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S@H Prices

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S@H Prices

Postby Athos » Wed Jul 22, 2009 9:44 am

Dear Lego,

I've noticed an issue with shop-at-home pricing. Specifically, once you've factored in the shipping costs, on an average size order, the price the customer pays is significantly more expensive than if they bought it in a store.

S@H prices are comparable, if not identical, to the prices seen in normal stores. Assuming an a sales tax, at said store, of 7%, the customer in the store would pay the MSRP plus 7%. When buying from shop-at-home, however, the customer will pay, MSRP plus up to 40%.

Using the most recent Indiana Jones sets as an example:

Ambush in Cairo: MSRP $10.99
-Total cost from S@H: $15.94
-Total cost from store (with 7% tax rate): $11.76
-Premium paid through S@H: $4.18 (38% more than shopping at a store)

Chauchalla Cemetary: MSRP: $19.99
-Total cost from S@H: $24.94
-Total cost from store: $21.34
-Premium paid through S@H: $3.60 (18% more than shopping at a store)

Venice Canal Chase: MSRP $39.99
-Total cost from S@H: $46.94
-Total cost from store: $42.78
-Premium paid through S@H: $4.16 (10% more than shopping at a store)

Fighter Plane Attack: MSRP $49.99
-Total cost from S@H: $56.94
-Total cost from store: $53.48
-Premium paid through S@H: $3.46 (7% more than shopping at a store)

Temple of Doom: MSRP: $89.99
-Total cost from S@H: $100.94
-Total cost from store: $96.29
-Premium paid through S@H: $4.65 (5% more than shopping at a store)

Its notable that as the order size goes up the premium goes down. However, it is not until one orders approximately $250 worth of Lego that the shipping prices become comparable to a sales tax rate of 7%. Thus, unless one is going to purchase $250 or more of Lego, foregoing S@H and shopping at your local store is the more economical option.

Further, S@H rarely offers anything at a discount, while stores will. Thus, further increasing the price disparity. Additionally, several states have no sales tax or a tax rate significantly less than 7%. This only further inflates S@H prices. When you couple all of this with the option to buy from amazon.com, which offers free shipping on many orders over $25, it is astonishing that anyone would purchase from S@H.

I noticed this issue while attempting to use my brickmaster coupon ($5 off a $20 order). Even using that coupon there was no incentive to purchase from S@H. Every thing I intended to buy, even with the coupon, would have cost me more than purchasing it in a store. This makes no sense. What good is the BM coupon then? In fact, the best arrangement I could come up with was the Hoth Battle, which would have, in the end, cost me the MSRP and left me paying the same as I would in the stores.

Steve
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Re: S@H Prices

Postby Solo » Wed Jul 22, 2009 10:40 am

Lemme shorten that for you:

Dear Lego,

I've noticed an issue with shop-at-home pricing.

You charge for shipping. That sucks.

Also, because of this, my Brickmaster coupon is kind of worthless. That also sucks.

Steve

Does that about sum it up?

Some thoughts to consider: not everyone has a local retailer that carries everything they want, and most online retailers will be more expensive than S@H. Also, as frustrating as it may be, some things are only available through S@H.

So what are the solutions? Should LEGO undercut their retailers by offering the sets cheaper online? Stores wouldn't order inventory. How about not charging for shipping? That takes a large chunk out of the profit and would probably make it not worth selling online at all. Give out better BM coupons? That solves a sliver of the problem... but not much.
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Re: S@H Prices

Postby Mister Ed » Wed Jul 22, 2009 11:53 am

Perhaps they could charge less for shipping? Perhaps they could have free shipping on orders over a certain amount all the time, instead of once a year? Or they could sell sets for slightly lower prices, which wouldn't really undercut the retailers when you considered the shipping. There are any number of things they could do to MITIGATE the problem. The question is, how much more competitive could they make S@H pricing and still make it worthwhile to them. Other online retailers seem to manage it, but they often sell less bulky items. (Amazon, for example, sells mostly books, DVDs, and other small items, and so can probably manage to offer free shipping on the LEGO, too, because it is a small portion of their total sales.)

Of course, I don't know the answer to any of these questions. I DO know that the situation as it stands has kept me from ever ordering anything from S@H unless I could get free shipping, which has only happened twice in the last 10 years.
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Re: S@H Prices

Postby Athos » Wed Jul 22, 2009 12:00 pm

Solo wrote:Lemme shorten that for you:

Dear Lego,

I've noticed an issue with shop-at-home pricing.

You charge for shipping. That sucks.

Also, because of this, my Brickmaster coupon is kind of worthless. That also sucks.

Steve


Does that about sum it up?


No. Not really. Your summation is an over simplification, provides no detail of the problem, misses the point and its tone implies you're belittling my concerns. I'm not complaining about charging for shipping per se. I'm saying that the shipping prices are so high that it makes it 40% more expensive to buy a set from S@H that it would be to go to a shop. The BM coupon shows how bad the situation is, in that I'm paying more than $5 more to use S@H.

And another problem I didn't address is those state's with Lego stores will get the tax stacked on top of the already high S@H prices.

most online retailers will be more expensive than S@H.


That may or may not be the case. I didn't check anywhere but amazon, which was significantly cheaper, even at non-discounted prices.

some things are only available through S@H


In which case, I may be willing to pay a little extra for the exclusivity. This is why I used the Indy line as an example. But even going to a Lego store, if one is nearby, alleviates that problem.

not everyone has a local retailer that carries everything they want...


While this may be a valid point, its somewhat diminished by amazon. I'm also in a position to comment on this, as I don't have a local retailer. The closest is 4 hours away. And I'm still not going to pay the 40% S@H premium on sets.

So what are the solutions?


One thought I had was to go back to including the shipping in the price of the set. As I recall, the prices were more comparable under that scheme. I think the major price disparity arises when your order is at the low end of the of one of shipping cost ranges. A flat shipping rate of, say 5% of the order, would make sense.

As to lower shipping fees cutting into profits, I think Lego would still come out ahead. They're selling sets at retail price to us, which gives them the wholesale markup, plus the retail markup. They could at least give us a break on shipping, especially with some of the damage that occurs in shipment from S@H.

But, I really don't know. For me, its going to be not buying from S@H. I'll either order from amazon, wait until I get to a store (in UT with a ~5% tax) or wait until I get to a Lego store (with a ~7% tax) to buy my exclusives (and get loyalty rewards).

Steve
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Re: S@H Prices

Postby bigospedros » Wed Jul 22, 2009 1:05 pm

Surely Lego would only think about reducing their shipping costs and/or prices if they found that people stopped buying from them in enough numbers to mean that the operation wasn't working for them. I doubt this is happening, so why should they bother?

Doing postage as a % of the order wouldn't work, because postage isn't based on the cost of an item, it's based on it's size and weight. In reality, what Lego need to do is not have a shipping amount standardised based on order amount. It needs to be variable, based on the size and weight of the total order. However, that incorporates a whole load of extra admin and again, perhaps their sales figures are good enough not to warrant changing this.

Amazon can do free shipping because they are a massive company and will have agreed special rates with their delivery agents, at a discount and because of economies of scale and their buying power meaning they probably pay less for the items they sell means they can offer free shipping. S@H will not have the economies of scale and therefore they can't match it.

Plus, at the end of the day, no-one is forcing you to buy from S@H. If buying in store or at Amazon is cheaper for you, then do it! I rarely buy from S@H because of shipping prices, plus, I don't get loyalty stamps, so for exclusives, I travel to my local Lego store (50 miles away) or buy from other retailers if and when they have sales. You should count yourself as lucky, because the discounts in the US far outweigh anything we get here in the UK.
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Re: S@H Prices

Postby Draykov » Wed Jul 22, 2009 1:07 pm

Solo wrote:How about not charging for shipping? That takes a large chunk out of the profit and would probably make it not worth selling online at all.


Here's a consumer option: save your Shop@Home orders for the holiday free-shipping promotions that are typical from Thanksgiving through Easter.

bigospedros wrote:Surely Lego would only think about reducing their shipping costs and/or prices if they found that people stopped buying from them in enough numbers to mean that the operation wasn't working for them. I doubt this is happening, so why should they bother?


I don't buy on Shop@Home like I used to. When they put a brick-and-mortar store down in Houston, I had to re-think where I bought my LEGO (Amazon and their consistent free-shipping offers was a pretty decent alternative for a while). Fortunately, LEGO has put two new stores in the Dallas area which is less than an hour away from me, so I've got the wonderful option of taking my little girl on adventures to Stonebriar and now North Park.
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Re: S@H Prices

Postby Mister Ed » Wed Jul 22, 2009 1:23 pm

bigospedros wrote:Surely Lego would only think about reducing their shipping costs and/or prices if they found that people stopped buying from them in enough numbers to mean that the operation wasn't working for them.


Or, of course, if they thought that, by doing so, they would increase sales by enough to offset any losses.

But I can't really say. I assume they know more than I do about what will make them money. All I can say is that the current set-up means S@H will make almost no money off ME, but I certainly understand that that is unlikely to matter much unless I am typical.
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Re: S@H Prices

Postby Jabba the Taff » Wed Jul 22, 2009 1:45 pm

I only get exclusives and hard-to-finds from S@H. I assume they run the numbers, but (in the UK at least) I presume most people would have a toystore close enough to them not to buy common items from S@H. So I can't understand why they would. Perhaps the exclusive sets provide enough cover for them just to put those smaller, more widely available sets on the site and count the bonus markup money they'll make.
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Re: S@H Prices

Postby Solo » Wed Jul 22, 2009 2:29 pm

Athos wrote:Your summation is an over simplification,
As intended.
provides no detail of the problem,
You covered that rather well, why reiterate?
misses the point
Is your point (however callously simplified) not "S@H prices are too high because of shipping."?
and its tone implies you're belittling my concerns.
Ha! You think that was bad, you should have seen what I had before I toned it down! ;) But seriously, I'm sorry about that, I really didn't mean to be belittling in my response. Just poking fun trying to figure out what's up.

...state's with Lego stores will get the tax stacked on top of the already high S@H prices.
That's completely the governments fault. Makes it suck even more, sure, but it can't be helped.
I didn't check anywhere but amazon, which was significantly cheaper, even at non-discounted prices.
Well there you go! Problem solved! Just buy from the cheaper place. *looks down* Hmm... seems like that's you plan after all. So was this just a rant?

One thought I had was to go back to including the shipping in the price of the set.
How do you figure? If you're paying the same shipping cost, but it's built into the price, how does that improve anything? Are you saying LEGO should increase the S@H prices across the board and then offer "free" shipping?
A flat shipping rate of, say 5% of the order, would make sense.
I'd love to know how that makes sense... LEGO doesn't determine how much shipping costs. They're at the mercy of delivery companies just like you and me.
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Re: S@H Prices

Postby ThinkingImpaired » Tue Jul 28, 2009 1:14 am

Solo wrote:They're at the mercy of delivery companies just like you and me.


Not to mention packing.

You can get mad at any website for charging for shipping. The costs aren't that bad. They aren't ripping you off. If you can find a set in a store then get it. But if you have to have it packed and shipped to you directly from Lego, be prepared to pay more than the cost of the set.

And taxes? Yeah, blame the government and its reckless spending.
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