Subject:
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Profit dynamics of bulk purchases
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Newsgroups:
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lugnet.general
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Date:
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Tue, 16 Feb 1999 01:36:28 GMT
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Viewed:
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1981 times
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In lugnet.general, markt@lynx.bc.ca (Mark Tarrabain) writes:
> Todd Lehman wrote:
> > How far does that go toward stopping an individual from buying $25,000
> > in bulk bricks and reselling these to a local toystore for $25,250?
> > (The profit is only $250 on the transaction. Not bad for about 1 hour
> > of work. :-)
>
> That's only 1% profit. Who's going to bother spending that kind of money
> to make so little?
Think.
Toystore writes $25,250 cashier's check to individual. Individual deposits
check and writes new cashier's check to LSI for $25,000. LSI delivers bulk
elements to individual. Individual delivers bulk elements to toystore.
In other words, Individual's up-front cash outlay is zero; individual makes
$250 pure profit for 1-2 hours of work (and keeps careful written records to
prove the legitimacy of the $25,000 tax deduction).
> Further, I would never suggest that TLG charge club members prices that
> are below what retailers could get their stuff for.
Nor would I. It would never stand a chance of being even considered by TLG.
> I, for one, would be quite happy with
> a discount falling anywhere between TLG's wholesale price and recommended
> retail price. Thus, it offers no real advantage to people who might want
> to consider selling to retailers because retailers can get LEGO cheaper
> directly from TLG themselves.
Isn't that backwards? Isn't it retailers who would seek out individuals?
(Most likely family members who they can trust fully to launder the
purchases for them.) Bottom-line profit on individual items isn't the only
motivating factor for store owners when they choose what products to carry.
A toystore carrying LEGO elements by the pound (or ounce, or whatever) would
have a slight leg up on their competition who didn't. They could probably
even charge a premium.
> It still offers advantages to people whose primary channel for obtaining
> LEGO is through retail outlets (which is most of us).
Indeed.
> > Any restriction limiting purchases to individuals only (and not to
> > corporations) would immediately create a demand for middlemen to launder
> > the purchases for the corporations.
>
> Nope. The income level of these "middlemen" would exceed the amounts
> allowed for private individuals without being corporations.
Not necessarily. Again, think. Scenario: Local store has 10 people each
buy $5,000 of bulk elements for them, paying them, say $5,200. Each person
thus profits $200 for their small investment of time and doesn't have to put
up a single penny up-front. Result: Store has just purchased $50,000 in
bulk elements for $52,000, resells those elements for $75,000 over the
course of a month, and not a single law been broken by anyone.
The rule wouldn't work.
> Anybody who
> tried to get away with it anyways would be guilty of tax evasion. Sure
> there are people who do it, and some who even get away with it, but it's
> still against the law, and if you *DO* get caught... well... it sure ain't
> worth it.
It certainly wouldn't be worth doing by any one individual in the high
volumes you might be thinking, but at those volumes, TLG would raise a
suspicious eyebrow anyway.
> > I don't see how it could be policed or enforced. Or even detected.
>
> TLG doesn't have to enforce it. The government already does. They don't
> catch everybody, but they do catch some. Do you really want to risk it?
I certainly would never risk doing anything illegal.
--Todd
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Message has 3 Replies:
 | | Re: Profit dynamics of bulk purchases
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| Todd & All; Excellent discussion regarding bulk brick sales. In certain political circles, I know if say corporation A gives 10 people $1,000 each to give to a candidate that supports them, while the maximum contribution is $1,000, it is illegal and (...) (26 years ago, 16-Feb-99, to lugnet.general)
| | | Re: Profit dynamics of bulk purchases
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| (...) Todd, I think you and I are just going to have to agree to disagree on this. I don't think that TLG would have any motivation to sell to individuals in the bulk amounts that you are suggesting, but if you think otherwise, well, hey... maybe (...) (26 years ago, 16-Feb-99, to lugnet.general)
| | | Re: Profit dynamics of bulk purchases
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| I really don't see what all this fuss is about, toy stores aren't interested in selling bulk bricks. You used to be able to buy bulk bricks (supplementary packs I think they were called) in UK toy shops but not any more, there isn't enough demand. (...) (26 years ago, 16-Feb-99, to lugnet.general)
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Message is in Reply To:
| | Re: TLG investigation
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| (...) That's only 1% profit. Who's going to bother spending that kind of money to make so little? Further, I would never suggest that TLG charge club members prices that are below what retailers could get their stuff for. I, for one, would be quite (...) (26 years ago, 15-Feb-99, to lugnet.general)
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