Tired and Frustrated with Shipping? - Let me share a story

[legoman12323123]

I am not sure why people have such low % returns (other than if they are flippers). I have been at it for many years (which must help), & while I sometimes sell items that are currently available, I mostly look to sell only out of production LEGO (where the returns are much greater).

 

There is no doubt that the values on recently retired sets don't return the quick profits the way that they once did - I suppose that would also limit the returns for newer investors.

Its only going to get worse .. once the fake legos take over ebay .. everyone is going to get their listing VERO'd by lego. If you have ever try selling a VERO item its near impossible longterm.

[StarCityBrickCompany]

lol if you could spend only 50k and net a 100% ROI on your initial investment of 50k and double that in ONLY a year .. you are a financial genius you should be dabbling in stocks not legos.

 

According to your logic .. all major outlets should downsize their store why buy up 5 million dollars of inventory in a store at 20% ROi .. why not downsize to 1/5 the size and only sell things that net 100% ROI? Its not as easy as it sounds .. I highly doubt you are netting 100% ROI on a 50k investment in only a year. Assuming 100% ROI you would have to be selling your items at 120% in order to cover fees, labor, shipping, ect .. If you are pulling that off .. thats amazing

 

It can be done, or maybe I should say could be done.

 

Someone starting out from scratch nowadays - probably not. But if you have been in the game for a while, absolutely - it can be done.

[imirish11]

My point is people that ROI doesn't really matter, net income per unit of time is what really matters. From the two theoretical examples I presented, it should be clear that there are thousands of different paths you can take to capture your profits. The path that you choose to reach those profits is your choice, and to each their own, right?

 

The theory of markets states that sellers will line up to capture highest ROI first, and quickly accept a lower ROI on a larger investment, provided it yields higher net income. Thus, you see retailers competing at very low margins bc sellers, over time, have been willing to accept lower ROI, provided they still end up with higher net income. It happens in every market, always.

[DoNotInsertIntoMouth]

My point is people that ROI doesn't really matter, net income per unit of time is what really matters. From the two theoretical examples I presented, it should be clear that there are thousands of different paths you can take to capture your profits. The path that you choose to reach those profits is your choice, and to each their own, right?

 

The theory of markets states that sellers will line up to capture highest ROI first, and quickly accept a lower ROI on a larger investment, provided it yields higher net income. Thus, you see retailers competing at very low margins bc sellers, over time, have been willing to accept lower ROI, provided they still end up with higher net income. It happens in every market, always.

 

I think it was also missed that it was an EXAMPLE to prove a point. Not something you did. lol.

[StarCityBrickCompany]

My point is people that ROI doesn't really matter, net income per unit of time is what really matters. From the two theoretical examples I presented, it should be clear that there are thousands of different paths you can take to capture your profits. The path that you choose to reach those profits is your choice, and to each their own, right?

 

The theory of markets states that sellers will line up to capture highest ROI first, and quickly accept a lower ROI on a larger investment, provided it yields higher net income. Thus, you see retailers competing at very low margins bc sellers, over time, have been willing to accept lower ROI, provided they still end up with higher net income. It happens in every market, always.

 

Unless you are a flipper (selling items that are currently available at retail), ROI does matter.

 

We are dealing with an item that will generally increase in value, and once they go EOL, has a limited availability. Any unsold items are unrealized gains - which are continuing to increase in value.

 

Disregarding ROI, and undercutting prices (just for a quick gain), also has a negative long term effect on valuations (by constantly weighing down on those prices).

 

If you are an investor who cares about the long term health of the market - then Yes, ROI does matter.

[smittypop2]

You guys are very focused on ROI, but no one seems to be commenting on price resistance. When a set increases to a certain degree, it is much harder to sell and you would probably be better off flipping it and reinvesting your money at a faster/smaller price point whenever possible.  You can release some blanket statement that Legos generally increase in value over time, it is not necessarily true. The average LEGO set is going to reach a point where it stagnates at a certain price point and it isn't going to increase any further and also you are going to have a much harder time selling it. Look at the last 10 years of Star Wars, City and other sets that have been re-released, updated, etc. countless times. These sets went up in value and then came back down as a result of LEGO doing what they do best. Anyways, these are all factors that need to be considered. If you just want to buy a bunch of sets and hold them indefinitely you are probably wasting many business opportunities to use that money to make other profits. I know this is all simple economics, but many people don't consider TVM, Price Resistance and things of that ilk when they are strategizing.

[Anakinisvader]

You guys are very focused on ROI, but no one seems to be commenting on price resistance. Whena set increases to a certain degree, it is much harder to sell and you would probably be better off flipping it and reinvesting your money at a faster/smaller price point whenever possible. You can release some blanket statement that Legos generally increase in value over time, it is not necessarily true. The average LEGO set is going to reach a point where it stagnates at a certain price point and it isn't going to increase any further and also you are going to have a much harder time selling it. Look at the last 10 years of Star Wars, City and other sets that have been re-released, updated, etc. countless times. These sets went up in value and then came back down as a result of LEGO doing what they do best. Anyways, these are all factors that need to be considered. If you just want to buy a bunch of sets and hold them indefinitely you are probably wasting many business opportunities to use that money to make other profits. I know this is all simple economics, but many people don't consider TVM, Price Resistance and things of that ilk when they are strategizing.

Yes, this is why you need to buy at a better discount. The price you purchase at IS one of the most important factors (if not the most). If you buy at a minimum of half off, you already have your profit (ROI) accounted for and you can always sell at retail if needs be. If it goes up in value then POOF you are golden.

[DoNotInsertIntoMouth]

Yes, this is why you need to buy at a better discount. The price you purchase at IS one of the most important factors (if not the most). If you buy at a minimum of half off, you already have your profit (ROI) accounted for and you can always sell at retail if needs be. If it goes up in value then POOF you are golden.

 

Finally a "POOF" that doesn't involve something going out of stock.

[Veegs]

Finally a "POOF" that doesn't involve something going out of stock.

 

Tie this to the GE threads around here! 

[allen9917]

Good post DNIIM. One thing I'm wondering and I know this has been talked about a lot, is your take on small vs. bigger sets, in terms of stress level. Assuming profit margin is the same, selling bigger sets mean less item to pack and ship, less customer service, and shorter record books. All those could lead to less stress. Would like to hear your experience.   

[fuzzy_bricks]

This is way more civilized and constructive than the big zoo thread.

[Anakinisvader]

This is way more civilized and constructive than the big zoo thread.

Yes, no poo throwing monkeys........yet.

[Ciglione]

For me personally, I am still in the learning process regarding lego investing. I have not made big profits yet. Also I started only about 3 months ago. I have made some mistakes with some sets I bought and I am happy if I can get the money back I paid for them or even make a small profit. When I get the hang of this and become more experienced I am sure I will earn more money. I know very well it takes time for sets to grow in value.

 

I do not see this as a business really. I am (still) having fun doing this and probably have not made any real profit yet. When you substract all hidden costs like fuel, time, etc. But it keeps me off the streets. I see it as a hobby which may become a business later. It is my dream to make a business from my hobby. 

[Darth_Raichu]

Yes, this is why you need to buy at a better discount. The price you purchase at IS one of the most important factors (if not the most). If you buy at a minimum of half off, you already have your profit (ROI) accounted for and you can always sell at retail if needs be. If it goes up in value then POOF you are golden.

With the increasing competition, this kind of discount is becoming harder to find. If anyone thinks competition is good, you are kidding yourself.

[DoNotInsertIntoMouth]

Good post DNIIM. One thing I'm wondering and I know this has been talked about a lot, is your take on small vs. bigger sets, in terms of stress level. Assuming profit margin is the same, selling bigger sets mean less item to pack and ship, less customer service, and shorter record books. All those could lead to less stress. Would like to hear your experience.   

 

At the moment I part stuff out a lot, so I basically will sell anything. lol. BUt it does contribute.

 

As reagrds to investing, I have some rules to that:

 

1. If the set is one of the cheap ones like $12.99 battle packs, etc. I have to get them stupid cheap and/or have to see a triple price increase. To put this into perspective, the only small sets I have invested in have Captian America and Catwoman Catcycle. I still have the Catcycles and I already sold all my Captain America cycles.

 

I have turned down Battlepacks at $7 quite a bit. The stress is a big concern and another that goes with it is "How do I ship this?"

 

If it can go First class, thats awesome - but how do you keep it safe in shipping. I usually ship in Polybags if its First Class, but these get damaged. So if you buy a box, lets say its $1 and then you ship it and it adds to the weight making it maybe $2.90 to ship.

 

So if you get a $10 set, you need to probably sell it for $16 before you make anything at all. Thats a high buy in - if it doesn't get to $30, its just not worth it.

 

$20 sets are a different story provided they are nice sets. I like those a lot because if you can score them for $14ish, you can still get them in a box and under the First Class Cap. Now you are in about $20, and usually they have much higher ceilings.

 

So I will always prefer a $20 set over one of the $12 ones for sure.

 

My rule for 20$ set to invest (because even with good ROI, net sale price is more important here) in is - Must have 3 minifigures and a decent vehicle/rest of set. At least 1 and preferably 2 minifigures are exclusive at the point in time (or exclusive variants), get it under 15$, and a popular theme.

 

RIght now looking with this criteria, here are some examples of good and bad:

 

good:

 

Wolverine - obvious with 3 exclusives and a nice Chopper

Extremis Boat - War Machine and Aldrich Killian exclusive, decent boat

Spider Cycle - Nick Fury and Sort of Exclusive Venom - very underratted rest of set though

Man Bat - Will Kill with Nightwing - only one exclusive but such a full set for $20 so Im confident in this one.

Power Lex - Duh - 3 exclusive figs

Captain America vs Hydra - Another Duh with 2 Exclusive figs and 1 with 1 other retired set figure

 

Bad:

 

Superman Breakout thing - the one with Zod and Lois Lane

Most every 20$ Star Wars set I have seen the last year

 

 

With the increasing competition, this kind of discount is becoming harder to find. If anyone thinks competition is good, you are kidding yourself.

 

Well the competition is good for some people - just maybe not the sellers. lol.

[j.hermit]

Remember that we have two different types of "retailers" chiming in on this conversation- investors and parters/flippers- and the two have totally different strategies.  It's not worth letting a set appreciate for years if it's only going to net a 20% ROI;  however, that return might be acceptable when you're only financially invested in an item for 3 weeks, not 3 years. 

 

For some of us (especially those like me, who don't have a lot of extra expendable income ), the reason parting out/flipping can be worth it is my good friend Mr. Exponential Growth.  I buy a set for a hundred, flip it for 20% profit, then reinvest the whole thing.  The next month, $120 at 120% yields 144, month three yields $173, etc.  I know that this is super simplified, and it's not taking into account the work, time, or other costs involved, but purely looking at the math, if I continually flip/part out for a monthly 20%, at the start of year three, my $100 investment will have grown to $72,000.

 

Don't judge my example there;  it's not a real world situation, I just straight plugged numbers into the exponential growth formula from 8th grade algebra- A x B^C (A is your investment, B is your ROI, C is generally time- how many times you are going to repeat this investment cycle, in this case monthly).  For my example, the equation would be $100 x 1.20^36.  Great theoretical returns, but a ton of work involved.  Your investment strategy will probably depend on what you have more of- time or money.

[dbost01]

well put

[Anakinisvader]

Remember that we have two different types of "retailers" chiming in on this conversation- investors and parters/flippers- and the two have totally different strategies. It's not worth letting a set appreciate for years if it's only going to net a 20% ROI;  however, that return might be acceptable when you're only financially invested in an item for 3 weeks, not 3 years.

For some of us (especially those like me, who don't have a lot of extra expendable income ), the reason parting out/flipping can be worth it is my good friend Mr. Exponential Growth. I buy a set for a hundred, flip it for 20% profit, then reinvest the whole thing. The next month, $120 at 120% yields 144, month three yields $173, etc.  I know that this is super simplified, and it's not taking into account the work, time, or other costs involved, but purely looking at the math, if I continually flip/part out for a monthly 20%, at the start of year three, my $100 investment will have grown to $72,000.

Don't judge my example there; it's not a real world situation, I just straight plugged numbers into the exponential growth formula from 8th grade algebra- A x B^C (A is your investment, B is your ROI, C is generally time- how many times you are going to repeat this investment cycle, in this case monthly). For my example, the equation would be $100 x 1.20^36. Great theoretical returns, but a ton of work involved. Your investment strategy will probably depend on what you have more of- time or money.

I exponentially like this.

[justafrog]

Remember that we have two different types of "retailers" chiming in on this conversation- investors and parters/flippers- and the two have totally different strategies.  It's not worth letting a set appreciate for years if it's only going to net a 20% ROI;  however, that return might be acceptable when you're only financially invested in an item for 3 weeks, not 3 years. 

 

Three types, really - investors of whole sets, parters/flippers, and those with actual individual parts stores.

 

The latter (me and my brethren) fall somewhere in between the two groups - our ROI has the potential to be better than either of the other two groups, but we have much more labor invested than either of the other two, too.

 

The flippers and/or "parters" (minifigs and large hunks of sets) are putting in a certain amount of additional labor but not tying their money up for very long in most cases, letting them re-invest a lot more quickly.

 

There's really not any point in any sub-category sneering at the others. All have people who are good at what they're doing, and all have people who are bad at it.

[El Guapo]

Raising prices is a good one. I think there is a sweet spot for everyone per day. my limit is about 15.

 

My Label printer - http://www.amazon.com/DYMO-LABELWRITER-Printer-1752264-Software/dp/B0027JBLV4/ref=sr_1_2?ie=UTF8&qid=1395506942&sr=8-2&keywords=dymo+450&tag=brickpick-20

 

Its on a good sale today, worth a buy.

 

Labels - you just need 99019 Dymo compatible.

Working on getting a new label printer....you use this to print shipping through PayPal?

[Bold-Arrow]

I see this thread has morphed into something else..lol

In all cases , you are good man for posting this . I'm pretty sure many of us get so involved in our businesses that we get consumed by it. I used to jump with every daily deal notification, I turned those off a while back ( though I will probably turn them back on when we hit certain occasions). It made a lot of sense, for me at least, to get a step back every now and then and take a breather and enjoy something else - I play soccer- or just do nothing and have a lazy day with the family .

Cheers

[Blackjack]

I don't have much money, but I'm not flipping.  Just holding sets for about a year and seeing what kind of returns they'll get.  I don't have the time/infrastructure for flipping now.

[legoman12323123]

Three types, really - investors of whole sets, parters/flippers, and those with actual individual parts stores.

 

The latter (me and my brethren) fall somewhere in between the two groups - our ROI has the potential to be better than either of the other two groups, but we have much more labor invested than either of the other two, too.

 

The flippers and/or "parters" (minifigs and large hunks of sets) are putting in a certain amount of additional labor but not tying their money up for very long in most cases, letting them re-invest a lot more quickly.

 

There's really not any point in any sub-category sneering at the others. All have people who are good at what they're doing, and all have people who are bad at it.

Good Point .. its like comparing apples to oranges to watermelons here .. so many different type of investors/sellers .. thats prob. why nobody can agree on anything .. everyone has a different point of view ( not necessarily wrong). I sell on bricklink and it takes more time and labor but I net the most ROI opposed to selling on ebay parting out figs/set which gives a decent ROI .. and than there is selling sealed sets which  little or no return if its a current set (even hotcake items after fees, shipping, competition, you make what $5-$10 bucks and shipping those is a pain in the ass, gotta find the right box ect) unless its a retired set that you have been holding onto for months/years.

[Brickshopper]

Good Point .. its like comparing apples to oranges to watermelons here .. so many different type of investors/sellers .. thats prob. why nobody can agree on anything .. everyone has a different point of view ( not necessarily wrong). I sell on bricklink and it takes more time and labor but I net the most ROI opposed to selling on ebay parting out figs/set which gives a decent ROI .. and than there is selling sealed sets which  little or no return if its a current set (even hotcake items after fees, shipping, competition, you make what $5-$10 bucks and shipping those is a pain in the ass, gotta find the right box ect) unless its a retired set that you have been holding onto for months/years.

surprised to hear someone who is parting out sets piece by piece and selling on bricklink refer to shipping out sealed sets as a pain in the ass...I sell on both and would take throwing a set in a box over counting and double checking a 30+ lot order on BL anyday sometimes for the same money. There are room for all; collectors flippers speculators. No one right method for all.

[StarCityBrickCompany]

Three types, really - investors of whole sets, parters/flippers, and those with actual individual parts stores.

 

The latter (me and my brethren) fall somewhere in between the two groups - our ROI has the potential to be better than either of the other two groups, but we have much more labor invested than either of the other two, too.

 

The flippers and/or "parters" (minifigs and large hunks of sets) are putting in a certain amount of additional labor but not tying their money up for very long in most cases, letting them re-invest a lot more quickly.

 

There's really not any point in any sub-category sneering at the others. All have people who are good at what they're doing, and all have people who are bad at it.

 

But there are not many pure seller types. What do you think a flipper (who is usually happy to make $1 on a sale) will do when they can make $10 on a sealed set? 

 

The mindset of accepting less (which has become much more prevalent) is simply unhealthy for the market, and certainly has a negative impact on the investor type.