're certainly not doing it to give a heads-up to resellers.
    SumoLego said:

    I have yet to see anyone demonstrate where Lego benefits or garners any profit from the secondary market.  (It's because they don't.)
    It's more than that. The secondary market is an irritation to TLG because they're control freaks. They like to control every aspect of the brand and their image. But then, they're entitled to - it's their brand.

    TLG goes out and does their market research, plans accordingly and then resellers will collectively decide something different, that a set's worth stock-piling, and the plans go out the window because their primary customers have been inconvenienced. Suddenly, a nice little Christmas becomes an expensive option, only available on eBay - and who do you think gets it in the neck? Or when there are sets with vastly inflated prices, like the Falcon, in the press, most people turn round and think it's ridiculous - and quite possibly think the products are more expensive than they are. It's not good, and from TLG's point of view, they've lost control of the the thing they covet the most - the image of their brand.

    TLG can't do much to stop resellers, but they do what they can - the most obvious of which is blocking bulk orders.
    catwrangler
  • prevereprevere North of Bellville, East of Heartlake, South of Bricksburg, West of Ninjago City Member Posts: 2,876
    bandit778 said:
    Going back to the Superheroes, at the other end of the scale to the Ant-Man set, how long do you think the1966 Bat Cave has got?
    A long time. As in years.
    madforLEGO
  • SprinkleOtterSprinkleOtter Member Posts: 2,731
    TigerMoth said:
    Batman said:

    Who benefits the most off of retiring sets? Consumers or resellers? I've never seen consumers driving to every TRU at open buying 4+ sets of the same. 
    Do you really think that any manufacturer or retailer is interested in anybody but themselves? Any action they take is for their benefit.

    They declare stuff as being retired to get rid of any remaining stock. They just want to get rid of what's left, and they don't care where it goes. They're certainly not doing it to give a heads-up to resellers.
    SumoLego said:

    I have yet to see anyone demonstrate where Lego benefits or garners any profit from the secondary market.  (It's because they don't.)
    It's more than that. The secondary market is an irritation to TLG because they're control freaks. They like to control every aspect of the brand and their image. But then, they're entitled to - it's their brand.

    TLG goes out and does their market research, plans accordingly and then resellers will collectively decide something different, that a set's worth stock-piling, and the plans go out the window because their primary customers have been inconvenienced. Suddenly, a nice little Christmas becomes an expensive option, only available on eBay - and who do you think gets it in the neck? Or when there are sets with vastly inflated prices, like the Falcon, in the press, most people turn round and think it's ridiculous - and quite possibly think the products are more expensive than they are. It's not good, and from TLG's point of view, they've lost control of the the thing they covet the most - the image of their brand.

    TLG can't do much to stop resellers, but they do what they can - the most obvious of which is blocking bulk orders.
    Show me something that indicates that resellers are an "irritant" to LEGO. I doubt that the limit is there to stop resellers- how many resellers would buy 10x Pet Shops from LEGO for maybe double VIP points, when they could get a better deal from pretty much anyone else.
  • BrickDancerBrickDancer Dunes of TatooineMember Posts: 3,639
    ^There have been official letter statements from Lego about their irritation with Resellers hogging up new releases for quick flipping (different than the normal post-EOL holdings). I believe it was the Ninjago Lloyd spinners time period when this was happening. And you should be able to find the discussions of it on this 'Predictions' thread, though I don't know what page# they would be on. Guessing it would be quite a while back on 150-300 pages section.
  • TigerMothTigerMoth Member Posts: 2,343
    SprinkleOtter said:

    Show me something that indicates that resellers are an "irritant" to LEGO. I doubt that the limit is there to stop resellers
    You've been told about the letters. In addition, TLG have schemes to facilitate purchases by various groups - but not resellers, who are specifically barred from using those other schemes. And whilst it makes sense for large orders to be banned in Brand stores, why else would they do it online?

    I know it's not quite the same thing, but it's also pretty hard to become a distributor. As I said, they like to keep control of anything to do with the brand - for pity's sake, they even have Walmart and TRU jumping though hoops.
    how many resellers would buy 10x Pet Shops from LEGO for maybe double VIP points, when they could get a better deal from pretty much anyone else.
    I don't know; ask the reselllers - but quite a few have tried, been rejected, and even banned.
    SumoLegocatwrangler
  • SumoLegoSumoLego New YorkMember Posts: 12,091
    ^ The household limits are primarily for the Furby/Tamagotchi/Tickle-Me-Elmo profiteering speculation crowd.

    Notably on new products, and exclusives.  Toys 'R' Us would be happy to sell you literally every piece of Lego in their store if asked.

    Batman said:
    Who benefits the most off of retiring sets? Consumers or resellers? I've never seen consumers driving to every TRU at open buying 4+ sets of the same. 
    Consumers benefit because there is a new and exciting set to replace it.  And perhaps they can get the left-overs of an over-produced set on sale.

    Four different consumers may buy a set if it is reduced or on sale.  Or someone parting out a set for Bricklink.  Either way, that is a primary market sale.  And shame on you for making me agree with @TigerMoth.  (Kidding!)
    SprinkleOttercatwrangler
  • SumoLegoSumoLego New YorkMember Posts: 12,091
    This is also a good opprotunity to note that Lego does worry about how quickly sets sell out and the potential for 'embarrasing' shortages of popular products at Christmas, or a widespread potential to profiteer a popular set.

    Inasmuch as they try to anticipate demand, that is the type of production unknowns they adjust to every season.
    catwrangler
  • mountebankmountebank Member Posts: 1,237
    SumoLego said:
    ^ The household limits are primarily for the Furby/Tamagotchi/Tickle-Me-Elmo profiteering speculation crowd.

    Notably on new products, and exclusives.  Toys 'R' Us would be happy to sell you literally every piece of Lego in their store if asked.
    That's not true of the UK. There are many many examples of TRUS UK refusing to sell to people they believe to be resellers.
    Dad
  • cloaked7cloaked7 Member Posts: 1,448
    edited August 2016
    Show me something that indicates that resellers are an "irritant" to LEGO. I doubt that the limit is there to stop resellers- how many resellers would buy 10x Pet Shops from LEGO for maybe double VIP points, when they could get a better deal from pretty much anyone else.
    Being banned by LEGO from purchasing on lego.com.  If LegoFanTexas were still around you could ask him about that.  Also, I have friend that was banned just because LEGO thought he was a reseller, because he bought multiples of a lot of sets.  My friend did so because he's a huge LEGO fan and collector, not a reseller.  Oh the irony of being banned for being a rabid fan.
    TheLoneTensorSumoLegoReesesPiecesOmastar
  • starwars4everstarwars4ever The Forest Moon of EndorMember Posts: 477
    ^ A side affect of being a Lego fan is rabbis?!? =0 =0 =0
  • SprinkleOtterSprinkleOtter Member Posts: 2,731
    I feel the reason behind the "5 per household" limits are there to stop scaplers, not resellers. As sumolego said, that is more to stop the Tickle Me Elmo crowd so that a bunch of people can't buy up what is predicted to be a hot set this Christmas, and sell them at huge profit.
  • dougtsdougts Oregon, USAMember Posts: 4,129
    edited August 2016
    cloaked7 said:
    Being banned by LEGO from purchasing on lego.com.  If LegoFanTexas were still around you could ask him about that.  Also, I have friend that was banned just because LEGO thought he was a reseller, because he bought multiples of a lot of sets.  My friend did so because he's a huge LEGO fan and collector, not a reseller.  Oh the irony of being banned for being a rabid fan.
    yeah, LEGO was doing some serious reseller banning back in 2013-14, both in store and online. They even sent memos around to all their stores.  It *seems* they have backed off those stances somewhat compared to those days, but maybe they are just more quiet and smarter about it now. They got some pretty bad PR for a couple of their poorly handled in-store bannings.

    Yeah, LEGO is perplexing in how they treat their most loyal and high spending customers.  Most companies would LOVE to have that kind of ardent fans but LEGO seems insistent on alienating them at nearly every turn.
  • CurvedRoadPlateCurvedRoadPlate Member Posts: 257
    I was trying to army build a bunch of figs from Bricks and Pieces and got questions from the phone customer rep that felt like they were trying to determine if I am a reseller. I told them what I was building and mentioned I display at Brickworld. 

    Yes, I'd hate to be banned just because I'm a big fan of the product. 
    SumoLego
  • CCCCCC UKMember Posts: 17,955
    SumoLego said:
    ^ The household limits are primarily for the Furby/Tamagotchi/Tickle-Me-Elmo profiteering speculation crowd.

    Notably on new products, and exclusives.  Toys 'R' Us would be happy to sell you literally every piece of Lego in their store if asked.
    That's not true of the UK. There are many many examples of TRUS UK refusing to sell to people they believe to be resellers.
    I guess it depends on the staff / manager. In 2014 I was purchasing 21 of the same set (3 for 2 promo), and the cashier called the manager over and he told me they had more in the back if I wanted them.
    SumoLegocatwrangler
  • SprinkleOtterSprinkleOtter Member Posts: 2,731
    CCC said:
    SumoLego said:
    ^ The household limits are primarily for the Furby/Tamagotchi/Tickle-Me-Elmo profiteering speculation crowd.

    Notably on new products, and exclusives.  Toys 'R' Us would be happy to sell you literally every piece of Lego in their store if asked.
    That's not true of the UK. There are many many examples of TRUS UK refusing to sell to people they believe to be resellers.
    I guess it depends on the staff / manager. In 2014 I was purchasing 21 of the same set (3 for 2 promo), and the cashier called the manager over and he told me they had more in the back if I wanted them.
    What set warrants 21 copies?
  • CCCCCC UKMember Posts: 17,955
    ^ Iron Man / War Machine boat set. For resale, obviously. 
    SumoLegoSprinkleOtter
  • SumoLegoSumoLego New YorkMember Posts: 12,091
    edited August 2016
    ^ Look, we all know you cleaned them out of Fusion sets.  (For resale value.)
    pharmjod
  • starwars4everstarwars4ever The Forest Moon of EndorMember Posts: 477
    ^ He probably cleaned them out of all Chima sets while he was at it. (Also for resale and to replicate the giant 10,000 piece promo set) ;)
    SprinkleOtterPenkid11brumey
  • Farmer_JohnFarmer_John USA - 4,035 Miles from 62 West Wallaby St., Wigan, Lancashire, UKMember Posts: 2,404
    I'd say a year and a half or two. It sell pretty well so it shouldn't be gone too soon.
    Actually, that's what everyone was saying about the UCS Tumbler and it was out less than 1.5 years.

    For me, the Classic Batman set is an expensive set that's all about the minifigs. While I personally like the set, it's definitely a throwback set for AFOLs (1960s). I expect it to be gone by late spring of 2017...at the latest.
    bandit778
  • YodaliciousYodalicious DagobahMember Posts: 1,366
    CCC said:
    ^ Iron Man / War Machine boat set. For resale, obviously. 
    What does that say about me that I bought nearly that many for my collection purposes?
    SumoLegoSprinkleOttercatwranglerbandit778Omastar
  • SprinkleOtterSprinkleOtter Member Posts: 2,731
    CCC said:
    ^ Iron Man / War Machine boat set. For resale, obviously. 
    What does that say about me that I bought nearly that many for my collection purposes?
    Hmm... You want to make Iron Man's armory out of just two different suits?
  • RecceRecce Tiny Little Red DotMember Posts: 900
    Talking about multiple sets, my most number of Lego sets belong to 9471 Uruk-Hai Army at 25, followed by the Minifigure Presentation Boxes at 20, and 40148 Year of the Sheep at 17.

    The first one was to create an army, though obviously not enough, will need at least 100 to 200 sets to make a decent army.

    The second one is because I wanted all the door panels, of course the free classic spaceman figure wouldn't hurt either.

    The Year of the Sheep was given free last year during a local promotion with certain amount of purchase at the official Lego shops here, so yes, I did buy lots of sets to get a total of 19 of them! Swapped 2 of them for the Year of the Monkey set so left 17.
  • SprinkleOtterSprinkleOtter Member Posts: 2,731
    Pitfall69 said:
    Year of the sheep? No wonder these keep popping up all over the place.
    That's really supposed to mean no pushing sheep over the road, right? Right?? Right?!?
    ricecakeBrickDancerbandit778brumeyPitfall69Omastarlegomental
  • brumeybrumey AustriaMember Posts: 994
    i ve been to the army when i was 18.
    met a guy there who made sexy time with sheeps now and then!
  • TigerMothTigerMoth Member Posts: 2,343
    Doesn't it mean "no Welshmen"?
    Pitfall69Omastar
  • RecceRecce Tiny Little Red DotMember Posts: 900
    Haha, looks like I've opened a can of worms!
    Pitfall69Omastar
  • YodaliciousYodalicious DagobahMember Posts: 1,366
    edited August 2016
    CCC said:
    ^ Iron Man / War Machine boat set. For resale, obviously. 
    What does that say about me that I bought nearly that many for my collection purposes?
    Hmm... You want to make Iron Man's armory out of just two different suits?
    Just two different suits...

    Now that's just silly. 

    There "might" be a few more varieties in my collection. My wife is just happy I have all I want of the ones currently out. "How many Iron Mans (Men?) do you need?!?" 

    "I don't need the Iron Men (Mans?). They need me."
    SprinkleOtterstluxOmastar
  • Gavin83Gavin83 Member Posts: 251
    SumoLego said:
    Batman said:
    SumoLego said:
    Also, Lego isn't at all invested in the secondary market to help drive sales of their product.
    Disagree. The secondary market eliminates the need for LEGO to conduct aggressive inventory sales. It's simple economics. 

     If the secondary market was removed, that would lead to supply > demand (at least with today's production #). LEGO would be forced to either scale back production (not good) or start selling at much smaller margin (not good). 

    But the the mere existence of a secondary demand ensures their products move off shelves. 

    To further the point, if they didn't care they wouldn't announce set retirements. 
    I should probably write a canned post for every time I see a declaration that Lego's primary market popularity is related to the nature of the current secondary market.

    Nonetheless, there is nothing in the current marketing, yearly reports or profits that indicates Lego has any focus on the secondary market.  Their focus is selling the latest Spider-Man, Batman, Star Wars, Minecraft or Friends set to the newest six year-old that is getting into Lego.  There are product lines geared to adults, but I posit that those sell at a much smaller rate (but at probably comparable margin) than the sets for 'civilians'.

    (See - Nexo Knights, Ninjago, Chima, Friends and TLM.)

    First, Lego doesn't typically announce set retirements.  (Tumbler, Town Hall, etc.) I would also make the educated assertion that the 'retiring soon' that often appears on the [email protected] website is a marketing ploy to push primary market sales for remaining inventory.

    The rather unusual marketing behind the arguably over-produced Exo-Suit demonstrates to me that the primary focus is not fuelling the secondary market.

    Second, there is no basis to assume that the supply would suddenly exceed demand without a secondary market.  You could argue that the secondary market creates excess supply.  One could make a similar assumption that no secondary market would create disproportionate DEMAND, where every set would sell out immediately.

    The product moves off of shelves because millions of parents, grandparents and other consumers find value in the product.  Lego enjoys exceptionally high goodwill in the marketplace - as a building toy - not as an investment vehicle.

    I have yet to see anyone demonstrate where Lego benefits or garners any profit from the secondary market.  (It's because they don't.)

    It may feel like the secondary market is important, but the truth is the primary sales are the ocean, and the secondary market is a cup of tea.
    With all due respect this post is as much of a theory as the one you quoted. We'll never actually know what percentage of sales are made to resellers. Personally I think it's more than people think and I think resellers do more for their image than they realise. I think totally banning reselling (ignoring that this is impossible) would damage their bottom line. Sure, I'd imagine there are a lot less resellers than normal consumers but I'd also imagine your average reseller spends a lot more than the norm. I'd be surprised if the average person spends more than a few hundred a year on Lego, a reseller could spend 100x that. Also if reselling didn't exist as a consumer I'd spend a fraction of the amount I do at the moment, if anything at all. It's much easier to spend a lot of money on a premium toy knowing you can get that money back. There's no way I'd spend £300 on a toy if it was worthless the second I left the store. 

    Personally I think their attitude stinks. They seem happy to use resellers when it assists them but when they start becoming a bit inconvenient they crap on them from a great height. Personally I think there's a difference between buying a new set creating a shortage (Minecraft as a good example) as opposed to buying a soon to be retired set and selling it on. However harbouring the later (which ultimately is good for Lego) will create the former.

    I'd actually be curious as to what percentage of sales go to who but frankly we'll never know. 
  • SumoLegoSumoLego New YorkMember Posts: 12,091
    ^ Um, Lego sold $5.2 BILLION in product.  

    My point is that the average Lego consumer out-numbers the 'reseller' in an exponential fashion.  Resellers give themselves way too much credit for their impact on the general market.

    There really is no way to differentiate between purchasers, but it is silly to think someone is stockpiling Rapunzel Towers with the expectation of selling them years from now.  Atleast to an extent that it would impact total current sales figures in a meaningful way.

    (If it did - then that would support longer production of the set.)

    If the AFOL collector market was more than a drop in their industry-leading sales figures, Lego wouldn't have exclusives.  They would be exclusive to every store that sells Lego.  (Which is not at all exclusive.)
    stluxpharmjodcatwrangler
  • SumoLegoSumoLego New YorkMember Posts: 12,091
    (And why would Angry Birds or Nexo-Knights exist?)
    stluxpharmjod
  • YodaliciousYodalicious DagobahMember Posts: 1,366
    SumoLego said:
    (And why would Angry Birds or Nexo-Knights exist?)
    I ask myself why Angry Birds exists every day. 
    SumoLegoJamesJT
  • TigerMothTigerMoth Member Posts: 2,343
    Gavin83 said:

    We'll never actually know what percentage of sales are made to resellers.
    No, we probably won't.

    But walk into the average small toy shop and look at the shelves. It's unlikely that any of them will ever be reduced, and they'll all be sold at full price. Resellers don't normally buy sets at full price.

    Walk into TRU, or look on Amazon. Most of the time, most of the sets are full price. Do you think either of them are interested in holding stock that doesn't sell? No, do you think they're going to pay to keep them warm when there's no chance of them selling? No. They're there because they get sold - again at full price and not to resellers. We may not buy them, but somebody does.

    Resellers are canny enough to know they almost never have to buy anything at full price, yet most of the time the shops are selling at it. Obviously it's not to resellers - unless you think all resellers are really, really stupid.

    And then, when a reseller buys a set at a discount, just how much do you think he contributes to TLG's bottom line? Not as much as the parents who buy exactly the same sets, not by a long way. When something is offered at a reduced price, the reduction all comes out of the profit - although some of it will be the manufacturer's and some the retailer's (the retailer doesn't take all the hit either - that's negotiated to promote the product).

    And, when it comes to purchasers, what do you think the ratio of resellers to non-resellers is? Pick a country. How many children are there? Do you that think that, say, 10% might have a few LEGO sets that have been bought by mothers, fathers, grandparents, aunts, uncles and other assorted relatives, friends and the children themselves. How many tens or hundreds of million purchases is that? You've said that a reseller spends a hundred times a what a non-reseller does. If the reseller contribution is to be any more than a drop in the ocean, how many tens or hundreds of thousands or resellers would that need? Do you seriously think there's more than a few percent of that figure?

    This is the standard situation where some of the numbers are so large that we cannot envisage them. Then, we mistakenly compare them with those that are more manageable and don't see the gulf between them.
    catwranglerTheOriginalSimonBpharmjodeggshenSumoLegoDad
  • SprinkleOtterSprinkleOtter Member Posts: 2,731
    @TigerMoth
    Well, let's look at some numbers, shall we? There are ~74,200,000 children in the USA. Let's take the number you suggested, that 10% of them have some LEGO sets (let's say, that they each contribute $100 each to TLG this year (profit, not the value of sets)). I would say that, even buying sets at a discount, a reseller would make TLG over $200 a year, because they buy a lot more sets than most kids get. That would mean that it would only take 3.7 million resellers to match the regular market of kids. but let's say that there aren't that many resellers- say there are a quarter of that, or a tenth. That is still way more than a drop in the sea.

    Do you disagree with any of the numbers above?
  • TigerMothTigerMoth Member Posts: 2,343
    @TigerMoth
    Well, let's look at some numbers, shall we? There are ~74,200,000 children in the USA. Let's take the number you suggested, that 10% of them have some LEGO sets (let's say, that they each contribute $100 each to TLG this year (profit, not the value of sets)). I would say that, even buying sets at a discount, a reseller would make TLG over $200 a year, because they buy a lot more sets than most kids get. That would mean that it would only take 3.7 million resellers to match the regular market of kids. but let's say that there aren't that many resellers- say there are a quarter of that, or a tenth. That is still way more than a drop in the sea.

    Do you disagree with any of the numbers above?
    Any self-respecting reseller is going to be looking at making purchases at a discount that's pretty close to TLG's profit margin. Those purchases simply don't make such a big impression, proportionally, on the bottom line. As I said, the discount comes out of the profit.

    Then you go through the number of resellers, starting with 3.7 million, then 900,000 and end up with 370,000 resellers contributing 9% of the profit. I think you'd be lucky to find 37,000 resellers generating 1% of the profit - which IS a drop in the ocean. And note that we are talking about serious resellers, not people making pocket money, because we're need those who are making a sensible contribution to TLG's profits.

    It's blurred a little because the resellers profits, even when selling at vaguely reasonable prices is much higher. Resellers are generally transferring much of TLG's profit to themselves, and then adding some.

    Manufacturers tend to make reasonable profits - they can't do much better because somebody else would come along and undercut them. TLG do much better than average simply because they add on a premium, pure profit, and is what makes the major contribution to their bottom line. That's stripped away when you have canny buyers like resellers, and a 30% discount hits the profit much harder than that.

    Apart from which, if resellers are so beneficial, why don't TLG encourage them? They also tend to stay quiet on most issues, but they openly criticise resellers.
    pharmjod
  • pharmjodpharmjod 1,170 miles to Wall Drug, USAMember Posts: 2,885
    edited August 2016
    No way resellers are even a blip on the radar in the grand scheme of things for LEGO's sale numbers. I bet there aren't even the 37,000 that @TigerMoth casually arrived at. 
  • SprinkleOtterSprinkleOtter Member Posts: 2,731
    TigerMoth said:
    @TigerMoth
    Well, let's look at some numbers, shall we? There are ~74,200,000 children in the USA. Let's take the number you suggested, that 10% of them have some LEGO sets (let's say, that they each contribute $100 each to TLG this year (profit, not the value of sets)). I would say that, even buying sets at a discount, a reseller would make TLG over $200 a year, because they buy a lot more sets than most kids get. That would mean that it would only take 3.7 million resellers to match the regular market of kids. but let's say that there aren't that many resellers- say there are a quarter of that, or a tenth. That is still way more than a drop in the sea.

    Do you disagree with any of the numbers above?
    Any self-respecting reseller is going to be looking at making purchases at a discount that's pretty close to TLG's profit margin. Those purchases simply don't make such a big impression, proportionally, on the bottom line. As I said, the discount comes out of the profit.

    Then you go through the number of resellers, starting with 3.7 million, then 900,000 and end up with 370,000 resellers contributing 9% of the profit. I think you'd be lucky to find 37,000 resellers generating 1% of the profit - which IS a drop in the ocean. And note that we are talking about serious resellers, not people making pocket money, because we're need those who are making a sensible contribution to TLG's profits.

    It's blurred a little because the resellers profits, even when selling at vaguely reasonable prices is much higher. Resellers are generally transferring much of TLG's profit to themselves, and then adding some.

    Manufacturers tend to make reasonable profits - they can't do much better because somebody else would come along and undercut them. TLG do much better than average simply because they add on a premium, pure profit, and is what makes the major contribution to their bottom line. That's stripped away when you have canny buyers like resellers, and a 30% discount hits the profit much harder than that.

    Apart from which, if resellers are so beneficial, why don't TLG encourage them? They also tend to stay quiet on most issues, but they openly criticise resellers.
    No necessarily. If any reseller is going to get a Modular or advanced model (like the Tower Bridge) at a real discount, let alone 30% off. And even 30% off is getting hard to come buy- most Bricklink stores buy new sets for about regular price, to start selling the minifigs, new parts, etc.

    Let's take a look at that number of resellers, though. 37,000, I feel is far too few- it seems like every town has someone that will clear out shelves of certain sets.


    Perhaps TLG doesn't agree with resellers, or doesn't like the image. And LEGO doesn't discourage resellers, as I have said before- they discourage the quick-flip-on-a-hot-toy scalpers.
  • Pitfall69Pitfall69 0 miles to Legoboy's houseMember Posts: 11,385
    A reseller is a reseller whether it is an older used set or a new set, but TLG is really only concerned with newer sets; especially the ones that are bought and quick flipped. (see Minecraft and Llyod ZX a few years ago) I know there are a lot of resellers that wait until the holidays to sell their Lego, but all you really need to do is calculate how many people are selling on Ebay, Bricklink etc. to come up with a rough estimate of how many resellers are out there. I agree with @pharmjod , 37,000 resellers seems high to me.
    madforLEGOcatwrangler
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