Retiring Soon - open speculation

[redcell]

A few weeks ago I posted the absolute genius behind TLG's plan to retire TH out of order. Looks like this is phase 2 of the plan. Create Claim a QC issue with a part shared by multiple older, investor-watched sets and move 1000s of units in a week.

Have a plan. Stick to it. Profit.

There is one fundamental flaw with this theory...by the time that a set hits "Sold Out" status at LEGO Shop at Home, TLG has already made all of the money that it is going to make on the set and does not gain any further direct benefit from the 1000s of units that are sold in the wake of the retirement.  Once TLG sells a set at wholesale to a retailer like Amazon or Target or Walmart, it has already made its money on that set regardless of whether the set is sold to a consumer one week, one month, or one year later.   

[gbg108]

There is one fundamental flaw with this theory...by the time that a set hits "Sold Out" status at LEGO Shop at Home, TLG has already made all of the money that it is going to make on the set and does not gain any further direct benefit from the 1000s of units that are sold in the wake of the retirement.  Once TLG sells a set at wholesale to a retailer like Amazon or Target or Walmart, it has already made its money on that set regardless of whether the set is sold to a consumer one week, one month, or one year later.   

The DS "sold out" last week shows that's not the case.

The DS went sold out and within 48 hours all major retailers were out of stock. Now the status has changed to "Sold Out -- Just kidding, we're making more" and all those major retails that just sold through 1000's of units will now place orders for more. Thus, TLG gets more sales to retailers simply by faking "sold out" status.

[redcell]

The DS "sold out" last week shows that's not the case.

The DS went sold out and within 48 hours all major retailers were out of stock. Now the status has changed to "Sold Out -- Just kidding, we're making more" and all those major retails that just sold through 1000's of units will now place orders for more. Thus, TLG gets more sales to retailers simply by faking "sold out" status.

Outside of the realm of fantasy and rank speculation, there is zero evidence to support the theory that this was an intentional ploy by TLG.  You and a lot of the other conspiracy theorists around here are making the classic mistake of trying to figure out another person's intent at arms length by applying your world view to the situation.  Keep in mind, TLG has gross revenues each year of over $3.5 billion.  How many DS sets do you think sold in the days after it hit sold out status?  Let's just say that retailers sold a total of 10,000 copies and that TLG sold each of those copies to those retailers at its standard wholesale discount of 30% (the number sold is almost certainly high and the wholesale discount that retailers like Amazon and Walmart command is likely low).  Based on those numbers (which I admittedly pulled out of my butt), this ploy would have driven sales that represented approximately $2.8 million in revenue or less than 1/10 of 1% of TLG's annual revenue.  I'm not sure if you've ever worked in a company whose business generates revenues in the same neighborhood as TLG's, but I have and I do currently, and I can tell you that I've never seen anyone waste time or resources playing stupid games like everyone seems to thinks TLG is playing with resellers here, particularly to have such an insignificant effect on corporate revenues.  To assign intent to these recent events is to believe one's self to be far more important in the eyes of TLG than one actually is. 

[Dr. Brick]

But if you applythat theory of yours you need to not only look at percentage of total revenue. You should look at the the revenue per set and this could easily been the best revenue driver (after the Dino series) for TLG in such a small time frame.

I simply don't agree with the consiracy theory since it would seriously put a dent in the TLG's relationships with these many retailers which would hurt them down the road

[gbg108]

Outside of the realm of fantasy and rank speculation, there is zero evidence to support the theory that this was an intentional ploy by TLG.  You and a lot of the other conspiracy theorists around here are making the classic mistake of trying to figure out another person's intent at arms length by applying your world view to the situation.  Keep in mind, TLG has gross revenues each year of over $3.5 billion.  How many DS sets do you think sold in the days after it hit sold out status?  Let's just say that retailers sold a total of 10,000 copies and that TLG sold each of those copies to those retailers at its standard wholesale discount of 30% (the number sold is almost certainly high and the wholesale discount that retailers like Amazon and Walmart command is likely low).  Based on those numbers (which I admittedly pulled out of my butt), this ploy would have driven sales that represented approximately $2.8 million in revenue or less than 1/10 of 1% of TLG's annual revenue.  I'm not sure if you've ever worked in a company whose business generates revenues in the same neighborhood as TLG's, but I have and I do currently, and I can tell you that I've never seen anyone waste time or resources playing stupid games like everyone seems to thinks TLG is playing with resellers here, particularly to have such an insignificant effect on corporate revenues.  To assign intent to these recent events is to believe one's self to be far more important in the eyes of TLG than one actually is. 

I certainly wouldn't consider myself a conspiracy theorist, you're inferring quite a bit to get there. I don't believe TLG is out to get reseller or even spending considerable resources on the topic. I do however believe that TLG is aware there is a secondary market and could be finding ways to exploit it when its advantageous to do so. Lets go with your numbers, aside from the 2.8 million (which is a pretty good return on 5 minutes worth of work from an $18 an hour web intern) there are other reasons TLG may want to move inventory, a box redesign or logo change for example.

All that said, it could very well be that TLG did simply sell out of DSs, end of story. Very possible, I don't know or claim to know any different.

What I do know is

1) Regardless of the actual numbers, when the most expensive item a company manufactures, which has been readily available for 7 years, goes completely sold out across all major retailers within 48 hours of a change in status on said companies webpage, that's powerful. When you have sets like PC and PS which for months can't stay instock at MSRP, that's powerful. IMO, TLG would be foolish not to realize these trends and more foolish not to exploit them if they have reason to do so.

2) This is an open speculation thread and I'm speculating. No conspiracy or tin foil hat, just discussing with an open mind to try to make the most informed decision possible in the future.. 

BTW, I don't see how it's relevant but the company I work for did almost 9 billion in 2014.

[P_R_Rice]

Outside of the realm of fantasy and rank speculation, there is zero evidence to support the theory that this was an intentional ploy by TLG.  You and a lot of the other conspiracy theorists around here are making the classic mistake of trying to figure out another person's intent at arms length by applying your world view to the situation. 

 To add to this; "Never attribute to malice that which is adequately explained by stupidity.

I find that I frequently need to remind myself of that quote. 

Anyone who works, or has worked, for a corporation should know that no matter how profitable a company is, or just how well oiled of a machine they appear to be... screw ups happen... more often than outsiders know.

Edited July 27, 2015 by P_R_Rice

[Battrax]

 To add to this; "Never attribute to malice that which is adequately explained by stupidity."

I find that I frequently need to remind myself of that quote. 

Anyone who works, or has worked, for a corporation should know that no matter how profitable a company is, or just how well oiled of a machine they appear to be... screw ups happen... more often than outsiders know.

This x  10^6

[redcell]

I certainly wouldn't consider myself a conspiracy theorist, you're inferring quite a bit to get there. I don't believe TLG is out to get reseller or even spending considerable resources on the topic. I do however believe that TLG is aware there is a secondary market and could be finding ways to exploit it when its advantageous to do so. Lets go with your numbers, aside from the 2.8 million (which is a pretty good return on 5 minutes worth of work from an $18 an hour web intern) there are other reasons TLG may want to move inventory, a box redesign or logo change for example.

***

What I do know is

1) Regardless of the actual numbers, when the most expensive item a company manufactures, which has been readily available for 7 years, goes completely sold out across all major retailers within 48 hours of a change in status on said companies webpage, that's powerful. When you have sets like PC and PS which for months can't stay instock at MSRP, that's powerful. IMO, TLG would be foolish not to realize these trends and more foolish not to exploit them if they have reason to do so.

2) This is an open speculation thread and I'm speculating. No conspiracy or tin foil hat, just discussing with an open mind to try to make the most informed decision possible in the future.. 

BTW, I don't see how it's relevant but the company I work for did almost 9 billion in 2014.

The thing is that what everyone seems to think is some kind of new phenomenon (i.e., a set disappearing within days of hitting Sold Out on LEGO Shop at Home) has been happening for many years.  Maybe it took longer than 48 hours in some instances and shorter in others, but the "Sold Out" tag has always been a trigger for resellers to jump on available inventory, particularly when it's a popular set like DS. 

If you work for a company that does almost 9 billion in sales, then I'm sure you're perfectly aware of how layered corporate decision-making works...what do you think is a more likely scenario: (a) TLG executives spent time sitting around in a meeting discussing ways that they could exploit the secondary market to drive the sale of a few thousand sets at third-party downstream retailers that are not owned by TLG (i.e., Amazon, Walmart) instead of working on actual corporate projects that would drive revenue for TLG, or (b) LEGO Shop at Home's order system is set up to automatically trigger specific status updates based on criteria that exist elsewhere in its system (i.e., no inventory + order placed for new stock = "Temporarily Out of Stock," while no inventory + no expected date for new inventory = "Sold Out")? 

 

 To add to this; "Never attribute to malice that which is adequately explained by stupidity.

I find that I frequently need to remind myself of that quote. 

Anyone who works, or has worked, for a corporation should know that no matter how profitable a company is, or just how well oiled of a machine they appear to be... screw ups happen... more often than outsiders know.

I like to call this the "well-oiled machine fallacy."  People always seem to think that the company that they work for is a complete and utter mess in which mistakes happen all the time and success happens almost by accident, but that every other company in the same industry runs like a well-oiled machine.

[gbg108]

The thing is that what everyone seems to think is some kind of new phenomenon (i.e., a set disappearing within days of hitting Sold Out on LEGO Shop at Home) has been happening for many years.  Maybe it took longer than 48 hours in some instances and shorter in others, but the "Sold Out" tag has always been a trigger for resellers to jump on available inventory, particularly when it's a popular set like DS. 

If you work for a company that does almost 9 billion in sales, then I'm sure you're perfectly aware of how layered corporate decision-making works...what do you think is a more likely scenario: (a) TLG executives spent time sitting around in a meeting discussing ways that they could exploit the secondary market to drive the sale of a few thousand sets at third-party downstream retailers that are not owned by TLG (i.e., Amazon, Walmart) instead of working on actual corporate projects that would drive revenue for TLG, or (b) LEGO Shop at Home's order system is set up to automatically trigger specific status updates based on criteria that exist elsewhere in its system (i.e., no inventory + order placed for new stock = "Temporarily Out of Stock," while no inventory + no expected date for new inventory = "Sold Out")? 

Certainly, (b) is the more likely scenario, no argument there. But to dismiss the possibility that TLG is aware of and potentially exploiting the secondary market when it's useful seems a bit naive to me.

If TLG has decided that they do in fact want to EOL DS and they still have 20,000 of them sitting in their warehouse (poor big business planning and all) they would want to move that inventory ASAP. Two ways to do that 1) have a sale or 2) create the impression they are already gone. 

 

 

Edited July 27, 2015 by gbg108

[StompingFreak]

I've only got six of them, but I bet they are gonna be a pig to shift in the next 3-5yrs. Glad I haven't over stocked. Saw a pic the other day, one feller has two full steel marker shelves full, at lest 50 units. I think we will be luck to shift them. Plus I really don't think TLG will stop making it anytime soon. New films, new interest, unless the first order build a new DS,(hopefully they learn from past mistakes, an don't) TLG will still make plenty of sales. AFOL's that still haven't brought one, see, love the new movie, faith in the force renewed, finally treat themsleve. 

I really think the DS in a poor investment. Been around far too long, plus two many of us can keep the market alive for years keeping the price down. JMO.

 

[brickolodon]

not a lot of ppl got DS...1 or 2 may be....I got mine just next day its sold out LEGO Shop at Home....total of 8....DS rocks....and will beat majority of sets by nd of the year....if its stay sold out.

[MathBuilder]

 

If its stay sold out.

Emphasis on if, and if there aren't any pictures of the new DS floating everywhere on the internet by then. 

To me DS and the T1 camper are going to be the real indicators of what is to come in the future of this investment and a measure of how real/un real the bubble is. I would have added PS to this but modulars are a whole other monster at least IMHO. 

[StompingFreak]

not a lot of ppl got DS...1 or 2 may be....I got mine just next day its sold out LEGO Shop at Home....total of 8....DS rocks....and will beat majority of sets by nd of the year....if its stay sold out.

LEGO Shop at Home has it at ship in 30 days. So not sold out anymore.

[brickolodon]

What are you talking about, still sold out...

[gregpj]

What are you talking about, still sold out...

Don't just look at the small listing... Click on the product itself. Or..... Read the posts here. Why would a half dozen people talk about it now saying "check back soon, we are currently making more!" ?!

[brickolodon]

..hmmm...its not a joke...my bad. Lol

[StompingFreak]

..hmmm...its not a joke...my bad. Lol

Your welcome!

[maestro]

Parisian Restaurant has retired

[Sprocket77]

Parisian Restaurant has retired

The sky is blue.

Seriously, we can all make statements like that, but at least try to back it up. You can order it at SAH with an expected ship date of less than 3 weeks from now.

[maestro]

The sky is blue.

Seriously, we can all make statements like that, but at least try to back it up. You can order it at SAH with an expected ship date of less than 3 weeks from now.

I returned one with a damaged box. Lego SAH rang me to say they couldn't get one for me. Then one re appeared on the site. I ordered it with 2 other items. I have just received an email from them saying it is no longer available and they cancelled the order.

[Sprocket77]

I returned one with a damaged box. Lego SAH rang me to say they couldn't get one for me. Then one re appeared on the site. I ordered it with 2 other items. I have just received an email from them saying it is no longer available and they cancelled the order.

Lego are notoriously crap at inventory. They're still selling them online, so presumably there will be some stock coming from somewhere.

[maestro]

Lego are notoriously crap at inventory. They're still selling them online, so presumably there will be some stock coming from somewhere.

Ok. However, when I ordered Red5 they said shipping was delayed by a few weeks. However, this is the first time they cancelled an order.

[Sprocket77]

Ok. However, when I ordered Red5 they said shipping was delayed by a few weeks. However, this is the first time they cancelled an order.

I think you need a lot more signs than that before you can declare something retired though. Look at the craziness on the Death Star thread recently. Lots of signs, everyone starts going DS crazy and a few weeks later, it's back again. 

[maestro]

I think you need a lot more signs than that before you can declare something retired though. Look at the craziness on the Death Star thread recently. Lots of signs, everyone starts going DS crazy and a few weeks later, it's back again. 

Ok. I think Parisian Restaurant is retiring :-)

[ED-209]

Ok. I think Parisian Restaurant is retiring :-)

I like it how you are sticking to your guns, but somehow I doubt it. The set has only been out a year.

Time, as always, will tell though.