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In lugnet.general, Frank Filz writes:
> In lugnet.general, Todd Lehman writes:
> > I believe that five to ten years from now, pre-packaged sets designed by
> > internal design teams will account for but a small percentage of the market
> > leader's profits -- the rest coming from bulk element sales with • ^^^^^^^
> > phenominally low overhead compared to pre-packaged retail sets.
> >
> > The leader's customers will be able to choose exactly what they want to
> > buy -- brick for brick -- 100% online. The ERP to make this work is easier
> > said than done, but someone will do it. The leader's website will give
> > customers a truly outstanding positive experience, which they will remember
> > and tell their friends and peers online. When a customer receives an order,
> > it will include personally-tailored incentives to return online to buy more
> > soon. Incentives may include gift certificates, coupons, parts-subscription
> > discounts, and pointers to areas online with related building ideas --
> > anything to keep the enthusiasm up -- and it will vary from person to
> > person, and the one who learns what motivates each person to buy more will
> > profit the most. • ^^^^^^
>
> I'm not sure that bulk or by-the-brick type purchasing will ever be that
> large a segment of the market.
Are you agreeing or disagreeing? I was making predictions about gross
profits, not gross revenues.
> I strongly suspect that unless something happens to change our culture,
Hasn't this already begun to happen? 5-10 years down the road is anyone's
guess, and I'm not holding my breath for sweeping changes, but I'll be
surprised if traditional businesses can keep up -- we're just at the tip of
the iceberg right now and already many people are buying major book and LEGO
purchases online rather than offline -- that's where so many of the deals are!
> that the in-store purchase of sets will be the the bulk of
> the market. Online sales of sets will be a close second. Unless the AFOL
> hobby grows astronomically, I would expect that the 5-12 year old age ranges
> will be the target of most of the sales of construction toys.
Most of the sales, but not most of the profits. :-) I'll bet the largest
percentage of gross profit will come from direct-to-consumer bulk sales. The
overhead is minimal -- you need servers to handle orders and walk the
customer through buying, etc., you need production facilities with robots
to assemble the orders from vast parts coffers (hopefully with as close to
JIT production as possible), you need software to run all that, and you need
a bit of grunt labor to make sure it gets shipped). No fancy packaging is
needed, and you let consumers online design their own sets. Plus, if you pay
consumers a commission on bricks purchased in connection with a model/set
they designed, you get free advertising. What could be more profitable than
that? I'm positive that it could be gotten down to a science.
> Bulk or by-the-brick purchasing will probably help keep more teenagers
> playing with the brick.
I sure hope so too!
--Todd
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