Recently, thereâ€™s been a whole lot of chatter about this yearâ€™s Christmas set, the 10249 Toy Shop. Normally, the release of a new set has been a source of joy (and sadness, because those of us who collect it are going to have to fork out some money and that always hurts), but this is something we Star Wars collectors have been familiar with for some time: a re-release. Toy Shop was the set that kicked off the holiday series six years ago, and now weâ€™re seeing it again.
The outcry has been that LEGO is poking the eyes of those who have supported the line from the beginning, who have put them away hoping for value, or who have the original sets and now see them somehow undermined by that. In short, a bunch of the AFOL community… we are a noisy bunch that loves to complain, after all.
Completionists are always a bit upset when a set gets re-released, butÂ I have to assume that they’re also upset about exclusives, pre-order bonuses, promotional material, retailer exclusives, and every other thing that makes their particular take on the hobby pretty much impossible. I feel for this bunch, because it’s hard to ever follow this path in hobbies… there is simply too much too many places, and their efforts to collect are undone by the success of the product. I feel for them, but the signs were there early with Star Wars… those stupid little figures on stands never even showed up for most of us.
I’m going to focus on the other bunch though, the group that feels slighted because they own the original, the people who are upset because the sets they had put away to sell later lost their value (and with them the scalpers that just buy up sets to sell later… don’t kid yourself, the only difference between speculators and scalpers is scheduling), and more generally the crowd that hates all of the re-releases. Maybe there are some that hate this release for other reasons, but it seems like most of the outrage can boil down to things like that.
The simple fact is that LEGO isnâ€™t a collectorâ€™s item, itâ€™s just an item that collectorâ€™s like to collect. LEGO cares about having customers that collectors, but they do not care about your collection. They should not care about your collection. They make and sell toys, and sometimes, that means theyâ€™re going to redo and re-release products. The fact that you have a collection doesn’t matter all that much to their bottom line or product decisions.
If you’re like me and collect LEGO because you love them, great! It’s a pretty awesome hobby that leads to an eternal lack of shelves and open surfaces. However, being a collector carries a risk that the “rarity” of the thing you collect can change over time. Either it goes away forever and you’re never going to see it again, and that means it gets more rare… or it gets really popular and you start to see it reintroduced, remade, and redone. Action figure collectors have been dealing with this… pretty much forever. Anyone that has collected sports cards anytime after the 80s or so knows that reprints, special editions, or “collector grade” stuff can come out after the fact.
Unless it’s some good specifically marketed as a collector’s item that is a one-and-done release, that risk is just part of the cost of the hobby.Â Coin collector’s can stand pretty confident that they’re never going to make another 1955 double-die Denver mint penny (or that they ever made… the coin in question was made inÂ Philadelphia… sorry Al), they could theoretically start making Susan B. Anthony dollars again if they felt like it. So while anything can be collected, very few things are actually collectible.
The Impact of AFOLs on LEGO’s business
Most AFOLs seem to greatly overestimate the impact that we have on what LEGO does.Â Consider what the AFOL market really is for LEGO. While LEGO doesn’t release information on how their revenue breaks down… in 2010 their investor magazine, The Brick, pegged the number around 5%. More unofficial discussions and the like with various LEGO people has the number varying year over year, between that 5% and up to 10% (where it was towards the 2000s when Star Wars was new, etc).
Five percent is a small, but noticeable part of the market, butÂ let’s contrast that against the fact that LEGO is also growing faster than that, increasing sales by 15% in 2014.Â There’s been an expansion into video games, movies, books, and TV shows.Â The upcoming release of Dimensions is taking a bite (probably a big one) of the Toys to Life market, which amounts to somewhere in the neighborhood of a billion dollars in sales a year.
It seems like the big misunderstanding in most of the complaints about things like this is most seem to view expensive sets as both adult-targeted or AFOL-only type sets. Iâ€™d argue that very few, if any, of the sets really are targeted outside of those customers. Certain things are going to have far more adults buying them (Ultimate Collector Series), but more often, itâ€™s going for older kids (or kids that are really good at suckering their parents).
It’s not that the AFOL market is ignored or even unimportant… if anything LEGO probably pays more attention to us than we deserve. That we get things like the Helicarrier, Ultimate Collector’s Series, and themes like The Simpsons or big playsets are there because they understand that 5% isn’t a lot but it is something.
There’s also the reality of the LEGO business model, one that is obviously working great for them based on the sales above, and it plans for turnover in their customer base. There’s a narrow range of time when the majority of their customer base is going to be using their product, and once they get out of that range, they need a new customer to step up and start purchasing.Â LEGO has been working hard to widen that barrier… but mostly downwards.
My daughter is three, and absolutely loves Duplo, and LEGO has been doing a lot to add to the line since she was born. It added Disney and Super Heroes to the mix, has added learning toy aspects to it to make them more attractive, and set up a Duplo area in brand retail stores. LEGO has been working to push down that line down into the 1 1/2 range instead of just the 3-5 it used to occupy. The pain in my feet from stepping on them and in my wallet from buying them seem to tell me that the strategy is working.
Conversely, the high-end line, stuff made generally for those older than the target age (which typically maxes out around 14 on their product boxes) has stayed fairly steady. We’ve gotten a big set and one or two UCS sets each year… the only really big addition has been giving us the Helicarrier, which wasÂ mostly targeted at AFOLs thanks to the price (but not exclusively).
Other than that, the themes with likely more AFOL fans as a percentage of the total, things like Modular Buildings or the big cars like the VW stuff keep humming along at pretty much the same rate with releases. They’re also not targeted directly to AFOLs… parent’s buy expensive sets for kids, and modular buildings are going to be popular for anyone who likes city stuff (and kids do like that stuff, as it remains one of the most popular lines).
Since LEGO doesn’t really disclose sales numbers (well, not consistently) for specific lines, there’s an assumption made here that things like UCS line with Star Wars, which is AFOL-targeted, is also somewhat an exception because there’s just a greater chance that AFOLs are going to be Star Wars fans. That line is also somewhat unique in that it can sell sets to adults who are not AFOLs, they just happen to think that the big set looks awesome and they don’t really need $200 worth of extra groceries (the kids can eat Ramen, right?) when they grab the set. That can’t really be said for things like the modulars, who can’t bank on the franchise to carry them, and therefore will sell fewer copies.
The Secondary Market Doesn’t Really Affect Sales…
There’s another side of the AFOL world that a whole lot of us have experienced, either as a seller, buyer, or both. Part of being an AFOL is buying, selling, trading, and generally trying to get things when they are no longer available. We all just tend to become experts on watching for sales, clearance or otherwise, simply because we want to be able to maximize our dollar. We start to watch garage sales and flea markets for that rare find there, and we often will sell things just because we need the space or have some extras.
There’s a subset those that try to make LEGO an investment. In the short term as scalpers who purchase up sets and try to create scarcity or artificially jack up prices on places like eBay or Amazon Marketplace. They prey on people who don’t know better or don’t have a direct option, and they typically live up to all of the bad things you have to say about scalpers. In the long term, you have the speculators, who purchase up sets to stick away in some closet to sell later and try to sell a profit. Sadly, there’s likely a whole lot of crossover between those groups, since a speculator is often just a scalper who didn’t sell it right away.
Let’s be honest, though, most of us have probably had sets put away that we’ve sold later. I know I have, though not nearly as many as some (it’s hard to keep those boxes closed). I don’t fault someone for buying an extra set and stashing it… trades and even sales keep the AFOL community going. I’m not really talking about that… I’m talking about the type to buy ten, twenty, or more of a set to put away. The ones that triple the price of a set the very instant it goes to a “Sold Out” status of Shop@Home.
One of the more asinine justifications for stuff like this is the idea that somehow LEGO benefits from the secondary market because it pushes demand. It’s just flat out wrong;Â LEGO earns money on the first sale, not for stuff after the fact, and they continue to make and sell things if there’s a lot of initial demand.
More than that, there’s something inherently bad for LEGO’s business model in this whole line of thinking.Â AFOLs likely spend a greater amount per purchase over the course of a year than their normal customers, and likely even has a higher dollar per purchase.Â Every business out there would gladly trade a $10 customer for a $100 customer, but very few are willing to trade 10 $10 customers for one $100 customer, or even 8 $10 for one $100 because there’s something to be said to scale.
The reason behind this is obvious if you read through LEGO’s mission or their achievements… they reached some 85 million kids to have a LEGO “play experience.” Selling small sets to ten kids means they, and like their friends, go and play with them. Then they ask for more, and likely get some more, and buy over a few years. Then, when they get older and have kids of their own, they remember how fun they were and buy them for their own kids.
Sure, for people that speculate on LEGO value this is going to suck a bit of the value away, but things like this is a huge risk in speculation to begin with. If the youâ€™re buying LEGO because you hope it has value later on, youâ€™re kind of missing the point of being an AFOL (or a collector in general). From the LEGO side, the only thing they care about is maximizing the number of sets they sell overall and keeping their customers happy.
Empty shelves do not make for happy customers. Those happy customers also don’t use the aftermarket (okay, a few likely do, but it’s rarer than it is with AFOLs)… they’re going to get their kids what’s currently out because that’s what kids care about. It’s why LEGO keeps certain things out seemingly perpetually, or rotate themes inside stuff like City and Castle. It’s also why they do re-releases…
Re-releases Make Perfect Sense for LEGO
LEGO’s business modelÂ understands that there’s a finite amount of time that kids are going to be spending with their products, and what makes sense is to have what kids are going to want available at some time during that window. The time for each step is between three and four years… Duplo age ranges from 1.5 years to 5 years, the Juniors line is designed from 5-8 or so, as are some City sets and more basic others, and Star Wars and similar licensed themes are going from 8 as high as 14, though 12 is more realistic there.
Sets are available for about two years, sometimes less and rarely more, though what’s available through retail changes from place to place. Also keep in mind that it’s not just Shop@Home or LEGO Brand Retail… they are comparatively small fish in the pond… there are around 100 or so brand retail stores and they are all in major cities. Compare that 5000 Walmart stores, 1700 Target stores, and 850 Toys ‘R Us stores in the US alone (and the US is not the biggest individual market for LEGO).
Those big three dominate the total number of toy sales… LEGO would love to have all the sales through their brand retail store (no middle-man to pay), but there’s 75 of those other stores for every one of theirs, and that’s still the majority of their sales. Those retailers have some pull with what is made… thus exclusives and repetition, because retailers want sets that their customers will recognize and want to buy. That’s why you always tend to have action figures for Spider-man even if there’s no movie out, Pixar’s Cars toys (a merchandising empire to itself), and everything like that. Kids always like them, which means kids are going to buy them (or, rather, adultsÂ are going to buy them for kids).
That applies for LEGO sets too, and even the big ones. Because the kids are churning, the adults that are buying for kids also tends to churn. Re-releasing a set five or six years later means it’s probably hitting fresh eyes. Even if it’s the same adult, that doesn’t mean the next kid doesn’tÂ want it of his or her own.
A lot of AFOLs seem thatÂ expensive sets are targeted to adults, or that kids don’t like holiday stuff like this or big things like modular buildings. If you’ve ever hung out in a LEGO store, just about everything gets attention. Holiday sets in particular get an extra glance for parents and grand parents looking for Christmas themed gifts for kids. We all had that family member that got us reindeer sweaters or a Christmas ornament… some are just cool enough to give Santa minifigs and LEGO trees.
Part of the disconnect I think comes from misjudging prices and how much gets spent… modular buildings are certainly pricey, but cost only $30 more than the top-end sets in most other lines (or only $10 more than the Falcon and it’s overpriced kin). Sure, my parents wouldn’t have bought that for me but plenty of other parents likely would for special occasions. That stack of boxes above I have put away for my daughter includes the Shuttle Adventure set, which would easily run $150 these days.
The effect of the secondary market likely has the opposite effect for people that are buying setsâ€¦ when something gets more expensive on the secondary market, a re-release is going get people who didnâ€™t want to pay double (or more) for a set buying the new version. That new sale is what LEGO cares about, so from a strictly business sense, of course theyâ€™re going to release sets again.
That’s why the Winter Toy Shop makes a lot of sense… the turnover point has happened for kids (the primary market) and there is a considerable amount of demand from people that didn’t get the set the first time. Are they going to lose some AFOLs that already have the set? Sure, but what percentage of a small percentage is that going to make in total sales? That makes a bit more sense with UCS sets, but even there, the X-Wing was a huge success the second time because so few have the original.
There’s not even a lot of evidence that releasing a new set impacts value of the old stuff… unless the old stuff was over-inflated to begin with. I’d argue that almost all of the aftermarket stuff, especially Star Wars, is overpriced to begin with. Value is a weird thing anyway, and it isn’t consistent or reliable.Â LEGO is up and hot right now, but that can change. It has for collectibles in the past put away for value… ask anyone who’s collected action figures (especially Star Wars figures), Baseball cards, or Beanie Babies.
The point of all of this is basically just a check of the AFOL whining over stuff like this. We come off a whole lot of the time as entitled, especially when things like this pop up, and it’s a fair criticism. LEGO is a business, and regardless of their aims at bringing toys to kid, quality, or things like that… it’s all with the aim of selling more of their product. It seems to be working, so perhaps we should just enjoy what we have, build what we not, and not begrudge others getting access to stuff that hasn’t been available to them. That’s how the hobby grows, and makes for happy kids and parents. I know some will disagree with this stance, but hopefully they’re the type that go comment after reading this line, and not the title alone.
So I guess, in the end, LEGO doesn’t really care about your collection, in the fact that it’s not really a collectible good. They do care about you as a customer, and they want as many customers to be happy as possible.