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What is LEGO's Strategy on Regional Pricing? Availability?
elazgar
Member Posts: 31
I have notice that the prices change quite a lot when I change my location at S@H website.
For example the Minifigure Wrapping Paper 853240. In Spain I would have to pay 1,95€, in Italy 1,99€, in Ireland 2,49€, and in Germany 2,99€.
In this case I don´t think that one euro is really important but in some other sets there is a difference of 10 or 15 euros.
Sometimes Ireland is cheaper than the rest of countries, sometimes Spain is at the same level as Germany.
First I thought it was directly connected with the economical level in each country but now I don´t know what to think as there is not a constant for the variations.
What do you think?
For example the Minifigure Wrapping Paper 853240. In Spain I would have to pay 1,95€, in Italy 1,99€, in Ireland 2,49€, and in Germany 2,99€.
In this case I don´t think that one euro is really important but in some other sets there is a difference of 10 or 15 euros.
Sometimes Ireland is cheaper than the rest of countries, sometimes Spain is at the same level as Germany.
First I thought it was directly connected with the economical level in each country but now I don´t know what to think as there is not a constant for the variations.
What do you think?
0
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Comments
Let me preference this observation/question by saying none of the below will stop me buying Lego or thinking it is a fantastic toy but… Can anyone explain Lego's official global pricing structure, specifically the variations in their online prices? Over the weekend I was flicking between the two website to see what the new Cars 2 (not even on the UK website yet, but oddly in shops) and PotC stuff looked like and I really began to notice the price differences.
In the UK we are used to products costing more than almost anywhere else in the world (the whole, being an island thing), or importing from outside the EU etc, and to a point we put up with that. But given Lego is a Danish company (and last I checked that was within the EU) moving the goods around Europe (specifically to the UK) should be cheaper than moving them to the US, thus incurring import duty and selling them there. As such I would expect to see a higher overhead for each unit on the US Lego website than the UK one. Even if the Lego create and package the items within the US they have to pay state and federal taxes for the privilege of avoiding import duty. I assume licencing can affect price in each area, as does anticipated quantity of sales but even that doesn’t explain the inconsistencies across the two sites. For example:
Queen Anne's Revenge is $119 on the US website and £102.99 on the UK site, yet on exchange rate the cost works out at = £73.89. What is really interesting is you then get something like the Maersk Train which is also $119.99 on the US site (again a licenced model just like the Queen Anne’s Revenge) but this time it is only £91.99 on the UK site, that’s £11 less than the Queen Anne, yet in the US they are the same price?
Even if this can be written off by local interest (i.e. not many people in the UK will be aware of the US freight train and its cultural significance) the same cannot be said of Diagon Alley or the Pet Shop. Both are set at $149.99 on the US site yet on the UK site Diagon Alley is £132.99 and the Pet shop only £119.99, that’s a £13 discrepancy, and both have an exchange rate cost working out at £92.98, in the case of Diagon alley that’s £40 more than in the US.
At $99.99, the Scorpion Pyramid is another example. It is £71.99 on the UK site with an exchange rate conversion coming out at £44.61. Yet the Battle of Endor set, which is also $99.99 on the US site, is £84.99 on the UK site, that’s £13 more. Based on exchange rate both sets work out at £62.02. I am aware that there is a licencing implication to this comparison, but as both sets are the same price on the US site I don’t see why they are different prices on the UK site.
None of this will stop be buying from the Lego website in the UK (I like my VIP points and my closest Lego store is Windsor and they don’t do VIP points, a conversation for another day), but what this does tell me is that as a European, I am being charged more to buy a European product from a European Website by a European company? So if I get the chance to buy my Lego from the US website, I will still get my VIP points (more actually on the point per dollar ratio) and save money, of course I would have to live in the US to save on international shipping costs, but that seems a mere technicality…
Post edited by @Matthew -23/05/11 15.44 GMT - Reason for Edit: Moved to 'Everything Else LEGO'
The largest factor is probably the size of the market. The US market is by far the largest and thus enjoys the cheapest price due to economies of scale, i.e. the cost of doing business (design, marketing, distributing) is cheaper per unit because the cost is diffused over a greater volume. Someone (I think it was brickmatic) made an excellent point about the transport infrastructure of the US being superior than most other countries, and thus making it cheaper to distribute. Also, TLG may be willing to accept a lower profit margin in the US as the necessary "cost of doing business" since it still accounts for so much revenue.
The suggested retail price is set by TLG at the product's introduction, so fluctuations in currency may increase or decrease the pricing discrepancy in different geographies.
Diagon Alley is $269.99 and the Pet shop the same
& we can't found any in shop so have to pay extra $45(wait 2weeks) or $100(wait 1weeks)for shipping
shame on you TLG
is that US dollars or Australian?
Within the EU ALL states are mandated to charge a hidden value added tax, this varies between 15% in Luxembourg and 23% in ireland. The US doesnt have VAT although the stores will add a sales tax at the point of sale of around 7%. If you buy online within the US but in a different state from where you live chances are you can buy without sales tax.
pet shop is a good example as its is £120 inc vat or £100 without. when calculating FX mid-point is a rule of thumb and you need to consider the bid/offer spread. post office / M&S have a c. 20 point spreadfor cash, cards around 10 points.
thus in a like for like comparison, pet shop is actually only $5 more expensive in UK than it is in the US. if the fx rate falls to 1.54, it is technically cheaper to buy it in the UK.
aussies get a raw deal but the sets are being shipped half way round the world where they are then charged import duty and have vat slapped on them - cost me €107 to send a 10kg package to Oz last week. the buyer is aware that your customs will also charge import duty on the quoted postage.
http://www.bricklink.com/catalogPG.asp?S=10218-1-&colorID=0&viewExclude=N&v=P&cID=Y
and with the dollar so stong right now it's almost 2 sets for the price of one if you buy from the official Lego site....
It's all market size. USA 300+ million people, Australia 22+million people. NYC and boroughs have over 10million people. 4 LEGO stores to hack around in. Lego nirvana...;)
Example:
The new Cars 2 set Lego 8423 World Grand Prix Racing Rivalry is US$15 and C$20
Not to mention we pay an additional 13% in tax.
So 25%-off sales bring down the price to US MSRP but still the tax is a pain in the brick.
If importing from US and it has to go through Canadian customs,
then most of the times there's more to pay.
When people can just cross the boarder and buy it from the US,
enjoy the lower MSRP especially for the bigger sets with less or no tax at all.
I have been looking up the national taxes in each country in europe and it is not so different in these countries (from 18 to 21,5%)
ireland = 12.5%
germany = 28% + (this amount * (5.5%+14%)) the extras are solidarity tax and town trade tax
France: http://search2.lego.com/exec/?q=10199&pt=&lang=2057&cc=FR => €72.90
Belgium: http://search2.lego.com/exec/?q=10199&pt=&lang=2057&cc=BE => €59.99
Germany: http://search2.lego.com/exec/?q=10199&pt=&lang=2057&cc=DE => €59.99
Does anyone have an explanation for these differences? A few euros I could understand, but €12.91 more expensive than BE or DE is a lot of money. Is shipping something to France that more expensive for LEGO?
http://search2.lego.com/exec/?q=7189&pt=&lang=2057&cc=FR => €69.90
http://search2.lego.com/exec/?q=7189&pt=&lang=2057&cc=BE => €74.99
I'm now thinking about writing something that compares S@H prices for a bunch of items... Damn, this "catch a bargain" thing is hard.
Over here it's usually a better idea to buy larger sets on Ebay and have them shipped to Sweden, even if the shipping cost is €50 or more.
So I'm officially challenging the aussies about who has the most expensive Lego... :-)
Why did LEGO allow the UK market and only the UK the extra discounts, free shipping and free Santa set, and yet by LEGO's accounting Germany is its biggest European market?
Why did France, Germany and Denmark receive a Free Santa set with X purchase, but Belgium, Ireland and Finland, for example, get zip? Why if I were Swiss do I receive 10% off but no freebie, but my Dutch neighbour gets neither? Why didn't LEGO extend the free set to all European countries at the very least? It's a free set to encourage more spending!
Their latest news release about the Santa set running out of inventory would effectively make the UK and perhaps the Swiss the only European markets to enjoy any promotional specials by the end of this evening. Well done, LEGO. I for one am not biting.
I'd rather have BOGO on the overpriced exclusives that the US TRU or Amazon carry as standard than half a dozen free polys (with a rubbish paper I need to pluck up the courage to buy) and can be picked up for peanuts anyway! - whoopeee! Seriously, exclusives in the UK can more or less only be bought from LEGO. How or why is it everywhere else in Europe and the US have the exclusives on their shelves? It really winds me up when I hear about "this on sale with 25% off" or "buy one, get three free". They're already priced considerably lower in the US than the UK and then their stores find it able to reduce by 75% - how does that work?? I welcome the day Amazon Uk offer an Imperial Shuttle as a Black Friday deal - you know what they say about flying pigs!!
The poly promotions from the papers are just that - the papers funding the promotion to sell their papers, not LEGO. Why is it Amazon UK aren't allowed to sell exclusives and make life "dandy" for UK fans like they can in multiple other countries?
I'm talking from a UK perspective, but equally know that we're not the worst off -we know how the Aussies feel. Stinks! Rant over!
^^ Flump is right, us Aussies really do get a raw deal. I can get just about any set of any size shipped from the US, (shipping costs, FYI, can be in excess of $50), and still get it far cheaper than my local store has it for. If I can do it through USPS/AusPost, why can't Lego? Clearly a rort.
Not only that, but the Pet Shop and Shuttle Adventure have only just arrived in stores (well a couple of months back), and we haven't seen any sign of the VW Camper. These sets have been available for purchase in other countries for months now, so we still get a raw deal.
EA, Ubisoft, Activision, Nintendo and every other gaming production company can get new computer games shipped and on the shelves, on a specified worldwide release date, so why can't Lego?
I understand that out of all of Australia's population of 24mil, maybe at most, 25% are Lego purchasers, compared to the US's 100mil+, but come on Lego, give us a break.
I just bought 2 EN from S@H as there are none left in Australian shops. $345AUD shipped which is about the same in USD. Could have 4.5 of them for that price at black friday sales. The an upside is that I will sell one off soon enough and get the shipping costs back atleast. The other is for my new train addiction.
We would love any of the deals you get, but in the past six months there have been some nice discoveries in relation to buying very cheap from overseas compared to what we normally pay (thanks to brickset and an Australian site), so I no longer complain about the higher RRP (please note the second paragraph is intended to be a factual comparison, not a complaint).
To get back to the main point of the thread, unfair LEGO pricing and promo policies create a 'what about me' feeling alot of the time but it is forgotten once you realise that you will suck it up and purchase that lovely set.
I can only guess with Europe...higher taxes, VAT's, smaller populations of each country and the Aussie's seems like the smaller sales due to smaller population and the freight cost since they're far away. I'm guessing on most above though.
It's all basically about volume of sales verses the cost to build and ship. Two sides of the ledger sheet.
I would suspect that any informed Australian AFOL would not be paying anywhere near RRP for currently available sets but this is true for any product. A pair of Nike free+ is $150 in Aus, but I just order them from Eastbay in the US and get them for $80 shipped. No wonder the B&M stores of Australia are crying about online overseas purchasing.
I did find it quite funny when I was in MYER (large department store) the other day trying to track down any last ENs and there was a 25% off one day sale. I saw all the mums in the till line stocking up for christmas, and i felt like walking over to them and whispering that I could sell them those sets for another 20% off and make a small profit (but not tell them the profit part).
Now I research everything before I buy it. Very rarely I buy at RRP in australia eg Pet Store is Au$269 but I can get it shipped from Germany for Au$170. It's a no brainer. When Our $ is worth more than the American $ it can be hard to take but that's life on an island miles away from anyone.
We do occasionally get free shipping from S@H but not often enough sometimes the odd keyring or spaceman magnet :).
The retailers here may winge about people flocking to online sales but at the end of the day they have them selves to blame thinking people are too ignorant to know better. Yes, the internet has been around for a lil' ol' while now and Bricklink is a great :D
Thanks to Huw and Doc's Amazon Bargain Watch database, we can now see that it's considerably cheaper to buy Exclusives (up to 30% cheaper) through a European Amazon (such as Spanish or French for example) than it is to buy from S@H (Uk's only source of buying them domestically). Given the recently flurry of people taking up the European offers, I'd like to think that TLG will supply them to Amazon and TRU (UK) and allow fair trading competition. Not holding my breathe though!!
Some here mention the free polybags. Those polybags are not sponsored by LEGO alone; they are business partnerships between individual companies and LEGO, be they the Sun or Daily Mirror newspapers or furniture stores in the Netherlands or bricoleur depots in Belgium, or gasoline stations in Germany. I can't criticize LEGO for that.
Some mention the lack of exclusive sets at Amazon.co.uk. You're going to have to ask the retailer why they choose to do that, because those sets are clearly on offer to amazon.de; amazon.fr, amazon.es, etc. I can't criticize LEGO for that.
I can criticize LEGO for its inequal treatment of its Black Friday promotional specials. As those specials were only on offer through its Shop@home website, it's evident that LEGO, and only LEGO, is responsible for drawing up the terms of its promotions. So then why so unequal? Why didn't LEGO have a pan-European promotional policy in place? It's the same region, distances are pretty compact, a number of countries share the same currency and yet they don't all enjoy the same perks of having a free set? It's pretty blatant how unfair LEGO's promotion was.
Mods, how can I edit the title of this thread to narrow its focus on promotions in Europe?
TLG (LEGO) alone are responsible for who sells their products. I for one criticize them for not allowing Amazon to sell in the UK.
BTW, I don't intend to get into any arguments by talking about who's got the advantage and who doesn't. I'm just giving some feedback, that's all.
Also, the US has a Lego factory nearby, but in Mexico to cut back on logistics costs. It used to be in CT earlier, meaning that the Legos were produced domestically to further slash costs there.
Thanks, Huw!
When I complained to LEGO about this lack of deals, I basically got a stock reply (blah blah blah price differences blah blah blah market). Then they had the guts to direct me to their special offers page which usually contains one half-decent set (*call for availability*, of course) and a bunch of magnets. Yeah, that's exactly the same as an *exclusive* Christmas set.
"You will suck it up and purchase that lovely set" Actually, no I don't; I'd buy a lot more LEGO (from S@H even) if prices were more fair. Right now I wait for deep discounts on Amazon UK/DE/FR, only in rare cases I pay full price.
Case in point:
http://search2.lego.com/exec/?pt=&lang=2057&cc=BE&q=2521
http://search2.lego.com/exec/?pt=&lang=2057&cc=NL&q=2521
http://search2.lego.com/exec/?pt=&lang=2057&cc=DE&q=2521
http://search2.lego.com/exec/?pt=&lang=2057&cc=UK&q=2521
BE €100 / NL €90 / DE €80 / UK £62
LEGO set 2521 is already significantly cheaper in the UK, and BE has one of the highest prices. Yet If a UK shopper bought this via S@H he would have gotten free shipping plus a free exclusive set. LEGO could have given me a 25% discount and a free Christmas set and free shipping and I still would have paid them more money than the UK customer! But I wouldn't have complained about that.
I can only hope that TLG sees it fit to offer me some discounts post-Christmas, but I'm not getting my hopes up.
=====
Anyway, on the OP's point, the thing that the Swiss and UK markets have in common is that they're outside the Euro, so I suspect that currency fluctuations are your answer. With the Euro at £0.85 now, and it was at £1 not long ago, this represents a 15% saving on the RRPs which were set some time ago. To say that differently, the RRPs have not been adjusted since €1=£1. I suspect that this is where the 10% savings have come from, since Lego are in Denmark, and so will manage all their stock etc in Euros.
I dont know this for sure, but it seems to make sense to me.
UK gets sweeter deals as EU customer service is based there.
and Si some prices havent been adjusted since 1 GBP = 1.40 Euro. this is why death star is 120 euro cheaper in UK than Germany
I can see currency fluctuations for pricing but for promotions? For a free set? Also, if the UK and Switzerland are the only European countries to still enjoy any kind of promotion today because they are non-Euro denominated countries, well then what about Sweden, Norway, Czech Republic, Poland or Denmark for that matter? None of these countries trade in Euros, and yet only Denmark (duh!) had received the free set.
People are already aggravated by difference in pricing--that's well-established!--so then for LEGO to pull this promotional special and reserve it for only certain European countries when we're all in the same proverbial sandbox, that makes it doubly sore. I don't see the logic behind LEGO's promotional policy.
On a world economic scale, the bank rating for specific currency (specifically currency not based on the gold standard) has an effect on the borrowing power of businesses (both selling and purchasing). It affects interest rates, which causes either an increase or decrease in product prices within that country.
The per piece price for LEGO in the U.S. is actually going up right now (as one views the price for new sets against the price for older sets). The kicker is that companies such as Wal-Mart and TRU work within complex systems to maximize profit... and the U.S. is still enjoying remants of Triple AAA - based business practices (such as BOGO and Black Friday) connected to a fluid, highest rate earning economy.
The inflation machine, it is suggested by some economists, is beginning to hit the U.S. market, and the wonderful prices on my side of the pond may very likely begin to fade, overall.
I wonder if certain countries do not receive the add-on gifts for reasons attached to taxation codes within various countries. I'd like to think LEGO understands all nations would like the great prices, but in the end, one has to look beyond simple "this country or that one" concepts, and start looking at import/export taxation policies placed on countries. Example: I've been informed in the past that taxation on imports is the reason LEGO costs as much as it does in Australia.