Blog

Well I began my journey. It's been nearly four weeks of a lego buying extravaganza, and it's been pretty fun thus far. However, I started with a lot of assumptions that I quickly learned wasn't quite, let's just say, very smart. You could probably label it idiotic, but I'm not that hard on myself and view it more as naivety. All I knew was that every time I wanted to buy a set that I didn't see on the shelves anymore, I had to pay 2x retail or more, or hope to get lucky on an ebay auction. Clearly all I need to do is buy some sets, hold them for retirement, then sell them later. That's it, right? I can buy two or three of a set that I really want, keep one, then re-coup the money later on a sale. This is nothing short of awesome, and in those simple thought processes, I began my journey into an addictive shopping frenzy. Not only did I buy sets I wanted, I bought sets just because they were on sale or clearanced. 

Assumption #1 - All lego sets go up in value after retirement

So, if I buy up all these Chima sets sitting on the clearance rack, I should be able to flip them, as they are all retired sets by now. This should be simple. I discovered brickpicker and got an average price for what the sets have been selling for, as well as a trend chart. That's a lot better than browsing through e-bay listings to get an idea of what they sell for. A $9 clearance set was listed at $24 on brickpicker, After fees and shipping costs, I should get about $9 a set profit, this is gonna be easy! So I head out and spend a day traveling to Walmarts, Kmarts, and Target looking for clearanced out Chimas. Every single one had at least 3 sets, and the last Walmart had well over 50 sets sitting there. I decided I had a good enough day and I would just get a few that I didn't see at any of the other stores, not thinking anything of it being a bad sign. Well, after I got home and started getting ready to list them, eBay gave me a rude message saying "Sell this for under $7.50 to have a better chance of getting noticed" or something to that effect. I laughed at eBay and said no way, these sell for much more than that. It did make me second guess it though, and I decided to go check what others have sold it for. I could have bought the dang things cheaper off ebay than off the dang clearance rack. I was very dissapointed, but I still had hope. Time will benefit these sets since they are retired, and eventually they won't be available in a sealed box. I held on to that thought process up until about a week ago, when I continued to see sets on clearance racks all over the place, even in stores I already cleared out. It was at that pont I realized, that there are so many of these sets still available, it will take ages to see a return now. There just wasn't enough interest in them, and not very many of them were selling even at prices below clearance on eBay. Not only that, but they took up two shelves of space in my inventory, and I only have about 12 at this point. Luckily, I kept all of my receipts in a file for tax purposes and all the stores had good return policies. Bullet effectively dodged, and I only used a little bit of gas money on this mistake, they were all returned. Well, all but two that I bought for $5, but I haven't cleared those off my shelves either, and I've tried.

Assumption #2 - Sales on a near two year old lego set means it's retiring

Uh oh, the Dolphin Cruiser went on sale at Toys R' Us and Walmart, as well as Amazon. All these retailers must be trying to clear their shelves. I better hurry and scoop up what I can because these sets are winners! I purchased 11 total in one night because of limits on quantities, otherwise I would have bought more. I also found two at a Toys R' Us 20 miles north, so my wife set out to get them in the morning to grab them. This happened after I spent most of my lego budget on May the 4th deals. We just overspent on our budget, but it's ok because these will be flying up in price in the next month or so. We are going all-in, and we are betting on these to be our main set to get some extra cash pretty soon. Toys R' Us was completely out of Stock and Amazon ran out as well. Walmart had a few left online for a day after that, but it ran out too. Here it comes, it's gonna retire. We just needed to see Lego set the discount or sell out next and it'll be the final nail in the coffin. A few more days later, Toys R' Us got a few more in, Amazon did as well. Targets didn't sell out of these at all either. Only Amazon kept the sale price going, the other retailers set their prices back to retail. So... they got a new shipment and restocked. That wasn't supposed to happen! Now I have all these sets I don't want to take back because I got them on sale, and these aren't retiring as soon as I thought. Lego budget completely blown through and I still want to get a few sets. I hope they don't retire too soon. These ones I will be holding and not taking back, but i'm strapped on them. Sales don't mean it's retiring in the next few days or weeks, or even months, but it is still an indicator. You need to have more indicators before assuming the sale is the EOL of the set. 

Assumption #3 - If you don't foresee a set performing well in the After-Market, you can part it out and sell the pieces. 

I bought two Lego City Museum Break-ins for $52 a piece. But I don't see City sets performing well going forward, so I decided to check the part-out value. On average, the sales for those parts in that set were around $110. So I decided to get into the whole parting out process, watched a few YouTube videos on the best way to do it from BrickTsar and AFOLMan, and began parting these two sets out. Looks like I'm gonna need to buy some Stack-ons and other storage pieces to keep them seperated for future sales. $50 later I had enough compartments to part everything out from these sets. Gotta spend a little to do things right, and $50 really isn't all that bad. Well, all stackons and bins are full, and I have had zero sales on the parts on any site I listed them on. I believe this is because I don't have enough of a selection, or enough quantity of any one part, or even a good enough price point. There is a lot more to long-term parting out than just taking a few sets and putting bricks in compartments and listing them. It also takes enough understanding of what the other lego collectors/enthusiasts want. They don't want to order one part off of you, unless you have enough of them. They want a large selection so all they need can be done without making multiple orders off of multiple stores. Shipping costs add up too much for them to buy off a bunch of small stores. That same set I parted out now goes for around $70 sealed on ebay with shipping included. Would have been a small profit, but now I have a bunch of lego parts that I can't sell for much until I get a decent selection. Don't get me wrong, parting out can be profitable, but it will probably take a while until you have a store people can count on to have what they need. You are probably better off buying large lots of lego parts by the pound from craigslist or flea markets if you want to go this route, not just taking a set or two and seperating all the pieces. Yeah, I know this is aother assumption, but that's my most educated guess at this point as to what it will take to get business selling parts. Some people buy sets with collectible minifigs then part them out, and have much better luck. The Musuem Break-in had cops and robbers, which aren't very collectible because there are so many of them. 

Assumption #4 - Sets will sell quickly if you have a good price point

I'm listing the Lord of the Rings - The Wizard Battle (79005) at a pretty cheap price point, and it's retired so I should get a few bites on this. Saruman and Gandalf are in it as well as an eye of Sauron. This shouldn't be difficult to unload and still make a few bucks profit from the clearance shelf. You might be able to find one or two of them cheaper than mine, but it won't take long until I'm the cheapest ones you can find. They'll sell quickly once that happens, and some will sell before then possibly. Incorrect young padawan. These sets are not highly sought after, and the buyers still need to demand it before you can make a sale. Even if you are the cheapest, people just don't want to shell out the money for this set enough to press the buy button. I'm sure eventually some will, but if the demand isn't there, its just a game of patience until it is. Sometimes, it might not ever get there. I still think its a decent set and people will want it, but they don't just fly off the shelves just because you are one of the cheapest places to buy it. It still takes time for demand to reach the price you are selling it for. When I search "Lego 79005 sealed" and go to sold listings, there were 6 sold in April, and 3 in May. I have 6 sets of them, so by those measures, it will take the whole month to get a few bites, but those were sold at a lower price point, so maybe even longer. I now am taking up shelf space for 6 sets that I may make $2 profit a piece on. Shelf space I could be using for a decent set that is highly sought after, and selling at a much faster pace. 

Those are my biggest mistakes so far that I've caught and wasn't stubborn enough to ignore. Heck, I might even be making a mistake thinking these were mistakes, I've been doing this for one month now, and just started using BrickOwl last week. I haven't listed my parts yet, only sets while I discover how to set things up properly. I may have better luck selling my parts out here than I did on other sites, but because I'm assuming I don't have enough inventory, I'm putting that as a low priority now. You can see what assumptions have done for me so far, yet I continue to assume.. lol.

So for now, I'm taking things a bit slower before I make any more costly mistakes. Ebay has been my main platform for selling, but the fees are too high to make a decent margin. I'm not looking to make a fortune, but even good sets bought on clearance can cost me if I place them on ebay at this point. I only wish I discovered BrickOwl sooner and started building a customer base weeks ago. Its free to list your sets here, the 'final value fee' is much lower, listing is much simpler, and it feels more like I have a store here since your listings don't just go poof after a certain period of time. I can be patient and wait for the right buyer at the price I feel a set is worth. I just wanted to share this so other new investors/resellers can learn from my mistakes, and hope they see this before they jump on their assumptions like I have. Investing in lego gets easier.... I hope! :)

So what about you? What mistakes have you made so far? Feel free to share them in the comments.