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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Tue, 9 Nov 2004 00:07:03 GMT
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Viewed:
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1662 times
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In lugnet.market.shopping, Scott Lyttle wrote:
> In lugnet.market.shopping, Allan Bedford wrote:
> > 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.
[My notes snipped... message was getting way too long.] :)
> Well, it sounds nice and good...but you have to be able to demonstrate that it's
> feasible AND profitable.
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 probably 600 - 700 dollars more sales than the company
would have gotten from that same group of people had we not placed the order
together. I assume some of that is profit for them. ;)
Most of the people who ordered with us did so because someone else was doing all
the work for them. Hence the suggestions for such a program to start at LEGO,
offering incentives for you, me or anyone to be like the person in our office
who handles this order.
> 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.
True. My point was largely driven by the fact that our group purchase was
significantly larger than any number of individual orders would have been. So
any loss of shipping/handling profit was probably offset by greater pure product
sales. And a good bit of that was Shop At Home exclusives. Again, more
speculation on my part that these are higher margin for the company.
> 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.
But what if 4 out of those 5 people didn't buy anything at all? Can the profit
made by shipping that one $20 order offset those lost sales? Again, to
reiterate my point... the benefit (to LEGO primarily) that I saw in a large
group order was that it brought in sales that would otherwise have not happened
at all. I know for certain that a number of people who bought with the group
would not have bought anything otherwise.
> 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.
This was the reason I suggested the website form change as a first step. The
catalog would have to present reasonable return on investment since, as you
note, it would be an extra cost to design/print/mail it. So that would/could
only occur if it could be shown that group orders themselves were effective
first.
> 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.
I'm not sure what you mean by "nobody in the office will coordinate it". Do you
mean no one in the customer's office, or at LEGO?
In the case of my examples (Pampered Chef and Tupperware) the "salesperson" is
just a person who makes contact with the company and agrees to take on the work
of selling/ordering/distributing product to friends and family. Yes, the
program would have to setup by LEGO, but the leg work is done in the field by
the customers. The incentive to be that person comes from the discounts and free
stuff offered to the customer acting as the agent.
> 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.
All good points. Which was again why I suggested a minimal cost to test the
waters. Could a change to the order form on the web (to simply separate an
order by individual customer names, ordered by a single person) really cost that
much? Maybe, but I'm not talking about a change to any of the backend stuff.
The order would still be stored and handled the same way, with discounts and
shipping applied exactly as it is today. The difference would be a form where
the customer could enter his/her friends names as they enter the products, so
they know who gets what when the shipment arrives. A presentation change, not
architecture.
> When a company is making profit, that's great,
See notes above about minimal investment in starting such a program.
> 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.
Without exploring _any_ of the ideas? Remember, they were several related but
ultimately separate ideas.
I'm not a business owner, just a guy from Canada who likes LEGO. It just seemed
to me, the more I thought about our order, that there were good things about it
that _possibly_ could be adopted by the company itself in order to generate more
sales. More sales means the company continues to put out products that you and
I love. :)
Best regards,
Allan B.
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Message has 1 Reply:
 | | Re: Anatomy of a Shop At Home group order
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| (...) Especially when you consider that $200-300 would probably have been spent at retail stores like TRU, where LEGO's percentage of the proceeds is lower... (...) I don't think LEGO would be interested in taking on a Pampered Chef or Tupperware (...) (20 years ago, 9-Nov-04, to lugnet.market.shopping)
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Message is in Reply To:
| | Re: Anatomy of a Shop At Home group order
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| (...) 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 (...) (20 years ago, 8-Nov-04, to lugnet.market.shopping)
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