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What frustrates you about the TLG?
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Comments
Why be such a spy? Why don't you just go ahead and ask the sales rep nicely if they are prompted to ask who the set is for... I am sure they will just tell you! Not a gigantic secret!
You've also got adults that are buying solely for the purpose of re-selling, not for their own interest. Re-selling LEGO as a collectible has been increasingly popular. I imagine even more so in the USA where prices are low, selling to the international community where prices are high.
I know they've done surveys on their website, surveys specifically for kids and specifically for adults, and focus groups of parents and AFOLs. Not sure how long they've been asking buyers that call S@H-- I know they DIDN'T do it back in the late 1990's, but obviously they've started.
One thing that helps is the VIP program. Many non-AFOLs probably DON'T sign up for the VIP program, but probably most actual AFOLs *DO* sign up for it if they can. That means that most AFOL purchasing at LEGO Brand Retail and via the website might be able to be identified (not sure if they have a little "is AFOL" checkbox for each VIP account). Doesn't cover most retail purchasing, but might be enough to give them an idea.
DaveE
I'm not so sure that your assumption holds up. I mean, if my kid was really into LEGOs I'd sign up for the rewards program to get a bit of savings even if I wasn't a AFOL.
Essentially, if you could somehow identify whether or not any given VIP member were an AFOL (via purchasing habits, survey answers, direct communication, etc), you'd likely have a relatively good idea of the number of AFOLs, since most AFOLs are VIP members (or so the theory goes). That's two big "if"s, but might be an excellent data set if it's possible.
It wouldn't necessarily give you a DIRECT handle on how much purchasing is done by AFOLs, of course. Most AFOLs probably do NOT live near LEGO Brand Retail stores, and likely make LEGO purchases elsewhere that VIP cards can't track. But AFOLs that DO routinely make purchases using VIP cards at LBR are probably a good indicator of trends in random AFOL sampling, which could be used to guess the overall market contribution of AFOLS, assuming the above.
Anyway, I didn't really mean to suggest that most parents wouldn't sign up for the VIP program.
DaveE
To compare Australia to US, I just ordered 4xPotC and 1xHP set from the Barnes & Noble site (the only US site i know that will ship to Australia). To purchase these sets in Australia at retail price they would have cost the equivilent of USD$385 (AUD$405) but my order came in at a total of USD$240 inc shipping (AUD$227). Sorry Australian economy.
I also scored the stormtrooper and darthvader minifig alarm clocks which we can't even get in Australia.
Statistics are great, but very misunderstood by the general public. For instance, people tend to be fascinated by averages but rarely consider medians, which are far more resistant to statistical outliers than means. When it comes to methodology, a study that initially looks great and scientific can turn out to be total rubbish because the methods to arrive at the results are fundamentally flawed in some minor way.
First, I understand your pain, prices are not double the american price in France (I'm currently living in SC, but I'm French) but still, way too much above.
Second, I work in international shipping, at MSC to be exact (second leader to Maersk, and I know everybody knows Maersk here!), and even though exports to and imports customs services in Australia are one of the pickiest in the world, in no way customs fees can justify the price being doubled compared to the American MSRP. A container, 20' or 40' long can hold around 30 MT of goods, considering the volume of a container, it's hundreds of lego sets you can stuff in one container never reaching the weight limit. So yeah, maybe australia asks for electronic and physical copies of documents (I'd have to check that at work on monday, but I doubt it, it's usually either one, not both), maybe they'll strip down the container to check for its content (I doubt it happens everytime, lego must be a trusted shipper there by now, and customs can't check every containers anyways) but it's not that expensive broken down to each set. The import documents: usually shipping lines don't charge extra for australia, and even if they were to do that, that does not apply to companies like lego who have huge volumes and negotiate that kind of stuff in their service contract. And if the container gets stripped (which I wouldn't see lego getting that too often), procedure which customs services charge either to the shipper or the consignee don't exceed 500-1000$, which broken down to all the sets in a container, is still not a lot.
I guess my point is: lego is full of crap when saying that it's customs procedure that are jacking up the prices. They just decided some day that America was gonna be the country with the best deals on Lego sets and that's it.Maybe not in such a mean way, but it's clearly delibarate on Lego's part to set a difference between countries, which is, I think, a terrible marketing strategy. For instance, in France, Legos are becoming almost part of an underground toy scene as kids know very little about it and parents really don't think of it as a must-have anymore. It probably would help a lot to sprinkle a few non sets licensed products in the shelves ("huh what is that "lego"?' never heard of it, but it must be a pretty big deal if people want to buy branded alarm clocks and storage cases") and a few special events at TRU's or even just advertising material in the stores, like flags, giant minifigs, lego sculptures...
Oh and my pet peeve is that I hate how lego chose a few countries as their favorite markets and completely ignores others, in my case France (but I know it's the case in other countries as well). Get a clue Lego Company! It's not because we don't speak english that we don't have a heart! We also want overpriced polybags, or alarm clocks, or USB drives, or storage boxes, or studs rulers, or minifigures series 2 that you don't give to UK because you like them better there, or sets that we get 3 months later while UK and USA got them 3 weeks early, or...
(seriously, they either have terrible sales rep in countries like France, or they just don't care about us)
It's bad in Canada too. We might get sets on time or roughly on time, but they are marked up with no reason for it. Our dollar is on par or better these days, our customs rules are not particularly terrible as far as I know, we are close to the US, etc.
The really cheap sets are only a couple dollars more, but once you get to the $20 US sets we're paying $5-10 more and the higher you go the bigger the mark-up. The Death Star is $500 here compared to $400 in the US. I wish I could just go across the border and do my Lego shopping, but while I am close to it, I am not that close. And with the price of gas, the extra expense would probably make the lower price negligible.
Oh, and we have one Lego store in the entire country-in Calgary. It's so far away I will probably never get to go because I would either have to drive for days on end or book a flight.
In fact, without knowing the 1) international transportation costs 2) customs processing costs 3) applicable tariffs, import duties, taxes, etc. 4) warehousing and distribution costs 4) local shipping costs 5) currency markets vis-a-vis Denmark 6) and finally arrangements with local retailers it is hard to really know whether the per country cost of LEGO is fair.
Take Australia for instance. You have a few major cities of not that high population set apart with vast areas of low population density. Sydney and Melbourne each have under 4 million people and they are about 300 miles apart with not much density in between. New York and Philadelphia collectively have well over 9 million inhabitants and are not more than 100 miles apart with huge population densities in between. If you're a distributor of a product, the US market is much easier to distribute in than Australia is thanks to economies of scale and the distribution infrastructure that is already in place.
I'm no expert and maybe TLG is taking advantage of some markets, however without the numbers on ALL of the costs of getting their product out, it is really hard to tell if the price for a particular country is fair or not.
So blaming it on customs procedures is incorrect, might cause an extra cost but that's it.
I believe video games also are a bit more expensive in Australia than anywhere else in the world so maybe australia is known among industrials as a country who pays more for toys and entertainment than other countries, and they take advantage of that. Just as much as a french bakery in france sells a baguette for 80 cents, while a french bakery in the US sells a baguette for at least 3 bucks.
edited by @rocao - 4/24/2011 - language
Honestly, the whole debate disgusts me, and not because I want other countries to pay less, but because I would prefer if the USA prices were higher. Everyone's asking why LEGO doesn't LOWER their prices elsewhere, but I'd like to ask why LEGO doesn't RAISE their prices in the USA. And yes, I'm pretty sure I know the answer to both those questions, as stated above. But I still advocate higher prices in the USA.
What percentage of LEGO's profits come from the USA versus elsewhere? We've been told that the profit margins are small compared to other countries. What happens to LEGO's profitability when prices everywhere else are lowered to match the USA's razor thin profit margin? You think LEGO's cuts to quality are bad now? What are they going to cut next? Yes, it's true that LEGO's doing well right now. They've been cutting costs left and right in order to do so. But my concern is that if LEGO lowers its prices worldwide, we'll see even more cuts to quality.
Yes, I live in the USA, and yes, I get cheap LEGO. But I'd be happy to pay more-- especially if the quality levels rose to what they once were.
DaveE
Doing a web search, the most recent global numbers I could find were from 2008, where the US accounted for 27.7% of the global toy market. The UK was 4th at 5.3%. What percentage of profits come from the USA vs elsewhere? I wouldn't be surprised if it were as much as half, particularly since the licensing activity with video games is strong in the US.
TLG is not turning in record profit solely on the back of their cost cutting measures. Any company the size of TLG will continually seek to reduce costs; they are not doing it out of necessity to stay solvent. And they don't need to look much further than their 2010 record revenue and the success of the Collectible Minifigs to conclude that decreased quality has not yet caused any significant backlash.
And has anyone considered regional family incomes? I certainly don't know the answer but is it possible people in the US simply bring home less money on avg than EU or AUS families after currency conversion?
Another consideration is the retail outlets, which need to make money too. How much does it cost to run a retail outlet in the US? If the costs of doing retail as cheaper, the products should be cheaper too.
And let's say that prices are unfair. Why then are we not seeing massive arbitrage? If the prices really were very out of whack, I don't see why people wouldn't buy Lego cheap in one country and ship and sell for a lot in the other. The more the discrepancy, the more profit a trader stands to make by arbitrage, so we really should be seeing this happening. Yet I don't get the sense a lot of arbitrage is happening. Anyone care to explain why?
Yes I am in Ontario, but unfortunately I am closer to Toronto than Windsor and at this point I am not in the position to make frequent trips across the border from where I live. Perhaps I can plan a single, but very productive trip for some time in the future and offset the cost of gas and maintenance on my poor old car...
Also Lego has a large presence in the US market in terms of Parks and Brand stores that I hear so much about, one day maybe one! They have too much to lose if these go under there.... so to help them not to lose the capital on there investments in the States they discount the cost of there goods there to help there repeat business, and thereby making other Countries to carry the cost of the markup margin that would be otherwise be picked up by buyers in the States. So for a hypothetical example the new train set 10219, should cost world wide $150.00 USD plus the currency conversion, but lego sets it's cost $120.00 in the States while it's $200.00 USD in the likes of Australia there by carrying the cost of States mark up and keeping there profits in line with the last few years profit reports that has been in the black which is against that of other companies in the toy industry as I'm sure we have all hear from Lego's figure heads. Which finally allows for that region to survive and stay strong this is the something many other large companies have done e.g. Coke cola, cosmetics, luxury cars & other luxury goods companies. The sad thing is no one stands up against it. Seeing how loyal the AFOL are to a brand and product maybe we as a group should be voicing our opinion on this matter and stop these large multi nationals at what there doing....?
This BS on the cost of customs and duty is Lego having a go at the strict Customs laws in Australia to that of the rest of the world. I have never heard of a container being pulled apart I'm sure they use X rays machines first.
On a side note another great Scandinavian company Ikea pty ltd is in trouble with the tax office in Australia for doing something similar with there tax and cooking the books, $500 million profit for 2010 in Australia but only paid $2.5 million in tax, and moving the profits from Australia to another region, doing this with the help of the parent company "Ikea foundation".
So just remember it's always up to some bean counter that makes the final call on things.
Lego sets are (for the most part) very top quality products. Maybe it's just a psychological thing with me, but when you add stickers to the sets it seems to cheapen the sets back down to regular old "toy" status :)
And, I've also bought sets before where the sticker sheet was curled or damaged in some way because of how they seem to just "throw" them into the boxes as almost an after thought.
Companies tend to use a fixed exchange rate, as they cant change their prices every time currency fluctuates. I'm not sure what currency Lego's base costs are in, because I don't know what currency they pay their suppliers/ factories in, but I suspect it's Danish Kroner and the Chinese Yuan, and then local costs for distribution outlets and offices.
For a UK person, Canada right now costs a lot more than it used to, and the same goes for New Zealand (which I suspect is closely tied to the Aussie dollar). So these 2 currencies seem to be particularly strong at the moment.
So companies tend to fix the rate, and fluctuations up or down just get absorbed, but sometimes the rate shifts and they need to do a 'readjustment' to fix a new rate. Canada and Australia are recently strong currencies, so high lego prices there probably reflect that the prices were set previous when they were weaker currencies. I they stay high for a few years lego will probably readjust. The same happened as the £ strengthened over the US dollar from about 2000 to 2006-ish, and there was a readjustment period over the last few years to improve parity. This was very notable in the things I was buying a lot of over that period, e.g. electronics and mountain bikes.
"The fastest growing rail traffic segment is currently intermodal. Intermodal is the movement of shipping containers or truck trailers by rail and at least one other mode of transportation, usually trucks or ocean-going vessels. Intermodal combines the door-to-door convenience of trucks with the long-haul economy of railroads. Rail intermodal has tripled in the last 25 years. It plays a critical role in making logistics far more efficient for retailers and others. The efficiency of intermodal provides the U.S. with a huge competitive advantage in the global economy."
I've been to Australia (Melbourne, Canberra, Sydney, Brisbane, and Cairns). Taking a bus between Melbourne and Sydney is not like taking a bus between Boston and Washington DC. The views out the windows are a lot more rural in Australia. As for the logistics and marketing implications of geography, this point was made to me by an Australian businessman over a dinner conversation. He made clear that to operate a business in Australia you would need to be able to meet the challenges of smaller markets that are separated by vast distances. His view really informs the arguments that I am making about Australia being more expensive because of its geography, not price gouging.