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Has anyone gotten out of the reselling "business", and can you share the reasons why?
For almost the past year, I've been amassing a small inventory of sets for resale. However, to be totally honest, I've started to change my mind about reselling. Reasons include:
-Lego boxes taking up too much space in closets (and sort of "junking up" the house)
-Impatience waiting for sets to be discontinued (which now seems to be taking longer and longer)
-Anxiety about picking losers, regardless of much everyone says a particular set is a sure-thing
-The prospect of limited return on investment due to more and more resellers in the marketplace
-Time needed to list, package and ship sets to customers (time I would rather be spending on something fun)
Basically, I'm beginning to think that reselling is more trouble than it's worth on a small scale. By small, I mean inventory totaling $10,000 or less. I'm thinking I would rather lose out on a few thousand dollars reselling (which is certainly not money for nothing), and instead simply enjoy the hobby and have more time to do, well, anything. Has anyone else reached a similar conclusion with respect to reselling?
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Having said that, selling LEGO still does work at times; not to run it as a business, but to fund the hobby. I sell minifigures and parts I don't want regularly, and I own all my LEGO free and clear - meaning when all said and done I paid nothing for my LEGO....(c;
So if someone doesn't have play-money, or in general strapped for funds, or feels guilty spending so much on LEGO, re-selling is a great way to fund the hobby. But I would never want to turn it into a business. I considered it and even tried it, but it is not for me. It is significant risk and more work than what I can put into it. So yeah, you are not alone... (c:
Less than $10,000 of inventory is a hobby business. Nothing wrong with that, it can help support your Lego buying habbits and perhaps make it "free" to enjoy your own Lego sets, depending of course on how you value your time.
To make it an actual "business", you need hundreds of thousands of dollars to make a real go of it, the time it takes to sell sets, some that sit on the shelf for a year or more, not all sets will really do well in the after market, etc. All that means that you have to bet big and wide to catch the good deals.
Over time, you of course get better and learn what to buy and what not to, but then at some point, you're spending as much, if not more time doing that than you are enjoying Lego.
I must say, I no longer enjoy building as much as I did a year ago, because the business part can really take over. Once you see hundreds of boxed sets piled together, some of the magic is lost.
One Fire Brigade is really cool, 100 of them are just cardboard boxes of plastic to be moved and sold and becomes work really fast.
Would I do it all over again? No, I don't think I would... I am still buying, but less than I did 6 months ago, my goal is to return it to a self funding hobby, but I suspect that 2 years from now when the inventory is gone, I'll just go back to enjoying the brick and leave the reselling to everyone else. :)
I wouldn't do it to make money, as picking the parts for orders is a huge ball ache, and not worth the time for serious profit.
There are a few big time people who do it, have warehouses, employees, the whole nine yards. I spent an afternoon a few months ago and did the math to see if adding that to my business would make any sense.
Short answer: No
Long answer: NO!
Hopefully now people can actually start to appreciate the hobby more for what it is and not get so caught up in the investment angle.
"Is this the best use of capital I have?"
If I put $100,000 into Lego, what is my return on capital investment? Could I make more elsewhere? What is this risk of this, vs other investments?
Then there is the whole "the magic is gone" aspect. Do I want to turn the family hobby into a business? Frankly, already have, and am working on unwinding that a bit.
I have my eyes on an investment property or two, I missed the whole fuss from 2002 to 2008, so perhaps now is the time.
When anybody asks him what the key to it is, other than the obvious things like hard work, he always says two words 'cash flow'.
The problem with selling sealed lego sets, and in particular small scale hobby sellers, is that you need to keep stock for a number of years before it becomes profitable, and therefore the model doesn't lend itself in the slightest to this ethos, especially in the beginning. On this basis alone it is not as easy as some people might think.
DadsAFOL is already on my favorite store list and has excellent service. It has large inventory and consistently competitive prices, which often do not coincide on Bricklink.
Didn't dig deep right now, but I'll be back, don't worry. :)
If you ever wonder how some large, public companies like Amazon can report losses for years on end... Profit and Loss is not the same as cashflow. P&L tells if you're making any money in the long run relative to capital investment, cashflow tells you if you have money for payroll next week.
You can have a highly profitable business, but if you run out of cash and can't pay your staff, it doesn't much matter.
As collectors, most of us spend a tremendous amount of time and energy price watching. With the gained insight, it's a logical next step when finding a great value to pick up an extra copy or two to resell and fund the hobby.
For most of us, that is a more realistic, practical approach than expecting it to replace our jobs or investment vehicles.
To comment on this thread, as a lifelong fan of the brick; and an reseller (I mainly rebuild vintage sets)...life's short so you better do what you love. Share any success with friends and family.
The Lego side business however does have some advantages:
#1 - I am largely working at my own pace with no customer deadlines
#2 - I get the enjoyment of the hobby along with the business aspect..it's more "fun" than an IT job
#3 - I learn some entreprenurial skills that will help me in the future
On the other hand, there are the disadvantages:
#1 - I have a tiny house that's "in-town" in a major metro area, so any space I'd normally devote to playing with or displaying Lego is reserved for inventory - this has really hurt my enjoyment from the hobby side
#2 - There is definately a gamble in picking the right sets...I have gotten pretty good, but there is more risk than in a consulting/services business
#3 - A lot of the work can be routine/mindless and not very stimulating (packing, shipping, etc.)
#4 - Scalability is a big problem - there are a fixed number of buyers for old sets such that more competition (and even myself listing multiples) starts to drive the prices down.
I've been very happy with the rate of return I've gotten to this point compared with the work that I've put in, but to keep growing that return (and further accelerate wealth building), I feel that it's time to go ahead and take the profits and move them into another area in the next year or so. Reselling Lego really helped me get focused on my financial goals for the next few years and establish a plan...I think that's been the best takeaway for me. I still think it will be worthwhile to resell for the next couple of years (it is going to get harder for sure, due to increased competition), and is a good stepping stone towards the "next big thing", but it is clear to me that this is the kind of business you should use as a stepping stone rather than a long term plan.
To clarify a bit regarding my reselling habits: my approach up until now has been to simply buy one or two extra of popular sets and then sell them after EOL for a small profit. For me, reselling was intended only to make a few extra dollars to supplement my Lego spending. But even that has become a little more of a headache than I expected, hence the reason for this thread lol. I think going forward, selling my used sets after EOL will still be sufficiently profitable (since I always buy at a discount anyway). I'm not really a collector who likes to keep every Lego set I ever bought; it's just too much clutter/stuff lying around!
- Already noted by some, but getting too hung up on re-selling makes it more difficult to enjoy the hobby. i.e. it becomes a self questioning war of attrition when deliberating whether to open a 'valuable' or old set. This I suspect affects more people than you realise. Whilst I can comfortably open old sets with no worry about any 'loss' of money as I am primarily a fan, I do still have a MISB sandcrawler that I desperately want to build, but am unsure whether to open. I need to break through on this one...
- Even worse than the first point, is the move to a mindset that you can never miss a bargain as it's too much of a good deal, regardless of whether you like the theme or set. If you opened your wardrobe tonight and were greeted with 50 Spongebob sets you bought in a sale, jammed in behind the clothes, then you might be in this camp.
anyway, must go, it's about time I built one of those sets with the orange pineapple in. hold on a minute...
I'm also looking into investment property. I want a couple of Lakeside homes/cottages. We will see :)