Investor sales, how big do you need to be to succeed?

[redeemed763]

I have heard some of our very large seasoned investors here mention that small investors will have a tough road ahead and may be going away due to increased competition. I am curious, at what point do you think an investor will be large enough to succeed? Will only those with 50 tower bridges on hand and 20k plus in annual sales be able to thrive or will their be smaller investors like myself who will be able to make things work well? Am I wasting my time here? Should I go big or go home?

[Grolim]

Depends on your definition of "succeed". To me that means meeting the goals that you set for yourself from this Lego investment game. Making enough to feed my own collection and a few dollars extra is about all I'm after, and succeeding at that so far.

[emes]

It all depends on what you define as "success"? Everyone will likely have a different idea of what success means. I see no reason why someone can't sell things at a low volume and make a reasonable profit, or sell a high volume and make a reasonable profit. The key is always buying things at a low enough price and then selling them later at a high enough price to cover expenses and guarantee a profit. I know that sounds cliche, but that's the fact of the matter, and if you do that at either low volume or high volume with products for which a secondary markets exists then you will succeed. A bigger problem people have in terms of growth is an inability to break away from buying only things they like, as opposed to buying and selling things that markets demand. I would buy and sell maxi pads if I felt like I could get them at a low enough price and there was enough of a secondary market to provide sufficient returns. The item that you're selling is irrelevant, it is simply a means of storing monetary value.

[azalon]

It all comes down to how much each person is willing to invest, as well as to spend the necessary time dealing with buying and selling. And storage space ) Do you want to do it full time and selling Lego is your complete means of support? That would be very difficult on a modest investment. And there's many factors that play a part--where you live, married or children or not, debt and so on. But if it's something on the side, basically everyone has the opportunity to purchase the same item at roughly the same cost. Anyone can compete with anyone. But you just need to do it wisely and to know what you're doing. Have a plan. Everyone has their own number of how much they have to invest. You might be able to stock away 3 Tower Bridges, for example, and in a year or two sell them for $100 profit each. That's great, but you can't look at the guy who could afford to buy 33 of them and wish you could do that too. Usually, you just can't and have to build slowly and be happy with your modest gains from modest investments. Nothing wrong with that at all. Sales don't tell any story of a person who has "made it". It's simply that they either had more capital to invest or made better selections when purchasing--or both. On Ebay you can sell your lonely MMV that you have a single copy right next to the guy who has 20 listed. And I would personally prefer holding on to a single $100 set as opposed to ten $10 sets. One buyer vs ten possibly. Also a four pound box could be $12 to ship while a two pound box could be $8, but it's much easier for the final cost to be more appealing to a buyer when the shipping charges are tied in to a $100 set as opposed to a $10-20 set. By that I mean that it's easier in a buyers mind that the final shipping costs reflects 10% of the total purchase cost and not 40% ($100 + 12 = 112 vs $20 + 8 = $28). But by pushing Free Shipping on sellers, Ebay really suckers the buyers as they at the same time gouge the sellers by taking a cut of the shipping charge. It's a real shame that the majority of Ebay buyers don't know how badly they're getting hosed. Sorry for the derail here heh Educate yourself. Buy and sell. Don't worry about the other guys unless you can learn from them. Then buy and sell some more

[redeemed763]

So you don'f see small time investors facing greater challenges and havjng a statistically greater chance of failing? By failing I am basically referring to having to sell off infentory at undsirable prices and moving aside.

[emes]

So you don'f see small time investors facing greater challenges and havjng a statistically greater chance of failing? By failing I am basically referring to having to sell off infentory at undsirable prices and moving aside.

I don't know of any statistics that would support either side of the argument...if anyone has such I'd like to see it.

I understand your point to be this. If you have 1 Tower Bridge and you want to sell it for a $100 profit, and another investor has 20 Tower Bridges, he can more easily sell his for $98 profit and undercut you. Sure, this is true, but the only way it leads to failure is if someone in this admittedly limited example loses patience and sells at a lower price. If you lower your price the guy with 20 Tower Bridges can keep lowering his. But, there's no guarantee that's what he'd do, and honestly, it's not worth your effort to try to predict it.

You can always wait for the guy with 20 Tower Bridges to sell out, which will mean there is less supply in the market at the price he was offering, which means those remaining in the market will likely command a higher price if demand remains steady or has increased.

That's what they guys here are saying when they say you might have to wait a few years to get the return you want. There are many small, medium, and large investors in every market. They all have different purchase prices and likely different sale prices.

One of the things that I think is missing from many of the discussion here is we don't often see someone mention the rate of return they want to achieve, and when it is mentioned it's often unsustainable percentage. Personally, I couldn't care less what the dollar amount I make on any sale is, as long as I get the percentage return that I want.

Trust me, if you repeatedly get someone to give you 5 quarters in trade for a dollar, you will be successful.

[azalon]

So you don'f see small time investors facing greater challenges and havjng a statistically greater chance of failing? By failing I am basically referring to having to sell off infentory at undsirable prices and moving aside.

There are some factors that a more experienced seller might be aware of or be in the position to take advantage of: timing, knowing when there's a sale or being able to purchase when there's a huge sale, using better methods of selling/shipping to cut costs, and a dozen other little things. If you bought all PoP sets and your competitor bought all Star Wars, you might not be happy with your outcome. But the guy with 20 TB's isn't going to worry about your one or two sets being $5 less than his. And if you only have one set, the advantage is only needing one buyer. Be happy with your profit and reinvest. Other times someone who is sitting on 5K of a certain set doesn't have the luxury to keep sitting on them. So it's also likely that he would accept a lower markup to sell through his stock. Again, the smaller seller can benefit by just being patient.

The success usually comes down to making a good purchase choice and patience. And I would rather pay full price on a set I wholly believed in instead of a gamble set that had a slight discount.

The only way a person would be "non-successful" and have to sell at a loss is by either buying the wrong sets or needing the money before the sets had a chance to mature valuewise. Again, choice and patience.

[stephen_rockefeller]

The success usually comes down to making a good purchase choice and patience. And I would rather pay full price on a set I wholly believed in instead of a gamble set that had a slight discount.

+1!!!!!!!

[TheOrcKing]

Two big fat thumbs way WAY up for everything azalon just said!

A bigger problem people have in terms of growth is an inability to break away from buying only things they like, as opposed to buying and selling things that markets demand.

I would buy and sell maxi pads if I felt like I could get them at a low enough price and there was enough of a secondary market to provide sufficient returns. The item that you're selling is irrelevant, it is simply a means of storing monetary value.

One of the things that I think is missing from many of the discussion here is we don't often see someone mention the rate of return they want to achieve, and when it is mentioned it's often unsustainable percentage. Personally, I couldn't care less what the dollar amount I make on any sale is, as long as I get the percentage return that I want.

Trust me, if you repeatedly get someone to give you 5 quarters in trade for a dollar, you will be successful.

And these bits from emes too!

[zak001]

So you don'f see small time investors facing greater challenges and havjng a statistically greater chance of failing? By failing I am basically referring to having to sell off infentory at undsirable prices and moving aside.

If you're talking about a small-time investor trying to make a living, the risk of ruin in that situation is significantly greater. An investment pool grows fastest when nothing is siphoned off from it. Every dime in profit you take is ten cents that's not going toward new product, which means the pool isn't growing; a market downturn, bad buying/selling decisions or unanticipated personal expenses are more likely to eat into your capital, then the pool gets smaller, the return on the pool shrinks, and so on into a death spiral.

But you'll probably do fine!

[TheDarkness]

There are some factors that a more experienced seller might be aware of or be in the position to take advantage of: timing, knowing when there's a sale or being able to purchase when there's a huge sale, using better methods of selling/shipping to cut costs, and a dozen other little things. If you bought all PoP sets and your competitor bought all Star Wars, you might not be happy with your outcome. But the guy with 20 TB's isn't going to worry about your one or two sets being $5 less than his. And if you only have one set, the advantage is only needing one buyer. Be happy with your profit and reinvest. Other times someone who is sitting on 5K of a certain set doesn't have the luxury to keep sitting on them. So it's also likely that he would accept a lower markup to sell through his stock. Again, the smaller seller can benefit by just being patient.

The success usually comes down to making a good purchase choice and patience. And I would rather pay full price on a set I wholly believed in instead of a gamble set that had a slight discount.

The only way a person would be "non-successful" and have to sell at a loss is by either buying the wrong sets or needing the money before the sets had a chance to mature valuewise. Again, choice and patience.

This is a great post.

Paitience is the key. To be honest it isn't that hard to make a profit from a set. But it just may not be as much as you hope.

Recently there was a sale here in Australia on the Diagon Alley set which was a Target exclusive. It was $279, down to $179 and they cleared out the rest of their stock and sold out. Obviously they sold quite a few, because eBay here has been flooded with them now, all around the 240-250 range. Those sellers now, out to make a quick buck, are the ones fighting over who has the cheapest price to draw the customer in and make the sale. They will drop their price by $5 or $10 just to move them. Auctions start and people look at those benchmark Buy It Now prices and will look to better those deals. Of course you always get those nutters who are addicted to bidding, and bid well over what they could have bought it outright from someone else, but those are fairly rare. Over the next month the average price will drop as people panic trying to offload it. You can see now the auctions going for less, and Best Offers being accepted. Patient people will just sit and wait with their sets til the market settles more. Slowly these sets will dwindle out, and sellers will start popping back in, throwing up $300+ price tags on it. It will only take one nibble at that for people to list their sets up on eBay again, so another batch becomes available, but the batches become smaller and smaller.

The patient person only really has to ride out the initial wave, and then it comes down to what profit you are looking at. There is no right or wrong, as it depends on the individual. The guys selling now are still making money. So everyone is a winner to some extent. One set, or 25, winning is winning.

It is the same method as buying shares, you only lose if you sell for less than what you bought (providing it isn't costing you anything to store, interest on credit cards, seller fees etc)

Everyone picks a dud line at one time or another, just like shares. The advantage we have, is we can build them and enjoy them

[StarCityBrickCompany]

So you don'f see small time investors facing greater challenges and havjng a statistically greater chance of failing? By failing I am basically referring to having to sell off infentory at undsirable prices and moving aside.

It depends on you definition of succeeding & failing. If you will need to sell the sets within a fixed time period (in order to pay the rent or mortgage, etc), then yes - maybe failure is possible. If not, then you won't fail but it might take a while longer to succeed. Investors with large inventories don't need to justify as high a profit margin, since they can make up for it in volume. Look at Amazon - and before that the big box stores that drove all the Mom and Pop stores out of business.

[Snowcrash]

To some extent you will generate your own definition of success. If you consistently make money on your investments that will also help too

[Alcarin]

Well to be honest... this whole thread is a moot point... You can make good with 2 sets invested (if you can call such person INVESTOR at all) or with 1000 I only got like 14 sets for investment purposes (+2 whole series of minifigs) and according to Brickpicker guideline i am making a solid 140

[Huskers1236]

As others have said, it all depends on what your definition of "success" is. I will never sell enough to make a living, I know that. Less than 5% of my total investments are in Lego, the wife would never allow it. My personal goal is to invest, make some money, get out at some point when I'm done with it, and have had fun doing it along the way. It's way more fun to stack up some Lego sets than reinvest my dividends quarterly. If I can turn my initial investment of around 10K into 20 (or more) when I'm done, I'll be happy, and will have proved her wrong as she thinks I'm crazy even though I show here the rewards of it so far. If you definition of success is turning a profit, then that should be your goal. If earning a living off of this is your goal, then yes, you need to be a big fish, no doubt about it. Problem is that as has been said in other threads, you basically have to just sit idle for about 2-3 years without making money before you can start selling and turning a profit. You would also have to have enormous capital invested.