Discounts on LEGO Exclusives

Lootefisk

LegoFanTexas said:

What you don't do is price it high, then leave it there and say "take it or leave it". It might work for a rare luxury item, it may work for very expensive items that are POA (price on application), but for a child's toy? No.

I don't think Lego views the exclusives as child's toys. Isn't this whole thread based on reselling child's toys. If there is no future in high prices what the heck is everyone doing in this thread.

It seems ironic that the same people that seem to criticize the policies of TLG regarding exclusives have designs on reselling those same exclusives at a higher price than Lego does.

LegoFanTexas

FenrisAkashi said:

But when you consider that sets from the early 90s had about the same or lower prices for similar or smaller piece count sets, and conversely according to Consumer Price Index $100 then buys $178 now... I'm surprised anyone got sets back then in poorer families like mine.

I think we all got a whole lot less LEGO, I know I sure did... I had a few buckets of random LEGO bricks, but the times when I actually got new LEGO was VERY rare. It was much more common to get a Transformers figure or a G.I. Joy toy, those were much cheaper.

LEGO was insanely expensive back in the 80s, and much more rare than it is today. Part of that simply reflects that it cost more to make it back then, and frankly I think LEGO made a whole lot less money back then.

Today, the numbers they report are about $1 billion USD in profit on about $4 billion USD in sales. But I suspect the profits are better than that, the family simply has a lot of their "personal stuff" owned and paid for by the company as a tax shelter.

nkx1

Lootefisk said:

It seems ironic that the same people that seem to criticize the policies of TLG regarding exclusives have designs on reselling those same exclusives at a higher price than Lego does.

I can't speak for LFT, obviously, but this statement isn't really an apples to apples comparison assuming I understand the intent of your statement. When a set is no longer produced, there is obviously a very finite supply. Limited supply + demand generally equals high prices, for anything. In short, demand dictates price on retired sets. There is really no collusion by sellers, at least that I'm aware of.

When a set is being actively produced by Lego, and is widely available from multiple (though few) retailers, there is not really limited supply. As such, demand should hypothetically dictate price to an extent. For instance, presumably slow sellers like exclusives may be discounted at times such that increased demand is created. Lego maintaining a rigid price structure for exclusives is not really consistent with a typical free market supply/demand environment, and seems more typical of an oligopoly.

There is really no hypocrisy in resellers selling retired sets for market price and the same resellers complaining about a Lego-created oligopoly for exclusive sets.

LegoFanTexas

^ All of that...

Plus, lets pretend for a minute that I never resold sets... I'd still much prefer to bargain hunt and pickup B-Wing for $99 and SSD for $254.

A deal is a deal, no harm in looking for a good price, and being willing to wait for one.

Lootefisk

We agree on that. Put simply I think Lego decided they'd rather sell 10 sets at $150 each as opposed to 15 sets at $100 each.

At the end of the day only TLG really knows whether or not they've done the math correctly.

Lootefisk

nkx1 said:

Lootefisk said:

It seems ironic that the same people that seem to criticize the policies of TLG regarding exclusives have designs on reselling those same exclusives at a higher price than Lego does.

I can't speak for LFT, obviously, but this statement isn't really an apples to apples comparison assuming I understand the intent of your statement. When a set is no longer produced, there is obviously a very finite supply. Limited supply + demand generally equals high prices, for anything. In short, demand dictates price on retired sets. There is really no collusion by sellers, at least that I'm aware of.

When a set is being actively produced by Lego, and is widely available from multiple (though few) retailers, there is not really limited supply. As such, demand should hypothetically dictate price to an extent. For instance, presumably slow sellers like exclusives may be discounted at times such that increased demand is created. Lego maintaining a rigid price structure for exclusives is not really consistent with a typical free market supply/demand environment, and seems more typical of an oligopoly.

There is really no hypocrisy in resellers selling retired sets for market price and the same resellers complaining about a Lego-created oligopoly for exclusive sets.

I think as technology evolves that really holds less true. By keeping prices on their exclusives fixed they can better predict future demand and adjust supply accordingly.

LegoFanTexas

^ Maybe, but that future demand is likely to be less due to a lack of sales and discounts and generally higher prices.

The question isn't, "do you want to sell 10 at $150 or 15 at $100, it is more, "Do you want to sell 10 at $150 or 20 at $100"?

Lootefisk

Lego is doing ok. I think Lego has chosen the 10 for $150 option either way. They're not making these decisions on a whim. If they have numbers that back up not discounting exclusives they'll stick with it.

If not you'll have your discounts soon enough.

dougts

maybe, maybe not. sometimes companies make decisions that result in less profit but produce other effects that they see as beneficial. We will simply never know whether this decision is resulting in less profit, more profit, or the same profit among exclusives. It could be any of those three and it could be that LEGO is willing to sacrifice some sales and profit among the exclusives line in order to reap other things they may see as beneficial - many of which we have discussed in this thread. Even an eventual rescinding of the no discount policy wouldn't necessarily mean it resulted in a profit hit that was too big. It might also mean the other objectives of the change weren't being realized.

Take Black Friday for example. Same store sales at my local LEGO store were down significantly according to what I was told. Anecdotal yes, but I'd be shocked if one store was the only one that experienced such a big dip. I don't think it's the economy either - it really isn't any worse than last year or the year before around here. But what did change was the underwhelming list of sales items, coupled with better LEGO sales by other retailers, the incredibly watered down scratcher system, and the exclusive discount policy.

Personally, I'm continuing to come around to the idea that LEGO is making a significant strategy shift in regards to their brand stores. Rather than trying to compete with other retailers, I think they are content to lose overall sales in favor of maintaining a higher margin, and positioning themselves as the "showroom" for LEGO products - knowing full well that the savvy shoppers may only come look but decide to buy elsewhere while they happily soak up full RRP sales from those who don't know or don't care. All the while they pump up the fact that they have the largest selection of anyone and continue the various outreach programs - monthly minibuilds, kids clubs, master builds, etc. Essentially, the retail arm becomes more marketing focused while worrying less about driving sales volumes. It could be that this strategy is ultimately changed again by the person making such decisions, or the next person in that job, but I think an argument can be made that a lot of the thing we have seen at LBR over this past year are pointing to this strategic shift.

Or maybe I have no idea what I'm talking about..

BTHodgeman

^ I agree with your showroom comment.

I'm really only familiar with the Mall of America store, which is/was a "Lego Imagination Center" vs. just a normal store. The focus seems to have always been more on showcasing the brand than retailing items in this store...

dougts

yeah, I guess LEGO stores have always kind of been that way - and it's not like the have many sales or discounts either. so perhaps it's just more of a further refinement of the strategy that already existed as opposed to a major shift.

I think the average Joe probably notices very little difference. But one this is for sure, a combination of changes this year has had a pretty major impact on AFOLs. Maybe that was the plan - why give us so many freebies/discounts when they know (or think) they don't have too.

Farmer_John

dougts said:

Maybe that was the plan - why give us so many freebies/discounts when they know (or think) they don't have too.

...or so says/believes the proverbial pointy haired executive at TLG.

BTHodgeman

...and to a degree it's true. This year I have purchased more Lego products than probably any year before. And 90% of that purchasing has been in November and December.

LegoFanTexas

@dougts - your long post is probably spot on the money all the way, many good points.

I thought about responding point for point, but then decided that everything you said might be true, or might not be, but we will never really know.

So I'll just say that it is all reasonable and could well be true. :)

dougts

BTHodgeman said:

...and to a degree it's true. This year I have purchased more Lego products than probably any year before. And 90% of that purchasing has been in November and December.

while my overall LEGO purchases haven't changed much this year, the percentage bought directly from LEGO is down dramatically compared to previous years.

BTHodgeman

Yes, I agree. Other than a couple lucky finds at the Lego store one day last week, and the triple VIP points, I haven't spent anything directly with Lego.

As I've said before though, I don't think Lego really cares. The cost of operating those "showrooms" has to eat into their profit just as much (if not more) than selling the items wholesale to other retailers.

nkx1

I only got back into Lego around November 2011, but between that time and early this year, I bought a fair number of exclusive sets when they were discounted. I even bought some that I didn't have to have, but the sales enticed me to buy. There are a few exclusives that I really want, such as Horizon Express, and in all honesty I might have paid full price if I really had to (bought with a recent TRU promotion instead). But there are a bunch of other exclusives where I could go either way (Arkham Asylum, Tower of Orthanc etc), and if I could get a decent discount I would buy. However, since those sets are always full price, I'm perfectly content not to buy them.

I remember New Years 2012 when I was able to buy several Imperial Flagships for $135 on clearance at the Lego store (I was very civil and only bought two, even though I wanted to buy every one they had for that price). I also bought a few other sets while I was there. Anyway, that's just one example of something that will get me into a Lego store to spend money. Full price stuff with almost no sales is no fun, and probably wont entice me to buy much from a Lego store.

Although, a bit contradictory to the above, I was just at the Downtown Disney store and they had the Unimog for $160 (only a bit contradictory, since such sales are so rare now). I was tempted to buy a few, but didn't feel like lugging them all the way to my car. That and there was a slightly better sale last week from TRU via ebay.

cheshirecat

Iirc Lego stores originally reported into the marketing department rather than sales such was the emphasis on being a showroom.

There's quite a few people sayingjust that they now don't buy anything in the Lego stores because they only bought stuff when discounted. Just for a minute stop and question what Lego are loosing by you now not shopping with them. The answer is very little, perhaps nothing, perhaps they're even benefiting. Take the FB for example, even without discounts they sold out quick enough once retiring soon despite being on the shelves for ever.

CCC

LegoFanTexas said:

^ Maybe, but that future demand is likely to be less due to a lack of sales and discounts and generally higher prices.

The question isn't, "do you want to sell 10 at $150 or 15 at $100, it is more, "Do you want to sell 10 at $150 or 20 at $100"?

It may well be that they want to sell 10 at $150 rather than 20 at $100. Bearing in mind that these are meant to be flagship, premium products.

Of course it is not as simple as 10 at $150 or 20 at $100, since if the modulars are out of reach for someone at $150 but in reach at $100, then if they are willing to drop $100 on a toy then chances are they will spend that $100 on other lego sets.

cheshirecat

^ Exactly I seem to remember posts earlier about having sets at different price points, theres already a wide range of sets at $100. Surely the modulars etc don't need to fill that void as its already full.

Lootefisk

LegoFanTexas said:

^ Maybe, but that future demand is likely to be less due to a lack of sales and discounts and generally higher prices.

The question isn't, "do you want to sell 10 at $150 or 15 at $100, it is more, "Do you want to sell 10 at $150 or 20 at $100"?

The problem with that is it takes twice as long to make 20. If your machines are already running at capacity Lego is better off making 10 FB's and 10 GE's and selling them at $150 rather than selling 20 FB's at $100.

cloaked7

^ Yup, we have no way of knowing, but I think the decision has as much to do with production limits as anything.

TheLoneTensor

BTHodgeman said:

...and to a degree it's true. This year I have purchased more Lego products than probably any year before. And 90% of that purchasing has been in November and December.

The real question is not just how much you've spent, but also how much you got. For example, my spending this year was down compared to previous years, and doing some quick & dirty calculations with discounts and freebies, my comparative ppp was reduced dramatically overall.

So basically, I got more product/$ this year, and that's with spending maybe 5% with Lego direct.

TheLoneTensor

Lootefisk said:

LegoFanTexas said:

^ Maybe, but that future demand is likely to be less due to a lack of sales and discounts and generally higher prices.

The question isn't, "do you want to sell 10 at $150 or 15 at $100, it is more, "Do you want to sell 10 at $150 or 20 at $100"?

The problem with that is it takes twice as long to make 20. If your machines are already running at capacity Lego is better off making 10 FB's and 10 GE's and selling them at $150 rather than selling 20 FB's at $100.

Excellent point. This also makes me think about limited resources. Plastic raw materials are finite right? So when does it start to get scarce and skyrocket, or just outright run out? Our lifetime? Our kids'?

CCC

TheLoneTensor said:

Plastic raw materials are finite right? So when does it start to get scarce and skyrocket, or just outright run out? Our lifetime? Our kids'?

Not really. For crude oil based plastics, yes. But plastic can be made from other sources of carbon based products and natural oils. For example, butadiene (the B of ABS) can be made from alcohol (well, specifically ethanol) through a couple of different routes and both the US and Russia did this during WW2 for plastic and rubber production.

odueck

In reading this thread I'm seeing a lot of parallels to another company: Apple. Much like LEGO, they discourage discounting, have a very successful online store in addition to a network of B&M stores, and emphasize the brand above all else. Makes for a kind of interesting comparison IMO.

In terms of discounting, I hate to say it but I think LEGO's policy makes sense. I'm still going to buy the sets I really want, discounted or not. If there were discounts, I would attempt to time my purchases to maximize my savings, and perhaps buy more sets simply because they are priced well. But that hurts LEGO's profit margins.

madforLEGO

Interesting... yoyo.com now has a 25 'gift credit' with purchase of Mindstorms EV3

Bumblepants

Noticed today Amazon US only has modulars for sale from 3rd parties. This was already the case with GE but now PS, TH, and PC are out of stock. Could just be Christmas rush or they might have decided to no longer stock them? Will be interesting to see what happens.

TheLoneTensor

CCC said:

TheLoneTensor said:

Plastic raw materials are finite right? So when does it start to get scarce and skyrocket, or just outright run out? Our lifetime? Our kids'?

Not really. For crude oil based plastics, yes. But plastic can be made from other sources of carbon based products and natural oils. For example, butadiene (the B of ABS) can be made from alcohol (well, specifically ethanol) through a couple of different routes and both the US and Russia did this during WW2 for plastic and rubber production.

I wonder if using such plastics would be transparent to us, i.e. if Lego suddenly started using alternative materials, would we notice like we do with the "Chinese" plastic. Plus, there's the concept of longevity. With anything newly developed, it's impossible to know how it'll last and look in 10, 20 years. Of course, that's not to that say what we have today is foolproof and 100% resistant to cracking, fading etc. I remember getting some blue plates years ago from a PAB wall, and a year later they literally crumbled apart.

CCC

^ If the reactants are the same, then no. What you do notice though is when the blend is changed, even slightly. You would probably also notice if the dye was changed (some dyes are not a single molecule, but again a blend).

You would really notice if they changed the type of plastic. For example, going from ABS to a starch based biodegradable plastic.

cheshirecat

Think i read somewhere that they have been testing such things but so far without success

Styer

BTHodgeman said:

or so says/believes the proverbial pointy haired executive at TLG.

Actually, his hair is less pointy and more squared off.

BTHodgeman

^ Hey - I never said that! :P

I think your quote got goofed up. lol.

Styer

Well someone said it. I made the post from my phone, so it wouldn't surprise me a bit if I messed it up. Sorry for misattributing.

Farmer_John

^I originally said it...it was supposed to be a loose reference to Dilbert, however, your minifig will do.

madforLEGO

So it Appears all Mods and other exclusives are no longer on sale via Amazon.com. That is it appears Amazon.com is no longer selling these, in the US at least.
Should be interesting if Amazon.com does not restock any of these.

LegoFanTexas

Amazon has the Super Star Destroyer in stock...

LegoFanTexas

Amazon has the Tower of Orthanc in stock...

madforLEGO

Ok, so not all, but Pet shop, Grand Emporium, Tower Bridge, VW Van, Town Hall, Arkham Asylum, Death Star, Palace Cinema, Horizon Express Haunted House are out of stock for Amazon at this time.

Likely due to the holidays but still interesting none the less, especially if they do not restock them soon (as GE and TB have been out of stock for some time now).

LegoFanTexas

Amazon is out of stock of more than half of all current LEGO sets, I wouldn't read too much into it right now. :)

You are right of course, they might well stop carrying some of those, but frankly I think even at full RRP they do sell in reasonable numbers, no need to be all pissy and not carry them at all.

Just carry a lower overall stock level of them and take the easy profits and put the cash into something else.

LegoFanTexas

Speaking of Amazon... you have to love Prime...

Well, ok, you don't have to, but I noticed that one of the new 3rd wave Ninjago sets is discounted, #70722

http://www.amazon.com/LEGO-Ninjago-70722-OverBorg-Attack/dp/B00ERARM82/

I added it to my cart just for fun, and shockingly enough, if I'm willing to pay the $3.99 one day fee, they can still get this to me tomorrow (the 24th).

I'm typing this at 11:17pm on the 23th.

That's pretty darn cool. :) I don't know of any other retailer that would even try to make that claim, much less pull it off.

I'm tempted to try it, just to have a story. :)

JeffH

Amazon did have AA in stock (17) and also Kingdoms Joust

LegoFanTexas

^ Yep, they still have Joust in stock, however I'd think that one will be a slower seller, it has been out 2 years.

Styer

LegoFanTexas said:

You are right of course, they might well stop carrying some of those, but frankly I think even at full RRP they do sell in reasonable numbers, no need to be all pissy and not carry them at all.

I disagree. I think it's a perfectly good reason to get pissy and not carry those sets at all. TLG's position is, apparently, no discounts or we won't sell to you. "Allow discounts or we won't buy from you" seems like a pretty reasonable response from Amazon. Which is not to say that Amazon is so-replying, but I could hardly blame them.

I'd be interested in someone who is better versed in anti-trust laws explain to me how, in the U.S. at least, TLG refusing to sell to retailers who discount isn't illegal. MSRP is an abbreviation of "Manufacturer's Suggested Retail Price," and it's always been my understanding that it was "suggested" because it was illegal for a manufacturer to require a particular price.

Lootefisk

If lego got together with MegaBloks and colluded against ever discounting anything you might be able to invoke antitrust laws.

One company is free to price and make agreements with retailers as they please.

JeffH

^With the recent SCOTUS ruling on antitrust, vertical price fixing (between manufacturer and retail) is no longer illegal. However Lego does have their retail stores so it is both vertical and horizontal and is kind of subjective. With the pro business trend of the court ruling, it is hard to see this is ruled illegal.

Styer

Ah. I'm not terribly up to date on anti-trust law. Still, I think it would be awesome if retailers refused to allow TLG to set their prices.

BTHodgeman

The SC ruled only that a manufacturer and retailer working together to set a price isn't "per se illegal." (i.e automatically illegal.) The new legal standard is that the "rule of reason" must be applied to determine whether or not the price arrangement results in less competition.

With that type of logic, I'm not sure many retailers are going to be actively engaged in determining the minimum retail price with their suppliers.

Practically speaking, manufacturer's still cannot force a retailer to charge a certain price. That would be considered price-fixing. They can, however, suggest a price and provide financial, marketing, etc. incentives for a retailer that follows the suggestion. (At Target,for example, the archway signage, display products, etc. are going to be supplied and paid for by Lego.)

The manufacturer also can simply choose to stop selling to the retailer.

Products like Lego (and Apple, etc.) are very good sellers. A lot of retailers would take a hit to sales if Lego were to stop selling to them. Then it becomes the battle of which company gets more out of the relationship?

With big sellers (Amazon, Walmart, Target, TRU), almost certainly, Lego would be harder hit if they stopped selling to these retailers. With smaller retailers, the opposite is typically true.

I wouldn't be too surprised if you see any of the above retailers start playing around with discounts just to test the type of reaction they get from Lego. What's the worst Lego is going to do to Target? Stop giving them displays?

LegoFanTexas

^ This...

TLG would be beyond stupid if they outright stopped selling to Walmart/Target/Amazon/TRU.

Restrict a few products? Sure. Limit exclusives and hard to finds? Sure.

Outright cut them off? That's cutting off your nose to spite your face.

That being said, if Amazon complies and Target does not, nothing says that Amazon can't get a better discount than Target.

There are 50 shades of gray between the black and white of "sell everything" and "sell nothing".

LegoFanTexas

Just noticed that a number of exclusives are running low on Amazon and Amazon does not have the (more coming soon) message on any of them.

http://www.amazon.com/LEGO-Creator-10232-Palace-Cinema/dp/B00BFXP3G2/
14 left in stock

http://www.amazon.com/LEGO-Creator-10224-Town-Hall/dp/B007GEMQ2I/
5 left in stock

http://www.amazon.com/LEGO-Monster-Fighters-Haunted-House/dp/B0095ZMTE6/
8 left in stock