This month (November 2016) marks my first complete year as a LEGO reseller and active BrickPicker, as well as the second anniversary of coming out of my Dark Ages. Okay, I was reading catalogs and buying a few cool sets for my kids every year before 2014, but nothing like the full-on assault of having to catch up with all that LEGO has offered in the past. To celebrate these milestones I thought it would be a nice idea to contribute some of my key lessons from the past year back to this community.
First of all, a little background. What really got me out of my Dark Ages was LEGO Trains, actually, it was a Fleischmann N-scale model train set that I used to have when I was a kid and which my dad brought over from Europe to the US 2 years ago. Enthusiasm over introducing my son and daughter to model railroading quickly turned into disillusion because I realized that none of the US manufacturers made tracks compatible with my N-scale track, and that just buying extra rolling stock was going to set me back hundreds of dollars for single-purpose items, which break irreparably when played with by (young) kids. Then a little light-bulb went off in my head: What if I bought LEGO trains instead – we could build our own trains, cars etc., and whenever we wanted something different, we just take it all apart. So with my wife’s blessing, Santa brought the Blue Cargo Train set (60057) and two Horizon Express sets for Christmas 2014. Unbeknownst to her, I had also managed to get an (already retired) Maersk Train, a few My Own Train carriages and some other random train-related bulk lots. I participated in a RailBricks contest (the last one they did before unfortunately shuttering the magazine) and started my decent into the delightful madness that is the world of AFOLs.
Since I’m a train guy, you won’t hear stories from me about having to have this or that Star Wars ship, or those exclusive SuperHeroes minifigs. Sure, my son has a Millenium Falcon and Poe’s X-Wing, and the key SW characters as buildables, but our LEGO buying was first focused on Chima (my son loved it), then shifted to Bionicle, and now my kids’ playing revolves around Harry Potter – we don’t own any of the sets, but have a few minifigures and a lot of imagination. My daughter has a lot of Friends sets which she loves, but is slowly growing out of her interest for these (my kids are 10 year old twins at the time of this writing).
Then November 2015 hit, and I started investigating the value of some sets, and joined the BrickPicker forums. My first purchases started rolling in ….. Pirate Chess Sets from LEGO Shop-at-Home, and a few handfuls of 10697 Brick Boxes from WalMart. As I really love the brick, I had determined I was going to start my own BrickLink store (having designed several train cars and placing tens of BL orders I had gotten familiar with how this worked). And I read and read and read on BrickPicker, and participated in the discussions, and grew wiser and smarter and, I must say, warier as time went by.
Here are the key lessons I’ve learned from my first year:
- The buying part is easy. The buying part is fun. Great adrenaline rush. But for many of us, there’s too much to buy. Just because it’s 50% off doesn’t mean you NEED to buy it. Case in point: I picked up a 31033 Vehicle Transport at Target in January 2016 for $10 (RRP: $25, so 60% off). Not a particularly nice set, it had just been released, available everywhere, and who will buy from you as a beginning Ebay seller? Needless to say, this set still sits unsold on my shelf.
- It’s all about buy-in. Where previous strategies mainly revolved around getting your hands on as many of the expensive sets as possible before they quickly but inevitably retired without much fanfare, the LEGO reselling game is undergoing a massive change. Buy-in price seems to be the key factor now. As a beginning buyer I was excited when I saw 20% off. A year later, 40-50% is where my heartbeat starts increasing.
- Selling takes time. It’s not difficult, it just takes time. Time to establish yourself as a trustworthy seller. Time to wait for prices to rise to a level you’re comfortable with. Unless you stumbled upon something truly desirable and unavailable, or if you are able to price significantly below others, don’t count on things selling within the first 30-day listing period. Darth Revans, Iron Patriots and Silver Centurions are obvious exceptions, but those don’t come by often. For other items it is a slow, slow game – listing and relisting.
- The game changes continuously. What works one month might no longer work the next month. Every Bob and Sally has LEGO items in their Ebay store. More and more people join and try to eke out an ever smaller amount of profit. Amazon throws up a gate. Ebay and Target stop a lucrative giftcard cycle. You need to stay in touch or your investments become much harder to sell, or your profit evaporates.
- Making a decent profit is not easy. At least, not for big(ger) sets. Just look at Ebay: You bought a set for $100 and want to make good profit. If you sell for $150 (shipping included), you will pay ~$18 to Ebay/Paypal in fees, and ~$10-$20 in shipping (in the US, depending on where you live). That’s $30-$40 off of your selling price, so you end up making $10-$20. A small profit is also profit, but you’ve spent time on this set, buying it, storing it, packing it, listing it, checking comparables etc. Unless you’re shifting hundreds of these sets a month, this will not be worth your while.
- Your time is valuable. Even if you consider this “only a hobby”, before you know you’re in your car driving from one Target to another. I have 6 or 7 Targets in a 15 mile radius from my house, and a similar amount of Walmarts. Popping into one is a quick affair. But when those clearance rumors swirly, and stock checkers are unreliable, your “quick check what they have” becomes a 3hrs+ road-trip. Plus, with 800+ LEGO sets on the market, you’re quickly spending 20-30 mins per store checking resale values, BL part-out costs etc. Then you need to list. Take a picture or two. Research what others are listing for. Do your administration (which for a detailed oriented person like me means adding a row for each set in a 30+ column spreadsheet tracking all sorts of aspects of your purchases). And for those of us who do the part-out route, there’s time in sorting out the set contents, setting up an organizational system, updating BL inventories etc.
Choose your game plan. There is too much going on (what with LEGO producing 800+ sets a year as mentioned before) to play all fields. Unless you’re sitting on vast amounts of spare capital, you cannot AND go deep on expensive sets, and cover all themes (Modulars, SW UCS, GBHQ, SHIELD Helicarrier, Advanced Technic models etc) and part out, and BrickLink …. Pick one strategy that best fits your lifestyle. Your options are:
- Good old-fashioned investing – buy expensive sets for true investment purposes, i.e. stash them away for 3-5 years post retirement and see if that magical 3xMSRP has appeared.
- Clearance hunting for quick flip – grab those 50-75% off sets, and list them within a year to see if you can get >MSRP to get 75-100% ROI.
- Diamonds in the rough – take a punt on a few sets that you believe are “iconic” and not soon remade. Remember: First rule of fight club is that nobody talks about fight club. Sit back and watch others scramble over the “common” sets, and rake in the profits when the sets are retired and people realize they “need” them. Or at least, that’s the theory.
- Buy for part-out. Split your sets into minifigs, buildings and vehicles, and sell them separately for more than the original sets’ cost. I’ve had some luck with this strategy, though it was never my game plan – especially with Dimensions (minifigure and video-game discs sold separately, with the minibuilds as parts for my BL store inventory).
- Buy for parts. Look at which sets have good BL value, but be careful: unique/niche parts can drive up the value but see very little sales. Be selective.
- Don’t be a sheep. Tied to the previous point. It is so easy to get carried away. “Great deal on this SW UCS – now 30% off!”. Sure, but if you have a budget (and I recommend you have one from the get-go), plonking down a few hundred bucks on a set that you’ll likely have on a shelf for the next 2-3 years might not be the wisest decision. Plus, there are many others who jump in on this, so you need to battle your competitors in a game that is not your strength. Net, stick to your own plan.
- Document. Document. Document. Keep track of what you spend and how much you earn. A spreadsheet is good enough. Don’t count on profit until you have it in your PayPal account. Account for all expenses – boxes, shelving, tape, you name it.
Find the right marketplace. Depending on your location, you have multiple options. Each marketplace has its plusses and minusses. The key ones are:
- Ebay. First choice for many. Used by bargain hunters, savvy shoppers and has generally a good, sizeable audience. To really have a good experience, you need to be honest in listing (duh), take lots of pictures, price right, ship fast, and have a return policy (and ideally, a generous one). Also, you need to use PayPal, and unless you work yourself up to Top Rated Seller, count on 12% of your total sale price (including shipping!) to be taken as fees.
- Amazon. Until very recently the absolute best place to start selling. Everybody shops at Amazon. Unfortunately, unless you pay $1k and provide proof of purchase (and potentially a letter from TLG proving you are an authorized reseller), you cannot list LEGO anymore. I was lucky to get grandfathered in based on a few sales I had in the spring and summer. FBA (Fulfilled by Amazon) is the best one of the lot – limited effort (buy, add to inventory, pack and ship to Amazon – they take care of the rest) and a lot of eyeballs. This comes at a price: up to 20% of the sale price goes to uncle Jeff, but the “Prime” label makes up for that by commanding a premium price from buyers, and people happily click away. Plus, you get a chance to be featured in the Buy Box. Just be aware of returns – you might have to swallow the occasional destroyed item.
- Craigslist. Flea-market audience. Has the hassle of having to meet with people (and finding a place where to do this can sometimes take a lot of back-and-forth with your buyer), but once the sale is made you have no risk and no obligations. Also: no fees.
- BrickLink (and BrickOwl, its key competitor). AFOLs only. Limited eyes, but limited fees (1-2%). Your buyers know what they want. Shipping is extra, so no need to accounting for shipping costs in calculating your price. The only downside is that setting up shop properly is not easy – adding shipment methods, figuring out how to price those methods correctly etc. all needs some research. Of course you can do without, but you get more sales if you do it right.
- Facebook selling groups. No real experience here on my end. I’m part of my local Buying/Selling group, but what I see is not instilling much confidence: used cars, pitbull pups and phones. I doubt anyone will want to buy a LEGO set at a reseller premium there. Others have reported more success.
- There are other apps and marketplaces: Offerup, Kijiji in Canada, Gumtree in the UK, Marktplaats in the Netherlands and Belgium …. I have no experience with these but from what I’ve heard, they fit in with Craigslist/Facebook above.
- Conventions, flea-markets, garage sales. Very interesting venues, each with their own dynamic. You could get away with charging a premium at conventions (and potentially at flea-markets), but often your participation comes with a fee, so you need to account for that. Again, not an area I have dabbled in so far.
- Read up on key threads. Check what happened to 41999 to understand how the horde can get carried away sometimes. Read the Amazon/Ebay/CL threads for tips on how to get started, and for answers to commonly experienced questions. Check out the Ethics forum to understand what is being frowned upon – if we don’t keep certain practices and standards, retailers will counteract and remove things like the ability to stack coupons, or the acceptance of printed coupons, or even the privilege of a hassle-free return. And before you make your first purchase, check the speculative bubble thread – if you are still convinced you want to do this after reading that thread, you’re probably strong enough to handle what’s coming (or rozy-eyed enough to not care).
- Master the art of stacking. There are published deals (50% off at Target!) and there are “make your own deals”. The latter have the benefit that they are YMMV (your mileage may vary) – others likely won’t be able to replicate them. Several retailers (Toys’r’us, Kmart/Sears, Meijer, BAM, Ebay, Galeria-kaufhof and mytoys in Germany to name a few) have coupon and discount policies that allow for the stacking of offers. Combine sale pricing with credit card discounts, with reduced-price Gift Cards, with 20% off coupons, with Buy-one-get-one-free (BOGOF) offers, with points/rewards program certificates, until your buy-in price approaches $0. Then rub it in other’s faces on the "What LEGO set did you buy today" thread.
- Get in on those loyalty programs. For the price of a small piece of your soul, join as many rewards programs as you can. Ebay Bucks, TRU Rewards, Shop-Your-Way, Meijer mPerks, BAM club membership, Barnes & Noble membership, you name it. Carry the card. And if you don’t mind carrying multiple credit cards, use store-specific CC’s for your purchases, and earn discounts and cashback. Just pay them off every month, please.
Be truthful in accounting. This goes two ways:
- Don’t get into trouble with the IRS. If you sell for profit, you are generating income. Better report it (plus in the US you can deduct the expenses incurred in making the sale, such as car mileage, shipping materials, storage materials etc.). Officially you should also register yourself as a reseller in your state/county (unless you block people in your state from buying from you). For my state (Ohio) this was really not a big deal – a small fee, some paperwork, and a twice-a-year reporting duty (so far always $0). Also, configure your selling accounts (Ebay, BrickLink) to automatically charge sales tax on purchases made by local buyers. You can only do this on Amazon if you have a professional selling account – when you sell as an individual you’ll just have to pay the sales tax out of the sales price. As a benefit: I get to buy tax-free in the few places that haven’t banned resellers (Amazon, Walmart) as long as it is for store inventory.
- Think about how you account for points, freebies etc. There are many ways to skin the cat, but I prefer this approach: Points never count as a discount on the purchase made to earn them, only as a discount on the purchase where they are used. Freebies count as a $0 purchase, and everything I earn on them is (gross) profit. So, those sets I bought at LEGO S@H for $75 to get the free Gingerbread House really cost me $75, even though I sold the GBH for $50 and made $40 profit after fees and shipping, and got 150 points as part of double VIP.
- Get approval from your S.O. (Significant Other). Some of us are blessed with AFOL partners. Some of us have bargaining partners – if you want to do this, then let me do my thing. Some of us have eye-rolling partners. And even some of us have to pretend and work undercover. Oh, and some don’t have partners, but I’m giving them a break and will not tap into my arsenal of AFOL bachelor puns. At least come to some sort of an arrangement. LEGO should never be the reason a relationship ends, and should never be more important than your S.O. I had big plans (and still have big plans) regarding my BL shop as well as regarding my LEGO Train building hobby. They’ve been slowed down – my wife protested against the amount of time I was spending on this and she was right. <Insert doormat pun here>
- Practice self-constraint. No you don’t have to buy it all. Often I go all the way through the checkout process and then take a breather. A quick comparison with other sites. Read some reviews. Think "yes it is x% off, but you still pay $y". And after amassing a closet full of LEGO: “First sell enough until you have more funds and more space, then buy again”. What also helps me is that I have a (very short) list of sets I really want to have for my personal collection. If there ever is a good deal on those, I’ll jump on it (ideally using Ebay Bucks or Credit Card reward dollars). For the other deals: there will be more deals in the future.
- Be helpful and you’ll be better off for it. Just like you need to build up a reputation of trustworthyness on Ebay or Amazon, I advise everyone to do the same on BrickPicker. Look out for your fellow BP-ers. Help them score a deal when needed. Post those deals when you see them (even if they don’t interest you), or at least, post them after you had your fill. Because all the goodwill you’re building up will help you get better deals yourself – via member-to-member private messages, or just by being "in-tune" with what is happening on the marketplace. And unlike many other platforms on the vast World Wide Web, Brickpicker is a very civilized, high-intelligence online forum. Conversations are kind, well articulated and insightful. Moderators intervene at the right time, and with clear principles. And everyone likes a giggle.
Unless you are a professional reseller (and I know there are several that frequent BP), remember that this is supposed to be a hobby. You’ll enjoy it more when you keep your love of LEGO alive. Scale back when you don’t have time. Sell if you need cash. Pop seals and build if there’s something you’ve now taken a fancy to, or if the market for the set has cratered. But please, please don’t get in over your head.
To conclude my story: I have spent considerable time over the first half of 2016 on building inventory, writing software to manage my BL store’s sales and pricing analytics, and sorted through about half of my sets and parted them out. I listed ~20k parts on BL, and have seen some nice sales coming through. However, as this is my hobby, I’ve had to take a break from adding to my BL store and it has been in hibernation mode over the past months as other priorities took over. I have continued to list sets on Ebay and Amazon to keep some sales going. I bought well – some initial purchases were not as good as some later ones when I got clearer on what I needed to look for in sets, however, those were offset by some lucky finds (Ghosts for half price, anyone?). I resigned myself to contributing to reporting sales and delightful banter to BP, and with ~3.5k posts to my name in just a year, I think I’ve been quite successful at that strategy at least.
To round it all up, some statistics from my first year:
Total resale purchases including supplies, shipping costs and fees: $7.3k
Average discount over MSRP: 44%
Total sales revenue: $3.0k
ROI on those sales: >175% (But I sold quite a lot of freebies which drive ROI up)
Average fee paid (Ebay, Amazon, BrickLink/BrickOwl): 11.2%
Parts amassed for my BL store: ~110k
Separately, the fantastic deals posted on BrickPicker allowed me to scoop up $2.5k in sets for personal use with a retail value of almost $5k, which equates an average discount of 49%.
Here’s to a great second year!