Subject:
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Re: Anatomy of a Shop At Home group order
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Newsgroups:
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lugnet.market.shopping
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Date:
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Mon, 8 Nov 2004 20:47:50 GMT
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Viewed:
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1578 times
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In lugnet.market.shopping, Allan Bedford wrote:
> A few days ago, in this thread:
>
> http://news.lugnet.com/market/shopping/?n=11832
>
> I mentioned the large group order that we (my co-workers & I) do every year
> about this time. This was our third annual and largest order yet. I'm not sure
> how many other people do this in their office/workplace or how many are
> interested in how ours went, but I thought I'd post a few notes about it just in
> case.
>
> Our order is compiled and submitted by one person (who is kind enough to let
> this sit on her credit card until mid next month). She emails anyone who might
> be interested and they stop by with their orders. It's important to note that
> she is not a LEGO fan in any sense other than she enjoys buying it for her kids
> and sometimes helping them to build. She's a typical parent of children who
> like LEGO bricks. In fact, I was the only one ordering bricks for me... all
> others were normal parents.
>
> I do my best to help out by taking an actual printed copy of the Shop At Home
> catalog in to work and leaving it on my desk for everyone to see/use.
>
> This year's order, as noted above, was our largest yet. We had 10 people
> participate and in total (before tax) we bought more than $900 (in Canadian
> funds). But maybe a few people reading this are wondering, "what's the big
> deal?" Here's a few things that might help you understand why I think this type
> of activity is so great.
>
> 1) Everyone who ordered got free shipping, since we were well over the $99
> minimum. This helps those people who wouldn't have gotten free shipping since
> many of the individual orders were actually below that amount.
>
> 2) In total we ordered more than 20 Advent calendars. This was one of the
> items that sort of got people jazzed about this back in 2002 when we did our
> first order. Each year we order even more.
>
> 3) Everyone who ordered bulk packs got the 15% discount, since we ordered way
> over 15 items from that section. That includes people who ordered only 1 or 2
> packs, so again this is a big incentive to join in our order.
>
> I think it's also worth noting that we know for certain that at least 6 or 7 of
> those people who ordered would have purchased little or no LEGO on their own
> since they don't normally do so and some people just don't change their habits.
>
> So here's the real point I'm trying to make with this posting. I *think* this
> type of program (bulk orders placed for a group by one representative customer)
> would be a positive thing for the LEGO company to implement. I hope someone is
> listening and sees the numbers above. We are just a small office... only about
> 44 people. That means nearly 25% of the people in our office participated in
> this order. Imagine if such an order were placed by a larger office or other
> workplace where you have many more _potential_ customers.
>
> Our little group buy is completely organized by us... or rather by my co-worker
> noted above. She has built an Excel spreadsheet that tracks everyone's order
> and amount owing, with discounts and taxes included. She was able to balance
> her spreadsheet to the penny with the final order on the LEGO website. But what
> about people/offices who for whatever reason wouldn't go about organizing such a
> thing? Should they be left out? Should those potential sales simply remain...
> potential?
>
> From what I've seen in the last few years, working in an office environment,
> catalog sales programs (one person brings it in and places group orders) are
> very popular. People sometimes buy things they wouldn't otherwise buy simply
> because it's easy, it gets delivered, and hey... "everyone else is doing it."
> :)
>
> I can only hope that if this idea hasn't been explored by LEGO that they will at
> least think about it. I just feel that it has the possibility of bringing in
> more sales; much of that in Shop At Home items where presumably the margins are
> a bit higher. Not to mention that our order is just one big order... not 10
> little ones. Doesn't that somehow save on packing/shipping costs? Maybe a
> little. But add up all those little amounts over many many orders and what do
> you get?
>
> It seems to me that a simple change to the web order form (to allow for a larger
> group order, broken down by individual buyer but still calculated as one
> purchase) would be a good way to test the waters. Promote the fact that groups
> end up with bigger savings if they order this way. If that seems to work then
> explore the possibility of a more parent-friendly catalog that helps those
> people (who aren't kids or AFOL's) understand what they're buying. And if all
> that goes well, why not even explore the idea of actual sales reps like those
> used by Pampered Chef or Tupperware? Build in some incentive (free stuff,
> discounts) for those folks to bring in more sales.
>
> As noted above, 90% of those who ordered with us were just regular parents. This
> is not an AFOL targeted sales program I'm talking about, but rather one that
> tries to get the average parent buying more LEGO for their kids.
>
> Am I looney? Is there a fundamental reason that even a small portion of these
> ideas wouldn't work? Is our office unique? Do you do already do this with your
> co-workers? If not, would you now consider it for next Christmas, based on what
> you've read above?
>
> I'd be curious to know what people think of these ideas and/or what you're
> already doing in your own workplace.
>
> Best regards,
> Allan B.
Well, it sounds nice and good...but you have to be able to demonstrate that it's
feasible AND profitable.
A few key details...
1) most companies make money on Shipping and Handling when they do it. What you
are proposing is to reduce that profit. Granted, your sales are higher, and the
company makes a profit on the product--you would have to define the break point
at which extra sales would cancel the profit on Shipping.
For example (figures made up here for example)-You buy a 20 dollar product, pay
5 bucks shipping. The company makes a buck or two on shipping (maybe more). 5
people buy product separately--that's 5-10 bucks profit on shipping. If 5 people
got together,and bought 20 dollar products, then that shipping profit is lost.
There's no difference on the product profit margin, because the product was
always exactly the same (100 bucks of product), but now, no profit on S&H--which
makes it a money losing venture for the company.
2) A more parent-friendly catalog...hm..that means extra cost to produce yet
another catalog, right? So, that's additional cost to the company, not just in
printing, but people who layout the catalog, etc. You'd probably have to factor
that into that breakpoint I just mentioned--and that wouldn't be cheap.
3) If nobody in the office will coordinate it, who do you expect to organize it?
Shop@Home? I don't think it's in the job description, or people there have time
to do it. If you add more people, remember that's additional cost to the
breakpoint.
It may work, but you'd have to have quite a bit of large sales to do it. After
a lot of (time consuming) number crunching, a company would probably have to
post a minimum purchase for group sales--and chances are most people would shy
away from that cost anyway. So overall, the experiment would be showing in the
red in company development--which affects the company's bottom line.
This isn't just LEGO--it's all companies that go through this. I've worked
enough small companies and large companies to see this process is exactly the
same no matter what.
When a company is making profit, that's great, and there is capital to
experiment with. When a company is in survival mode, it's all about breaking
even and spending very little on experimental ideas because they just bleed red
ink. As evidenced by some of the posts on Lugnet, with the parks being
considered for sale, and KKK giving some personal fortune into the company--I
definitely think the survival mode is going on.
So, don't think of me as bashing you, but if I were a business owner, just the
mere thought of this would get shot down pretty quick.
Scott
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Message has 2 Replies:
 | | Re: Anatomy of a Shop At Home group order
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| (...) Snipped good pros and cons. Howe about a compromise? a "do it yourself kit" as it were. Put together a few paragraphs on how to organise a group order, provide a sample excel spreadsheet and instructions for use, and disclaim the heck out of (...) (20 years ago, 8-Nov-04, to lugnet.market.shopping)
| | | Re: Anatomy of a Shop At Home group order
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| (...) [My notes snipped... message was getting way too long.] :) (...) True. Since I'm not privy to any of LEGO's financial information all of my ideas and thoughts about this were pure speculation. However, it is clear to me that our $900 order was (...) (20 years ago, 9-Nov-04, to lugnet.market.shopping)
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