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In lugnet.dear-lego, Thomas Main writes:
> I have always wondered why Lego didn't pursue the small toy store and
> get more of its product onto small toy store shelves. The benefits
> gained would be an impression of Lego as a quality toy - like
> Playmobil. Lego could encourage the small toy stores to carry product
> that doesn't sell well in mass retail outlets - like the Train theme and
> service packs (this would also allow the toy store to offer Lego that
> wasn't so commonplace).
IIRC from previous conversation, the initial order when somebody signs up to
become a Lego retailer is at least $2000. Are subsequent orders just as much?
That might put a damper on how many, if any, Lego sets small stores buy.
> This is pure speculation on my part, but I think Lego doesn't do this
> because it is too large of a company. They distribute all their NA
> product through a factory in Enfield, CT (as far as I know) and only
> want to deal with large customers like Wal*Mart and Toys'R'Us. What I
> think they may need is a company that would handle small-scale
> distribution for them. This company would also be a big buyer and its
> job would be to sell to the small, independent toy stores. What do
> ya'll think? By catering to both the discerning toy buyer as well as
> the mass merchants, Lego may even be able to sell town sets other than
> "town jr."
While it's true that major companies can move more stuff more easily, it's a
good idea to know how they can do this: distribution cost is major factor in
retail set prices. In many cases, you're talking about 20%. While big
chainstores have their own distribution methods which saves money, small
toystores often don't have a chance against this. Another seller in the middle
would just increase the price considerably.
Think of it like this, per each set:
$5 Maidens Cart (hah! :) manufacturer's price
$1 Shipped in quantities of 100 to Walmart
$2 Walmart retail markup
----
$8 your cost
This is the traditional method.
Your new method would look like:
$5 Maidens Cart (hah again! :) manufacturer's price
$1 Shipped in quantities of 100 to "Joe Gritz's Big Lego Distribution Center"
$2 "Joe's" markup (so he can feed his kids and send them to LL Carlsbad)
$1 Shipped in quantities of 20 to "Small Toys 'n Stuff Store"
$2 "Small Toys 'n Stuff" retail markup
----
$11 your cost
Note in the second model that the shipping per set to Small Toys 'n Stuff is
higher.
Also Walmart and TRU have regional distribution centers to hold more stock so
that each store doesn't have to hold all of which they have the potential to
sell, which means as a corporation, Walmart can order a lot more (thus driving
down the cost per set) because they have a place to keep it. Small Toys 'n
Stuff does not have this. Also, bigger chains hire cheaper labor, so any labor
done is at/near minimum wage which is why they can save $$ on distribution.
[f-ups sets to lugnet.market.theory]
-Tom McD.
when replying, note that during the course of writing this message, no animals
were exposed to spamcake testing.
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Message is in Reply To:
 | | Lego product distribution
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| I have noticed that hardly any specialty toy stores I have been to have Lego on their shelves. I always see Brio and Playmobil and sometimes even LGB trains, but I very rarely see Lego. When I ask the store owner if they have Lego, the response is (...) (25 years ago, 24-Jun-99, to lugnet.general, lugnet.dear-lego)
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