Subject:
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Re: eBuisness Model
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Newsgroups:
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lugnet.dear-lego
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Date:
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Sun, 10 Dec 2000 00:11:31 GMT
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Viewed:
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1775 times
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In lugnet.dear-lego, Kyle D. Jackson writes:
> In lugnet.dear-lego, Amnon Silverstein writes:
> >
> > Let the FOL market the sets they design. To order, people just click the
> > FOL's web site, and they get bounced to a S@H run ordering web site. People
> > buy the set directly from S@H. The FOL submits the plan to Lego, and
> > registers it as an original design.
>
>
> I can't see this being too practical. Since the consumer ultimately
> ends up purchasing the product from TLC, then the customers
> believe they are dealing with TLC through the entire process.
No, this could be made to look like the customer was dealing directly with
the FOL. Check out the T-shirt ordering system here. Go to the main page, go
to the left corner, order a shirt. Everything you see in the following
process is LUGNET. All the design copyright is owned by LUGNET. All the
money, manufature, ordering, is handled by cafepress, but you don't see that.
> This includes the browsing of all the FOL sites you mention.
> So TLC would need to enforce standards across all those sites,
> essentially making them TLC controlled. They might be better
> served just keeping all the sets on LEGO.com in one big
> browsable cross-linked catalogue. Then people could browse
> by theme, size, price, most-popular, whatever...
If special interest groups maintained and promoted their own sites, they
could do the editing and quality control on their own, so Lego wouldn't have
to worry about it. LUGNET could have a list of member-voted excellent sets,
and you wouldn't have to wade through tons of garbage to see great ideas.
The train builders cold maintain a page for great train models, etc.
>
>
> > If a set sells over a certain number of units, send the designer a 5% cut of
> > the list price for all additional units that are sold. If the set sells
> > enough units, it could give the designer a bigger price cut and the general
> > public a small price cut as well.
>
>
> I can't see this happening either. The set would either be
> available for sale or it wouldn't. By allowing TLC to sell
> the set, the designer is giving away their copyright on
> the design (I doubt TLC would be willing to sell under
> license to Joe FOL like it does with Lucas, Disney, etc.) So
> at most if a design is accepted by TLC, a small one-time
> royalty fee might be paid but then the FOL is cut out of
> profits after that, regardless of quantity sold.
This isn't true. LUGNET didn't give up its logo to the shirt printing
company. You can design things with other people's parts and keep your
design and copyright. If I design a new machine, I don't have to turn over
my design rights to Ace Hardware because I made it using their bolts and
brackets.
There is no reason Lego couldn't have any terms they want for the deal. My
5% proposal would reward people for helping them sell parts. AC Delco must
give a price break to car manufacturers who sell cars that use a lot of
their parts. This would be a similar buisness model.
>
> To come to this conclusion I look at it this way. Let's say
> TLC today has about 50 new set designs introduced each year.
> Let's say with FOL designs made available, that rises to
> 50,000, or 1000 times as many sets available for sale. The
> market would never rise so that 1000 times as many sets
> are sold for each design. So far fewer sets would be
> sold per design (intially 1/1000th the sales). Overhead
> costs are going ride heavily based on the number of unique
> items in inventory, which has gone from 50 to 50,000.
> Ultimately the profit margins plummet..., unless prices
> to consumers are raised and/or production costs are
> lowered (lower quality, plain bagging for e-sales instead
> of pretty boxes, etc.).
One part you are missing in your calculation is the growth in the market. I
have seen a lot of LUGNET people's designs that I would love to buy.
Instead, my choice is to buy dozens of Throwbots, discard 90% of the parts,
buy rare parts on eBay, buy a bunch of $10 service packs, and do the best I
can. Most of the time, this doesn't cross the threshold of being worth
doing, so I end up not buying anything. If I design a set, Lego is bound to
sell at very least 1 copy, to me. I probably have a few friends who would be
interested in buying my set, so that is a few more. I would be providing
Lego with free marketing. Something like this worked great for Amazon.com. I
can think of a dozen sets I would buy from FOLs, even though I have all the
sets I want from Lego already. Many people who had never bought Lego sets
before would certainly be persauded to buy sets designed by their friends,
or buy special-interest designs that Lego has never produced.
The other part is the inventory. No FOL sets would be kept in inventory at
all. They would be produced as needed. Computerized machinery would bag
parts on demand. The 5% cut to the designer would be a sales bonus, not a
cut for the economy of scale for producing a large number of identical sets.
Also, the packaging could be automated and cool. There are several
mini-press techniques for putting together great looking, finished booklets,
for a cost of around $2. A nice ink-jet box could have the original FOL
cover art, for the cost of perhaps another $2. The plastic box insert would
be standardized based on the parts count.
> With no guarantee that any given set will sell, TLC risks
> the overhead cost on each and every design. And with very
> low sales volumes per design, the FOL is almost going to
> have to *pay TLC* to get them to try selling it.
There is no inventory. Lego loses nothing if a set doesn't sell. They will
already have the capacity to produce sets on demand, according to what they
posted for their 2002 plan. The only thing that is different is the
additional sales of kits from the new market.
>
>
> > If someone complains that their design has been ripped off, take a quick
> > look at the design that was registered first. If the two are too close,
> > unregister the copy, and send the designer an email saying that the design
> > is not sufficiently original to register. This could probably be automated
> > to some degree by a computer comparison of the CAD files. The rip-off design
> > would be pulled before it sold enough units to start paying off, so people
> > would be discouraged from doing this.
>
>
> Again, a lot of tedious product management that will cut into
> profit margin.
This part may not even be needed, I just stuck it in because some people
worry about it. If a design is ripped off, the big web sites like LUGNET
wouldn't promote the rip-off version. I think the original creations would
sell better, and there would be no incentive for the consumer to go with the
rip-off. If good selli models also had a price reductn, the original kit
would be at a reduced price relative to the rip-offs anyway, so there would
be an incentive for the consumer to go with the original.
>
>
> > This could create a whole new market, really harness the creativity of the
> > FOLs, and give the consumer a bunch of new choices, for a big win win win.
>
>
> I could only see this working on this scale if TLC ran an
> ebaY or BrickBay. Let the FOLs sell whatever they want. TLC
> gets a percentage cut of all sales. However, the FOL sellers
> are responsible for getting their own parts, printing instructions,
> etc., etc. TLC bulk ordering would provide their supply, where
> practical.
This would be less efficient than my proposal, since the FOL would have to
order from Lego, and then sell kits themselves and ship them again, but this
could be an additional channel.
>
> I for one would not want to wade through 50,000 new designs
> each year to look for things to buy. It's too baffling to
> the average consumer. Remember we as "harder core" LEGO
> enthusiasts are by far in the minority (I'll say 0.01%).
Under my proposal,you wouldn't have to. Lugnet could have a listing of the
very best models. If you find a great model that isn't on the list, you
could nominate it. The community would self-edit.
>
> KDJ
> _______________________________________
> LUGNETer #203, Windsor, Ontario, Canada
Thanks for your comments on my proposal, and I think you have some good
points. But please look at my proposal assuming that Lego already has the
automated kit production capacity in place, as they describe in their recent
announcement.
-Amnon
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Message has 1 Reply:
 | | Re: eBuisness Model
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| Amnon, I think you may have misinterpreted my message, likely because I misinterpreted yours :] I assumed you meant that any average Joe consumer off the street would be able to design their own sets, set up a site, and sell them. This I think is (...) (24 years ago, 10-Dec-00, to lugnet.dear-lego)
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Message is in Reply To:
| | Re: eBuisness Model
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| (...) I can't see this being too practical. Since the consumer ultimately ends up purchasing the product from TLC, then the customers believe they are dealing with TLC through the entire process. This includes the browsing of all the FOL sites you (...) (24 years ago, 9-Dec-00, to lugnet.dear-lego)
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