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The impact of the Walmart sales on Ebay selling and more
I am hoping that this thread does not get merged, but if it does that is o.k. I just wanted to get comments about the crazy price drops at Walmart. My boys who collect have changed their Christmas list. They want sets that they already own to get cheap parts. So, as a consumer and customer this sale is wonderful. It is such a great opportunity for so many people to get sets at a terrific price.
However, as a seller......are we doomed(yes, that sounds a little dramatic :)? This is the time of year where my sales soar. I have so many older sets that I was expecting to make great money on. I know that my kids switched their lists when all of the sets went on sale, and I am sure lots of other people will make similar decisions. Money is tight for so many people and I would be naive to assume that this will not impact my sales in some sort of manner.
I also am wondering why in the heck are the dropping the prices so low? Does anyone have any insight into this? I would love to hear your opinions.
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1. Walmart is no longer going to carry these sets.
2. These expensive sets are not selling on Walmart and they need room for the next container load of Lego about to arrive.
3. Walmart is upset with TLG and is sending a message.
4. Walmart wants to improve their "we are the online low price leader image" compared to Amazon.
That said, I suppose ti depends on what old sets you were hoping to sell. Maybe these sales will impact your Harry Potter sales or your recently retired Star Wars sales... but I doubt it significantly impacts sets like Cafe Corner, Emerald Night or the Imperial Flagship.
I reserve the right to be wrong about all that, of course, but even in spite of these sales, I don't anticipate losing any money on the sets I'm holding.
if it can gain a large market share of the christmas shopping before the competitors even begin to promote sales like black friday, then it would have captured a large majority of the sales.
think of it this way: if walmart cuts msrp by 25% and got consumers to spend 50% of their shopping budget, by the time competitors begin their BF or christmas sales, they need to undercut by more than 25% and most likely need to go above 30-35% to get consumers to buy more. this is the biggest reason why walmart is setting up christmas shopping earlier and earlier.
don't forget we have the feds printing money for the third time since 2009 and still the economy is feeling like crap. money is hard to come by these days and many consumers are poorer. and don't forget the fiscal cliff looming after Dec 31st. we are all going to pay more taxes and receive fewer benefits.
we're buying lots now on the notion that the future will bail us out - (buy cheap now and sell for profit in the future). if the future is poorer than us today, then we are so screwed (buy cheap now and sell even cheaper in the future). oops... gulp!!!
That's crazy talk....didn't you see the latest unemployment numbers. We are heading in the right direction. (Trying to keep a straight face.)
I think Walmart had way too much inventory and moving the older stuff for the newer stuff. Plus, the average, typical shoppers do not purchase high end lego sets from Walmart. Walmart is what it is......shop for cheap.
I hope that I do not offend anyone with talking about purchasing. I know it can be a hot button here. It is a business for me. I pay lots of taxes by selling. I like to give good deals for my customers. I am also happy that so many people could get these deals at Walmart.
I know you are all going to think this is crazy, but I do feel sorry for "ToysRUs" This is suppose to be their big month and "Walmart" and "Amazon" have stolen their thunder. I would be sad if "ToysRUs" ever went away. I know they don't have great prices, but they are the one store where I can sometimes find a discontinued Lego and they have a great selection. It is the only toy store left.
Back on topic, I don't see these sales having an impact on ebay sales as many kids and collectors are still looking for retired sets. I know my sales haven't slowed down at all.
There's been much discussion here about the effects of more resellers entering the market, sales, and over supply, but the biggest thing that scares me is our possible financial collapse in this country. Sitting on a large stash of Lego is not very comforting the way things are going. Lego is not a necessity, but rather a luxury, and needs come before that when people make decisions on what to buy. At least I would hope so :P
My guess is they're either in a disagreement with Lego, they've decided not to stock these large sets any more or they're doing some sort of experiment.
How much money are they really making on, say, TH at $120? That's 40% off MSRP. How much more of a discount do they get from TLG? There's got to be more to this that just sales and profits.
It would be interesting to know if there are other areas where Wal-Mart has slashed prices insanely this season...if that's the case then that would signal a pretty big challenge to Amazon I would think, especially now that the sales tax impacts are about to hit Amazon as states line up...I am a little worried about Amazon as I've seen people on other forums in California now saying that they are avoiding Amazon now due to the new "Amazon tax against Californians" - yeah, I have seen it described that way :)
On the other hand, I could definately see Wal-Mart trying to move out some of these large sets which are probably not fast-movers to prep for the holiday season. I can't imagine the turns on the modulars and exclusives are that great, WM can probably do better by churning through several pallets of Furbies (or whatever) rather than 1 pallet of stagnant Death Stars. I work in IT for a large retailer and getting the right merchandise assortments in place for the holidays is a huge priority right now to be able to meet demand.
Yea, not much help to the thread but had to post how great this site is!
There's nothing earth-shattering about 25% off. Toys R Us had modulars and larger sets like Tower Bridge and Death star effectively 25% off several times last year with their BOGO 50% off sale. Amazon routinely has a large selection of LEGO for 20% off or more. LEGO's discount for LUG showcase, store volunteering, and larger AFOL conventions are 30% off.
The sale was noteworthy because it applied to many of the more desirable sets, was somewhat unexpected at this time of year, and there weren't pesky BOGO50 considerations needed to pair up items, but the discounts are not likely going to dramatically destabilize the market.
$289 isn't what it used to be. But I'll grant that the average consumer didn't get access to this sale, it was at an odd time of night and ran out quickly.
But I don't think that is out the price range of the "average" consumer, whatever that might be.
Yea, I gotta agree, a loss is a loss...
Yes..people can laugh and have an opinion. I have been doing this for years and grew up in retail. Trends change and business models change too. I don't claim to be an expert, however I have seen companies change and products become less valuable.
The standard discount everyone gets is 30% off RRP, that is well known.
What is also well known is that there are ways to make it lower than that, product placement dollars, marking co-op dollars, rebates for volume, etc.
I fully expect that Walmart is paying about 50% of the RRP for most of these sets, after all that is said and done, but they have costs on top of that.
In this case, selling them for any less than about 30% off would be losing money, they have warehouses to pay for, credit card fees to pay for, shipping, employees, cost of capital...
All of that has a cost attached to it, buying something for $5 and selling it for $6 does not give you a $1 net profit. It might get you a $1 gross profit, but that means little until you subtract out all the costs of doing business.
I feel very comfortable saying that Walmart is not making money at these prices, but that also might not be their goal here. Amazon lost money for years and years to build up a customer base and establish their name.
Second, according to market research from August, iPhones have a 6.9% share of the overall cell phone market. Now there are reasons to not own an iPhone beyond it being unaffordable, but IMO that small of market penetration is enough to suggest its cost is prohibitive for a large percentage of the population.
I don't think this rash of Walmart sales will hurt anyone's sales in the aftermarket. The horror stories that I have read about the condition of the boxes should squash that :)
I've said it before, it really is no different than the parents buying Power Wheels for their kids, which I also see quite often.
I have a client who has 6 kids, aged 11 to 16, two pairs of twins. All have smart phones, total of 8 in the house.
There may not be 50 million such people in the USA, but there are quite a few of them out there. I have a hard time believing that Death Star, in 4 years, hasn't sold half a million copies world wide, and would not be suprised if it has sold 1 million copies in 4 years.
Ok, imagine you walk into Walmart for a single tv that you see is on sale. You buy your tv and then walk out of the store without buying anything else. Walmart priced that tv as a loss leader, expecting you to hopefully buy some cables to go with it or possibly some software, a blu-ray player, hell maybe some cat food. Since you only bought the tv, Walmart makes very little or even loses some money on the sale. Same goes for the discounted Lego sets. Buy one and they make only a little. Buy ten, along with possibly a few other reasonably priced items and they make some money. Heck, you might even be happy enough with the sale that it persuades you to stop in next time to buy groceries instead of going to the grocery store.
My point is just this... If there are 50 million people worldwide who can afford an iPhone 5, with models ranging from $200 to $400 (and those are US subsidized prices, they are higher elsewhere), then there are a whole bunch of people who can, if they choose, spend $200 to $400 on a Lego set.
They might not choose to, but they could. Is that in the US, or worldwide? I would think that is low for the US number.
Ahh, found some numbers...
In the USA, Apple holds a 34.3% share of the smartphone market and a 17.1% share of the total mobile device market.
In the USA, 116.5 million people own smartphones, that is 1 out of every 3 people in the country, men, women, and children combined.
Based on all that, there are 40 million iPhone owners in the United States currently.
http://www.wirelessweek.com/News/2012/10/devices-Apple-Gains-Market-Share-Despite-iPhone-5-Anticipation/
That is a lot of people in the US with iPhones! We have about 110 million households, so on average, 1 out of every 3 households has an iPhone in it.
Yikes! :)
The truth is that even at $300 I just can't see spending that much on a child's toy. That is today. Six months ago I was in a Lego spending spree that I am now ashamed of. Also the iPhone is a device that people actually rely on for their daily lives. We had this discussion before about the iPad. Neither the iPad or the Death Star are necessary items. But I use the iPad a lot more than I would build and play with the Death Star
I personally use my iPad far more than my phone, which is not yet an iPhone because the screen is still too small, and it needs a slide out keyboard. ;) My Droid 3 has a larger screen and a keyboard, but it clearly is inferior to the iPhone in almost every other way but those two points.
But I love the iPad. :)
Back to the Death Star, it is a child's toy perhaps, but my son didn't build it, I did. So in that case, it was an adult toy! :) But I think most of them are still going to kids.
And I know what you mean about the spending spree, I've started selling off part of the personal collection that was purchased to build, when it dawned on me that we would never have the space or time to build it all, and at some point we had "too much", I was harming my kids through excess, in this case, "less is more". :)
I think you could take a poll of all the parents who bought power wheels and ask them if they'd buy their kid a $400 Lego set, and I think the vast majority would look at you like you're crazy. Just my opinion. :)
I will grant you, many people see the Death Star in my home and say "that cost HOW much?"
Yes, they say that... Then I take 60 seconds to show it to them, the detail, and they tend to go, "oh... yea I guess so..."
It takes their brains time to wrap around it.
Then they come back later and say, "what was that Star Wars set, I want to get it for my son".
:)
More than once... Lego has just not done enough to make people aware that a detailed playset for kids is in that price range.
The problem with the UCS Star Destroyer and UCS Falcon is that while impressive to us, these same parents are generally not buying them for the kids, because there is nothing to do with them once built. Death Star is an amazing playset, the UCS sets are not.
Rant over. Again, I'm glad people can hoard sets and still live a nice life. That's what this country, or any is about. Freedom. But why does everything come across as a brag when it comes to buying?