How to Become a LEGO Distributor

BrickDancer · February 2012

All is curious except for the large volume aspect. How is it physically possible to obtain large volume fraudulently? I've been pondering that point over the weekend.

phantom78 · February 2012

a large department store here occasionally has a buy 2 get the 3rd toy free sale (cheapest toy is the free one). so as long as you pick out 3 that are the same price you get a 33% discount from RRP.
ive been told that works out to roughly the cost price for smaller toy shops and online retailers buying direct from lego australia.

dougts · February 2012

$350 for $700 RRP of current sets such as superheroes? While it's a great deal for you, there is no way this isn't stolen or fraudulently obtained (stolen CCs, etc.)

dougts · February 2012

@BrickDancer $700 RRP of fraudulently obtained stuff is pretty easy to come by really. the CC/Dropship scam could be run simultaneously with multiple stolen CC numbers and several orders. then there is the old "swap the barcode" trick at retail stores, not to mention conveniently missing an item or two in a self-checkout area when yuou have a huge stack of boxes in your cart.

JP3804 · February 2012

Know somebody that works for a large shipping company. Things fall off of trucks, trains ect. all the time. I would ask, if he is legit you should get a straight answer. jmo

BrickDancer · February 2012

@dougts Overall, I'm cautious since I do not want any part of a fraud. But the $700 RRP was only a small fraction of his inventory that I could visibly see. Plus no access to D2C sets means its not a dropship scam, or else why restrict yourself from the easy selling big money sets. The situation as a whole is certainly suspect due to the large discounts, but other factors are pointing to a legit access privilege. Such as varying levels of discount depending on the set, 20% off for PotC and 40-50% for SW. Its not a blanket proposition of 50% across the board on anything current. Very curious... that's where I'm at on this right now.

Yellowcastle · February 2012

^ I can't help but see trouble ahead for you here...

Martin · February 2012

Usual scam rules apply here: if it sounds too good to be true, it probably is. A couple of years ago, I heard entire trucks of LEGO product were stolen/hijacked here. Large volumes are not impossible to source illegally.

gmpirate · February 2012

@BrickDancer Where and how did you meat this guy? Did he just pull up along side you in a van in the parking lot? :P

y2josh · February 2012

Here's what I can tell you about obtaining LEGO from third party wholesale distributors - It's almost never worth it. They're sold at about 7% below RRP and, especially if you're selling them on eBay or Amazon, this isn't even close to enough of a discount to actually make money unless you can manage to move units at insane markups.

I'm sure the discount is healthier buying directly from LEGO... but as a point of comparison... buying product directly from NECA runs you between 40%-50% below RRP, while buying the same products through the third party distributors runs you around 33%-43% below RRP. This markup seems fairly consistent across companies, so I'm doubting 'the little guy' could afford a large enough volume to even begin to compete with the discounts available from standard BOGO (and especially Black Friday) sales.

johnsbricks · February 2012

there is another forum that discusses profit margins

http://www.toysnbricks.com/forums/viewtopic.php?f=4&t=1498

essentially the profit margins seem to be around 30%. Anyone selling cheaper in bulk maybe getting stock illegally.

Coolsplash · February 2012

Well, I think if the guy is directly involved with someone from the Factory then it is possible. Or maybe a employee discount? We still do not have a clear understanding of how LEGO and their strategy work especially in sales. I think when stores could offer a products at 50% off just to clear shelf space, as no one works to loose money just to clear out shelf space. The stores have serious overheads to meet so even if they sell stuff at a markup, at the days end it all comes down what is in Black and what is in Red.

The discount range between manufacturer and retailer is well hidden from us consumers. I know this working in Pharmaceuticals as no one knows the discounting offered to us by Manufacturers/Importers. And since LEGO is a big business I think there is a bigger discount gap.

Back on this guy, it is best to proceed with caution.

dougts · February 2012

^ standard employee discount is 30% off RRP. 4-5 days per year they get 50% off. so, seems unlikely he's giving all those away at his cost at best. hardly worth his time/effort just to break even. not to mention, he'd risk losing his job by buying that much at discount (if they even let him).

there is just no way he is selling current sets at 30% to 50% off RRP and doing it legitimately. Even if he could somehow obtain merchandise at this steep of discount legally, which I find hard to believe, he is then selling it for essentially no profit. Why on Earth would he do that? he could make a killing selling these online, etc at much closer to RRP.

adding the "selling it in the parking lot" aspect, and it just smells rotten all the way around. Best case scenario, he is somehow involved in purchasing/procurement for a major retailer (TRU, etc), and somehow is managing to order for himself using the major retailer discounting. That still would be a violation of the agreement between LEGO and the retailer, and I would have to think the retailer wouldn't allow it either - for obvious reasons. and again you come back to the fact that he's essentially selling all this at or barely above his cost. it all comes down to making you believe his cost is zero.

Coolsplash · February 2012

My thoughts to be exact @dougts. Employee discount it out, but retailer discount could work yes.

I once met someone from Ebay who was selling LEGO without their original boxes and the prices he had were shocking. Like there was a difference of about 30-40% off in those sets (from retail) but he asked me to send him a list which I did and he got back to me in a week letting me know the prices. I did get the prices but upon further questioning the guy simply vanished. My guess he had some contact in one of the factories and were stealing the stuff somehow BUT seeing the Mega Factory documentary on National Geographic, it did not seem possible. Just a thought.

streeker · February 2012

@BrickDancer, this Brickset member landed the same kind of local "connection" as you in Northern California. Reading your post was like deja-vu:

http://www.bricksetforum.com/discussion/2751/2011legomaniac-hello-fellow-legoholics-from-california

On the Ebay scam thread, LEGO flags any order with DC2 sets over x amount ($200?). Almost all DC2 sets start at over $100. Better to buy 3 Funhouses than have your cover blown with too many 3 Grand Emporiums or several one-DC2 orders, no?

Have you seen his inventory of retired sets? Or does he have just current sets?

I'm sorry to say it, but I'm convinced your goods are hot.

BrickDancer · February 2012

@streeker yeah I caught that post when it was fresh, so this situation fit the same bill. As you can see from the other guy, everything looks legit even if it sounds too good to be true. No retired sets, all current and just released stuff. I'm working on a deal ranging across ~20 sets with x2 or x3. He's taking it like an order at a restaurant. Doesn't sound like a problem and the % is still good. Some sets he already gets in on a regular basis, others he'll have to place an order just for me.

How is it possible a little old lady and some middled aged guy who are 150 miles apart able to get these rates? I was tossing last night thinking about it all.

LegoFanTexas · February 2012

@BrickDancer - if he is legit, he can tell you where he is obtaining the stuff from.

I know you want a deal, EVERYONE wants a deal...

I assure you, his cost is zero, which is why he can sell at 50% off... They are stolen, plain and simple... Please do not encourage such criminal activity...

streeker · February 2012

@BrickDancer, on the contrary, I brought up that old thread to show that you this might be a new sort of scam coming into play, i.e.; NOTHING looks legit, neither for 2011legomaniac, neither for you.

dougts · February 2012

How is it possible a little old lady and some middled aged guy who are 150 miles apart able to get these rates? I was tossing last night thinking about it all.

You know the answer, even if you don't like what it means. ;-)

Si_UKNZ · February 2012

Receiving stolen goods is also a crime you know.
Just saying.
It might seem worth it but in the end it might not be.

BrickDancer · February 2012

So torn by this gift-horse (or trojan).

Whatever happened to 2011legomaniac though? If I don't post for a long while, send in CSI Lego to investigate.

brickmatic · February 2012

@BrickDancer That's how criminals move stolen goods, they sell at steep discounts. Between reality shows like It Takes a Thief that showed an former professional thief rob places and documentary pieces about some successful professional thieves, its clear that after product is stolen the key is to off load it as quickly as possible. That means selling it at a steep discount. Some of the jobs they talked about on these shows moved lots of product. I'm pretty certain the goods being offered to you at these crazy discount prices are stolen. Why else would you sell at a loss? Even if they just need to clear inventory, they could do so at higher prices if their goods are legitimately obtained. Why would anyone sell so far below market price?

cynthilina · February 2012

This is a good discussion. However I did a little research and actually asked Lego what the under lining deal is about small toy stores. The truth is places like wal-mart and TRU don't just buy in volume, they buy by warehouses. Were talking millions a year. For example TRU has 600 Stores in the US alone. Even when "sales" occur they have so much volume for what was spent that the sales really break them even in most cases. Wal-mart is the same way. With this said Lego told me that they do require a 10K purchase as a way to open relation ships. The agreement however states an obligation to purchase much more. I was told they get calls all the time about people willing to spend 10K even 30K on lego per year. Here is the issue, cost to Lego. Keep in mind all the factors that effect market pricing, in lego's case oil, international taxes and fees' etc. In the end this adds up. Also think about the time and money paid to employees to do the paperwork, packaging, shipping, etc. It costs Lego the same amount to ship a 10K order as it does a few million when it comes to paychecks. Also the Large companies are established and purchase Millions a year under contracts. Its not imposable for small toy stores to get Lego's however they must be willing to spend the money and move the volume of the order fast. I have been researching opening a toy store for months and found that its a very high risk idea. First your sales are better during some parts of the year than others. Second with the economy the way it is, hand me down toys are the thing right now.

LegoFanTexas · February 2012

@cynthilina - to expand on TRU and Walmart...

Lets say Walmart has 8,500 stores... and each store keeps 120 boxed sets on average on the shelf (I'm ignoring polybags, hangers, etc.). Now lets say that the average selling price of a boxed Lego set @ Walmart is $25. Now lets say they turn their inventory every 30 days (if they aren't doing that, it wouldn't be worth an entire isle of shelfspace).

So at any given time, Walmart has about 1 Million Lego sets out on display on the toy shelf with a value of $25 Million. They turn this every 30 days, for an annual rate of sales of Lego of $300 Million.

This number seems pretty reasonable to me, considering that Lego does a few Billion a year in sales, and Walmart is perhaps their biggest single buyer with Amazon a close second (double those numbers for Amazon). TRU, Target, K-Mart, B&N, etc. all buy in huge volume as well, not to mention that this is the US only... What do all the overseas sellers do?

The volume of sets, plastic parts, shipments, is staggering...

cynthilina · February 2012

the numbers are ridiculously high. NOT to mention on top of all that Lego has their own store's. SO why spend the money selling to a few 10-30K buyers that in the end make Lego very little money? Sure for the collectors and genuine business owners that's a great thought but when you stop worrying about $100K and worry about $100M things change.

BrickDancer · February 2012

SO why spend the money selling to a few 10-30K buyers that in the end make Lego very little money?

Market visibility & presence! That is an intangible value that is not easily accounted for in marketing costs but is highly strategic in an overarching way. Imagine Android vs. iPhone; it appears like Android is winning by the sheer numbers of outlets selling them. A marketing champion is at the helm for Google the way they are turning the tide of public opinion against Apple. Even though facts do not support it. Its all about perception.

cynthilina · February 2012

That's true however, what happens when people take their kids to Wal-mart, target etc? Inevitably they end up going to the toy section. Lego was brilliant in this idea. They don't have to do allot specialty store advertisement just put the product in a store that sells almost everything and wham Visibility like you wouldn't believe. Lego capitalized on the one stop shopping Idea. For example I was in Wal-Mart at lunch and a father was their to pick up pictures, by the time he left he had a $30 Lego kit for his kid. The other side of the coin is honestly Lego is to easy to find and obtain on line at a massively lower overhead. Just like most things. So as much as I would agree with you BrickDancer I do see a strong case for Lego as well.

danstraindepot · February 2012

I agree those mentioned at 50% off lLego are stolen.
30% is the discount. Also Lego wants a 'toy store' that sells other toys. And you CANNOT ship out of the country you are a dealer in. That will cost you your dealership. And the supply/exclusive items make it pretty tough for someone to start selling Lego. Regardless of the amount you are willing to spend. In my opinion its best just to buy them on sale and get what you want at the Lego store.

If you have a Lego club, that can be interesting. But it is NOT for resale, and there are strict requirements.

cynthilina · February 2012

100% agree dan!! After enough research its to expensive in the long run. I just visit Walmart and Target Daily, check Craigs list for local reasonable sales and hope to get lucky when I travel.

bahnstormer · February 2012

Lego has a different strategy for different markets. For the US it makes sense to deal with a limited number of massmarket retailers who can cover the whole country. Look at it this way, Lego has maybe 15 or so core clients and maybe 15-20 major regional clients (kroger, etc) , they only have to dispatch to around 100 locations and all of those will be huge distribution centres. ie fill several semi-rigs, drive to walmart DC in west bumblemumble , see you next month.compare that to the hassle of fulfilling and shipping a 2k order to momnpop on 10th st and you can see why they make it difficult. Chances are indies cant get friends as the initial 6 months production is split out between the above client base until the market slows down in the summer freeing the factories to make the xmas stock.

When you compare that to Europe which now has almost double the population but less than half of the geographic area things get difficult for lego. They have to deal with 27 different rates of VAT in about 20 languages. Lego has different policies and requirements for UK, Benelux, France and Germany. I called Lego UK last year as it is cheaper to buy from them than Germany, and they said they already had their quota of small businesses for the year. Germany has some very stringent rules regarding the ratios of product lines that you have to buy initially and then annually. lets say that you would have to buy a LOT of duplo, city and technic to be able to buy a small amount of LOTR or SW stock. from what I ve seen online, I'm guessing Benelux e-tailers dont have the same issue.

IMHO, it is a lot less hassle to deal with a specialist wholesaler (there are a handful in Germany) as you can order in smaller amounts and restock when needed - you might want to check with Lego USA who they use, as they certainly have these relationships all over Europe.

LegoFanTexas · February 2012

When you compare that to Europe which now has almost double the population but less than half of the geographic area things get difficult for lego. They have to deal with 27 different rates of VAT in about 20 languages.

Off topic a bit, but this is why I believe that if Europe could get their act together, pick a common language, common legal system, common tax system, and unify, they would be an economic powerhouse to rival, and probably pass, the United States, with China unable to catch up for a long time.

Europe is a mass of modern and long term culture that really could be something, if they could get over the whole 27 different country thing.

Unify already, would you please?

streeker · February 2012

@LegoFanTexas, ^ the stink of ignorance wafting from the turd of your post, geez, I can smell it from across the Atlantic.

bahnstormer · February 2012

^
It may eventually happen and it vil (ha ha) probably be German, which will upset the French quite a lot.

The Bilderbergers are trying this over here but there never will be a Euro equivalent of the USA. Put it this way, you are more likely to see 15 million Canucks take US citizenship and lose the CAD than see Europe unite under 1 language, 1 legal and 1 tax system.

2 examples from this months press:

The Germans are trying to unify Europe on their corporate tax rate of c.30% which is upsetting the Irish as theirs is 12.5%.

In the UK a teacher who sleeps with an underage pupil gets jailed, in Germany they get a 1000 euro fine and moved to a different school in a different town.

LegoFanTexas · February 2012

@LegoFanTexas, ^ the stink of ignorance wafting from the turd of your post, geez, I can smell it from across the Atlantic.

Now, now... be nice... :)

I am well aware of the history and of the ten tons of issues involved... But my point remains, if Europe could unite, it would create an economic powerhouse. That much is true.

You just have to get everyone past a lot of history... So easy to say, so hard to do...

Coolsplash · February 2012

Ok so based on all this discussion, can we figure out the maximum discount LEGO must be giving to big stores like Walmart and TRU? I can figure out how Walmart is selling so much LEGO especially at clearance of 50% off but I wonder how much of a discount could a small to medium sized toy store could get from LEGO.

streeker · February 2012

^^If you were well aware of the 'history and the ten tons of issues involved' you wouldn't 1) have raised the issue (uninvited) and 2) used a patronising tone. Reread what you wrote and ask yourself if you were nice on a forum which is founded by and of which several members are European.

You're getting really big for your boots, and I am being kind when I say that. You shouldn't ignore that 'ignore button' thread.

bluemoose · February 2012

Come on folks, play nice. There's no need for this kind of antagonism.
This is a hobby we should be enjoying, not getting all stressed over.
There are always going to be folk that we don't agree with; the grown up thing to do is ignore them & move on :-)

LegoFanTexas · February 2012

^^If you were well aware of the 'history and the ten tons of issues involved' you wouldn't 1) have raised the issue (uninvited) and 2) used a patronising tone. Reread what you wrote and ask yourself if you were nice on a forum which is founded by and of which several members are European.

My tone was not meant to be patronizing, so I do apologize if it was taken that way.

Europe seems to be going this way anyway, what with the EU and the Euro. I was simply trying to point out that if you add the economies of the EU member states, you get an economy larger than the United States.

If the United States were broken up into 50 separate countries, what a mess would THAT be?!?! Of course, you'd find people here who would support that as well, so there are all kinds in the world.

You're getting really big for your boots, and I am being kind when I say that. You shouldn't ignore that 'ignore button' thread.

As for the "ignore button" thread, if I was worried about everyone in the world liking me, I'd just go nuts.

So I just take care of myself, try to be as nice as possible, and let people who don't like me, well, just not like me. :)

streeker · February 2012

Strike 'uninvited'. Try 'unsolicited.'

@Coolsplash, I see what you did there. Ahem, yes, I think medium-sized stores could only afford a much, much smaller discount, just because something about buying less volume from LEGO compared to big retailers translating into less discount wiggle room.

MinifigsMe · February 2012

@LFT - really??? Was it necessary to come along an patronise a whole continent? There's so much wrong with what you've said I barely know where to start, so I'll just point out how you are a single country with different taxes and laws in every state - so why propose something for the EU that the US doesn't follow?
I think we'll stick to our own little messed up ways of doing things, and at least know that when we get sick with a terminal illness our country won't turn it's back on us. Please stick to the one or two threads about bragging as thats clearly all you want to do anyway.

Edited for language by YC 2/24/12

MinifigsMe · February 2012

Sorry coolslash for OT - 5 am posting probably should be a avoided but pregnancy insomnia clearly makes me rant!

Yellowcastle · February 2012

@everyone - this is getting old. Please stay on topic, keep it civil and try not to offend millions of people.

madforLEGO · February 2012

Well if it is too good to be true then it probably isn't.
Just because you got the merchandise does not mean it was not illegally gotten.

Now it is hard to condemn a process but since all of us have heard massive amount of scamming going on with LEGO I would be dubious about any 'good deals' out there....

madforLEGO · February 2012

^--Sorry, tried to put the above comment in another thread and was not paying attention :-(

Coolsplash · February 2012

@Savage_Steel don't worry about it :)

madforLEGO · February 2012

As I have learned in other threads, everyone has their own opinion and beliefs. If you perceive they are wrong in their thinking then I do not think you are going to convince them otherwise.
It just is what it is, and I have given up debating it as it is a lost cause.

I have also learned that if you do not like the opinions of certain members I would say just take it with a grain of salt as they are who they are, and move on to the next message. I think there are people in this world that get a rise when they can push buttons, but there are also those that are really good people at heart (at least I hope so) but do not realize how what they say is perceived by others. If someone says something that is truly nasty I'm sure moderators will say or do something to resolve it (at least I would think they would).

bluemoose · February 2012

^ we have put members on temporary bans in the past for poor behaviour; we don't have a policy of " name and shame ", so it hasn't been very obvious to the rest of the membership that we've done it, but we do do it & will continue to do so when we feel it is justified. Sometimes they come back, sometimes they don't ... I've got respect for those that are able to put their bruised ego to one side and rejoin the community here.

LegoFanTexas · February 2012

@LFT - really??? Was it necessary to come along an patronise a whole continent?

If you felt patronized, then I apologize, that was not my intent at all.

It really was meant to be a compliment, but clearly I failed in communicating that.

What I was trying to say is that Europe has a great combined economy, you are held back by the various national barriers, languages, etc. of dozens of sovereign nations, from an economic point of view.

I don't know if that properly communicates what I was trying to say, perhaps a few words in a forum posting don't do the thought justice.

There's so much wrong with what you've said I barely know where to start, so I'll just point out how you are a single country with different taxes and laws in every state - so why propose something for the EU that the US doesn't follow?

Consider for a minute if Europe was a single nation, with each of the current nations, states within that nation, with a single government running the whole thing.

You'd have something similar to what America has, and I think you'd be the richest, most powerful nation on Earth. Combine all your income into one pool, combine all your military forces into a single force, and you would be king of the hill.

That is meant as a compliment. If you disagree with it, fine, I respect that, but that is how it is intended.

Yellowcastle · February 2012

@LegoFanTexas - I understand that you're just trying to clarify earlier comments but none of this is on topic. You just need to move on.

cutmygrass · February 2012

I have been thinking about opening an account and again like many the issue is the up front setting up of the account and then on going "business relation" with Lego. But lately have been wondering if you could parallel import, like we have here in OZ will coke cola and the like i.e. like say purchase from traditionally larger or cheaper lego markets like the USA, import the stock into Australia, Canada etc at a cheaper rate then what Lego can and sell it for less than what the multi nationals can....? maybe a co-op of sorts.....?

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