Unimpressed with Lego Inc

[skayen]

Hi,

I am venting annoyance @ Lego Inc.

The price of 10227 in Australia is $350 AUD, which is roughly $356 USD. Naturally, I jumped on the 4th of May Star Wars sale to pick up the B-Wing at $99, shipping to a freight forwarder somewhere in USA. Even with the exorbant shipping costs from USA to Australia (approx $80 USD!!), it'd work out to be about 50% off the price here....

... except Lego saw what I did and has cancelled my order, siting 'privacy concerns':

In an effort to protect personal consumer information, LEGO Systems, Inc. has elected to no longer process shipments to Third Party Shipping Vendors.

We have determined that because your order is scheduled to ship to such a vendor we must, accordingly, cancel your order.

I remain unconvinced and unimpressed. There's a process for dealing with credit card fraud, both legal and through the credit card vendor, and neither of them involve vendors refusing sale.

It'd be fine if Lego's price in Australia was commenserate with the price in USA, but it's not. It'd even be tolerable if they accepted their /own/ argument that the cost of doing business in Australia is so high that they can't reduce their margins and then step back and let third parties succeed in delivering products here where Lego fails---but they're now blocking that avenue, too, obsensibly to 'protect consumer privacy', but really to enforce regional pricing.

Well done, Lego. Nice way to foster good will among your customers.

John

[Hey Joe]

It does seem kinda lousy. Perhaps you could try writing them to get a fuller explanation?

Prices here in China are outrageous as well, I often have stuff sent to my Mom's home in the US. Maybe you could find a friend to help you do this?

Joe

[skayen]

A follow up from Amazon (who I also queried about why they refuse to ship most lego ships to me) confirms that Lego is also restricting trade to control market prices. Nice work, lego.

Warranty and legal restrictions limit the delivery destinations for some products. The manufacturer of the item doesn't allow this item to be shipped to Australia.

Please understand that this policy is based on warranty issues, manufacturer restrictions, and Federal law, and as such, cannot be amended at the discretion of our Customer Service department.

To check in the case, if item is eligible to ship to Australia, please add the item to your cart and proceed to checkout. If the item isn't eligible to ship to a certain address, you'll receive a message saying so when entering the address. [/Quote]

Edited May 8, 2013 by skayen

[Bamos]

Lego has stopped drop shipping in the US due to credit card fraud. And they have canceled the VIP cards for some customers who do drop ship even hen it was not fraud like a gift for a family member.

Edited May 8, 2013 by Bamos

[timmyc1983]

While i have not experienced this exact problem first hand yet, i have noticed the exorbitant prices TLG charge for their products in Australia. You would have thought a company making billions of dollars profit would be able to work out how to ship their products to all their customer base cheaply, not just the European and US markets.

I went to purchase some PF kit from lego.com the other day and when i changed my shipping address to Australia, the prices literally doubled at the checkout point, yet they were giving me free shipping!! I'd much rather pay the standard $45 shipping and pay US prices.

It's unfortunate TLG has been bitten by the greed bug...

[skayen]

Reply from TLG, in part:

Due to differences in economics around the world, prices are determined by the demographics of specific countries. There are also differences in taxes, exchange rates and market value of our products. Also, the laws of a country can affect the way prices are stated. For instance, prices in the US are shown without sales taxes while in Europe the prices stated to the consumer must include VAT.

John, I’m sorry that our decision to no longer process shipments to Freight Forwarding Services has caused you frustration. Due to the unlucky incidents that happened in the past, we’re committed to protecting your personal information and ensuring the quality of our service. So if you’d like to provide us with a residential address, please call us and we’ll be happy to help you place your order again:

Apparently shipping to a freight forwarding company (actually, shipito) is a problem, but if I give a residential address then it's fine---even though I'm still paying wiht an Australian credit card. Honestly, that's a non-answer. If you're happy to accept money from an Australian credit card albeit shipping to a residential address in USA, then it should be no different from doing the same but shipping to a commerical proxy which specialises in redirecting mail---/espcially/ if I write to TLG offering to provide images of my credit card and Australian residential address.

I am actually pretty angry about TLGs insistence on keeping the Australian market insular from the rest of the world. If they're incapable of doing business in Australia while keeping costs reasonable, then they should step back and let us import lego ourselves rather than actively stopping us. Stopping us is a tacit acknowledgement that they cannot or do not want to price lego in australia at similar price points as the USA and elsewhere.

Edited May 8, 2013 by skayen

[harmacy]

So if you’d like to provide us with a residential address, please call us and we’ll be happy to help you place your order again:

'We'll be happy to place your order again' says to me that they will do it for you at the special price... Im probably wrong, but it might be worth a shot?

[Peppermint_M]

Business is business, not charity (even charity can be business!) and after thatm, Governments make it hard for them too. Taxes, charges and levies increase prices, it may be a case that shipping to a private home address is cheaper and more cost effective over sending it to another business because there would be additional charges to do so. Maybe stacked on Taxes plus the risk of fraud on the part of the company receiving the product, it could be a government edict preventing it too.

Yes, price differences suck but the US has a huge population, a great deal of competition for all kinds of products and, yes, as mentioned the Tax is not listed against the goods.

Australia has about 93% less population than the US... The maths say that it is more expensive risk-wise to advertise, ship and stock the product at the smae price as the massive country in a country where the market is magnitudes lower than elsewhere.

Not to mention that the manufacturing bases are closer in Europeancountries and the shipping costs to the US and facilities in China are less prohibitive for the company.

LEGO is out to make money. Yes, they are out to make money with their warmfuzzies ethics on product quality and company practice, but they are still out to make money. Newsflash, the company was so eager to make money back in the early 00s that they expanded at such a rate into so many markets that they nearly collapsed. Then they slashed everything down to carry on making money.

Yes, it is annoying that the cost is so high in comparison to others, yes it sucks that so far it seems economics is preventing Australasian market expansion (who knows, there might be other reasons too) but they aren't singling you out alone.

This old complaint gets tossed up at least once every few months and will carry on doing so for time immemorial for as long as the ol' US of A has a whopping great population and the rest of us are less populated than some states...

[1974]

TLG's politics on this issue is made of 100% suck. I doubt they have such high costs of doing business in AUS compared to US/EU. EU has a comparable population to US but we still pay a good deal more

Why? Because TLG can, that's why

But they should remember there was a time when the company was almost bust and time may indeed change again

I live in DK. I got money. I can pay. I often visit Portugal. "They" (as in the average income person) don't have money. LEGO still costs the same as in DK. LEGO sale is poor

I see copy brands all over, hardly any LEGO

Good business strategy?

If LEGO will not dropship, I can see a very good business for some passionate LEGO fan to do a US to AUS _private_ venture

Just charge say 10-20% on top of S@H prices, add shipping to AUS and it would be possible to earn quite a bit just dropping by the post office now and then

As long as your not a registered business I can't see why TLG should stop this

And yes, the issue WILL come up again and again and again, simply because there is a lot of angry consumers. That is btw, how TLG make their money, from consumers you know

Too many angry consumers and it could be 2004 for TLG again

[Alternator]

In NZ it was even more punishing at 383 usd... that is almost quadruple the discounted price. Since our price does include tax though it is actually $333USD with it excluded, so actually it was only over 3 times that sale price

Now a few subtle things:

The X-Wing is $400NZD, and the B-Wing is $450NZD

But in USA the undiscounted prices of both those sets is the same...

This discrepancy could be due to packaging size, maybe, but I suspect they were going to try and see what our market would bear - I'm glad they tried it with that set! (the price of bigger sets here do seem to get hit with a multiplier of x2+ though).

At the end of the day I'm pretty happy that I can get Lego here though, and there are obviously economics involved with all of this (we genuinely are a small market far away from everywhere).

My very simple response to the price of the B-Wing was to not purchase it at that ridiculous price - hopefully other people over here avoided that set as well otherwise we will continue to see those kinds of prices; given the X-Wing is a bit cheaper here one would suspect that is what happened, but they still seem to have the inflated $450 price point on the B-Wing?!?

This whole fiasco over this pricing has prompted me to consider if there really are must have sets or if I should more closely inspect the price and pass on more, I had actually been soaking up many of the 10k level sets.

unrelated I've also got a failed motor which probably is not old enough to be understandable (a year or two, but then it hasn't been used heaps) if their customer service takes care of me as I believe it will then perhaps that will be a reminder what we're getting in the higher cost deal with them servicing our region.

To the OP, I do think it was a sucky move on their part and obviously the pricing has frustrated me too, but if you can organise the address, and lego will honor the discounted price, do it.

If not then remember while you do not have the power to control what price Lego sets, you do have the power to reject the offer and walk away (It's much worse for Lego for those sets not to sell than it is for you if you don't buy them; trust me).

Just charge say 10-20% on top of S@H prices, add shipping to AUS and it would be possible to earn quite a bit just dropping by the post office now and then

As long as your not a registered business I can't see why TLG should stop this

Not sure about the different rules around the world, but if you tried that over here you would be classed as a business since you're doing it to make a profit, and so you'd be expected to pay tax on your profits... In fact isn't this effectively what "investors" in Lego are doing (except some of them have crazy markups).

Edited May 8, 2013 by Alternator

[TheLegoDr]

I think someone should sticky a comment for new/all members to see. This debate does come up quite often and instead of the moderators and other members continually having to explain everything multiple times, maybe one post that explains it all should be stickied.

I agree, it does suck incredibly. No sympathy for me since I'm in the States, but I can understand the frustration. As much as I love LEGO, if I lived anywhere else and had to pay more, I would more than likely not buy LEGO or buy significantly less. But that's just me. With the numbers LEGO puts up, one person won't be missed.

Since LEGO is affordable here, I end up buying a lot more than I need I would imagine. But LEGO can offer these prices for us and it works in their favor. I think I read somewhere that technically instead of lowering pricing everywhere, they would more than likely increase prices here to make up for it.

As far as doing it as a side business, that is a good idea. The whole drop ship idea sounds good, but at the same time I would think something sketchy to be linked to it. I wouldn't say it is fraudulent necessarily, but it doesn't seem legit. Although, the person probably should be classified as a business for it. Just think all of the VIP points you could accumulate, plus the extra money for your troubles...that is tempting. Although I would say Eastern Coast is probably the best place to do it instead of in the middle of the country like where I am.

[jonwil]

This kind of credit card fraud is a real problem (and not just with LEGO).

It involves bad guys using stolen or fake credit cards to buy items that are of reasonable value, easy/cheap/fast to ship and easy to re-sell and having them shipped to re-shippers.

The re-shippers then ship it on to someone who works for the bad guys (who is probably going to be someone low on the totem pole to obscure whats really going on) where it is then s9old on eBay or other auction/sale sites (possibly using stolen/hacked accounts) at a price low enough to move it quickly but high enough to actually make some money from it.

Real owner of the credit card issues a charge back, merchant then investigates. Only information the merchant has is credit card info (all of which is either bogus or tied to the real owner of the card) and the re-shipper details. The re-shipper wont hand over the details of their customer without a court order or warrant or subpoena or whatever. And even if they do, said information is likely useless (even if the person/address it points at is in a country where its possible to go after them, the item is likely already moved on and impossible to further track down)

[Jedi master Brick]

TLG's politics on this issue is made of 100% suck. I doubt they have such high costs of doing business in AUS compared to US/EU. EU has a comparable population to US but we still pay a good deal more

Why? Because TLG can, that's why

For a star we have Higher V.A.T in Europe. Also our combined population may be similar to the U.S but here they have to translate into loads more languages (extra cost.) America is a much more competitive market and until it becomes more competitive in Europe are products will be more expensive

[merman]

I SO agree with this issue. The sales tax in Holland and Germany are respectively 21% and 19%. That is a 2% difference. Yet, sets, especially exclusives like the X-Wing and Orthanc, are almost 15% more expensive in Holland. Our countries have depending economies and lie next to each other. Yet, the Germans are way better off than the Dutch. I committed my complaints to TLG and got the EXACT same answer as listed above. This price difference has been increased/severed since Dutch sales tax went from 19% to 21% in Octoebr 2012. TLG has rounded up the prices and use the tax increase as an excuse.

The price differences between Europe and the US are highly debatable, the differences between European countries is absolutely unacceptable. Hopefully, the ambassadors can discuss this issue with TLG.

Edited May 12, 2013 by merman

[Faefrost]

One other thing that our poor suffering Aussie and Kiwi friends have to keep in mind. The pricing is not that TLG hates this region. Regional or National pricing is based on the costs of bringing the product to market amortized over the expected number of products sold. That "Amortized over the expected sales" is where the US, Germany and Canada tend to win out.

Lets look at what is normally the worst case area, Australia. (And yes New Zealand gets it the same or worse, but the larger size makes the Aussies a better example). Our problem is we think of the problem in a 1 to 1 manner. A straight currency conversion. We assume costs are equal or are even directly relative or flat. We have heard the term "economis of scale" without ever quite understanding it.

Here is what we often fail to realize. There is a minimum base cost for entering into any countries market. It does not matter if it is the US or Ireland or Australia. The base costs of infrastructure needed will be fairly high, and at the minimum level fairly static. Distribution, transportation, marketing, etc etc. while they may scale upwards, there is always a lower or bottom threshold to them that must be in place. The costs of this minimum threshold are then divided or amortized among the expected products to be sold. Now if you are expecting one market to sell over a million pieces this mortization will be far less visable than in the market where you are expecting to sell 50,000 pieces. Yes the costs of infrastructure and delivery in the 1 million region will be greater, but the cost increases are not a straight ratio. They are a quickly flattening curve. The costs associated with going form 100,000 units to 200,000 units are substantially greater that the further costs associated with going from 800,000 units to 1 million. This is where the US and Germany win out. They are a large enough sales market that the basic costs of doing business there get very diluted amongst the shear number of sets being sold. Whereas each set sold in Australia carries a very very large piece of those basic costs of doing business.

And the sad thing is at certain levels it gets a bit self perpetuating. Australia's total sales numbers will remain lower, and hence its amortized costs more concentrated per set, in part because they are priced higher. TLG would essentially have to prime the pump a bit and effectively subsidize Australian sales with sales from another region, in order to increase overall sales numbers and allow the needed costs to be spread around more broadly locally. But here's the kicker. Many countries have very protectionist import laws that make it very illegal for a foreign company to do this sort of thing. The price of the goods must reflect the actual costs of the goods sold. I could be wrong, but I think Australia is or has been one of these type countries.

Is this making any sense?

[Hey Joe]

Is this making any sense?

Yes, you've hit the nail on the head.

Joe

[Flipz]

Is this making any sense?

Very much so, though it might be nice to have some numberless graphs to illustrate the curve you are speaking of (perhaps built out of LEGO? ) just for clarity.

What I am interested in is: what could we the LEGO fans do to improve the issue? It may or may not be legal for a company to "prime the pump", but could a group of dedicated (read: extremely wealthy and altruistic ) fans "prime the pump" by flying to Australia and buying a lot of LEGO over the course of a few months to a year? (Theoretically, of course, I don't think anyone would be willing to go THAT far to do this on the scale necessary to cause any permanent change, anyway. )

[Faefrost]

Very much so, though it might be nice to have some numberless graphs to illustrate the curve you are speaking of (perhaps built out of LEGO? ) just for clarity.

What I am interested in is: what could we the LEGO fans do to improve the issue? It may or may not be legal for a company to "prime the pump", but could a group of dedicated (read: extremely wealthy and altruistic ) fans "prime the pump" by flying to Australia and buying a lot of LEGO over the course of a few months to a year? (Theoretically, of course, I don't think anyone would be willing to go THAT far to do this on the scale necessary to cause any permanent change, anyway. )

There is not much that we the fans can do. What probably will help however will be that big new Lego factory being built in China. It will greatly reduce the transport costs that get built into that infrastructure overhead. Plus China has been very aggressive recently in negotiating very favorable trade deals with Australia and New Zealand. The Chinese factory may allow Lego products to be considered "made in China" for both domestic Chinese sales and for certain local nations such as Australia. The favorable trade deals and the Cinese Wan being directly convertible to the Aussie Dollar may allow Lego to treat the entire region as one for cost amortization, and the shortened supply chain makes it much more practical to do so. All this should lead to Lego prices falling to at least Euro levels in the entire region. ( See folks! That Chinese Lego factory is not the bastion of pure evil that some fear.)

Edited May 13, 2013 by Faefrost

[J.V.D.]

Is this making any sense?

No...

Its funny how people always come up with this "economics of scale" to justify those price differences. I am not saying this EoS doesn't exist, but its just a false argument here. Specially when explaining the differences between EU and US. ( I guess it is in part valid for Australia and co..)

In Feafrosts post I see Germany being mentioned a couple of times.. and as far as I understand, Germany is still Lego's biggest market. Bigger then the US. Now add to that already big German market, the rest of the countries in the European union... which form practically one market.. then, according to all this economics of scale, Lego should be cheaper in europe, no? Now just look the up the price of a set, any set, on S@H US and then switch to any EU country..

Transport costs?.. mmm, if I am not mistaken TLG has some factories in europe. So can somebody explain me how loading something on a truck and drive it to another european country some hundreds of kilometers away can be more expensive then loading the same thing on another truck, drive it to a harbour, load it on a ship, transport it across the atlantic, load it on yet another truck and drive it a couple of thousands of kilometers cross continent?

What is a valuable argument are taxes..; from what I understand US prices are without sales taxes ( and need to be added for some states), while EU prices, by law, must include our infamous VAT; which averages around 20%.

For this reason, and with the actual 1.30 exchange rate, I can understand and accept the 1 US$ - 1 € pricing (though its still some 10% more) for the smaller and biggest sets. Though the smaller licensed sets / battlepacks also are deviating from this 1US$:1€ the last year or two.

However, that doesn't explain nor justify the outrageous price differences we see on the mid-range sets; the typical 20US$ or 30US$ sets, that go here for 27 - 40, or even 50+ €. Yes that is right.. 65-70 US$ for a 30$ set..

So while,taking into acount the 20% VAT, the small and biggest sets show that economics of scale only play a minor role, I cannot help but wondering where the up till 80% of mark-up on the (licensed) mid-rage sets comes from... unless TLG is trying to compensate for the deals they give another part of the world..

[Hey Joe]

The fact that most retail workers and truck drivers are treated like very disposable chattle in the States should probably be factored into the argument. They earn a little above pauper's wages with few - if any - benefits.

Joe

[Faefrost]

No...

Its funny how people always come up with this "economics of scale" to justify those price differences. I am not saying this EoS doesn't exist, but its just a false argument here. Specially when explaining the differences between EU and US. ( I guess it is in part valid for Australia and co..)

In Feafrosts post I see Germany being mentioned a couple of times.. and as far as I understand, Germany is still Lego's biggest market. Bigger then the US. Now add to that already big German market, the rest of the countries in the European union... which form practically one market.. then, according to all this economics of scale, Lego should be cheaper in europe, no? Now just look the up the price of a set, any set, on S@H US and then switch to any EU country..

Transport costs?.. mmm, if I am not mistaken TLG has some factories in europe. So can somebody explain me how loading something on a truck and drive it to another european country some hundreds of kilometers away can be more expensive then loading the same thing on another truck, drive it to a harbour, load it on a ship, transport it across the atlantic, load it on yet another truck and drive it a couple of thousands of kilometers cross continent?

What is a valuable argument are taxes..; from what I understand US prices are without sales taxes ( and need to be added for some states), while EU prices, by law, must include our infamous VAT; which averages around 20%.

For this reason, and with the actual 1.30 exchange rate, I can understand and accept the 1 US$ - 1 € pricing (though its still some 10% more) for the smaller and biggest sets. Though the smaller licensed sets / battlepacks also are deviating from this 1US$:1€ the last year or two.

However, that doesn't explain nor justify the outrageous price differences we see on the mid-range sets; the typical 20US$ or 30US$ sets, that go here for 27 - 40, or even 50+ €. Yes that is right.. 65-70 US$ for a 30$ set..

So while,taking into acount the 20% VAT, the small and biggest sets show that economics of scale only play a minor role, I cannot help but wondering where the up till 80% of mark-up on the (licensed) mid-rage sets comes from... unless TLG is trying to compensate for the deals they give another part of the world..

You are forgetting some of the other critical costs of doing business. While transport distances are not as great, actual European Transport costs are 2 to 3x those of the US and Canada. As well retail shelf space and real estate for such is 3 to 4x US costs for the same. While the European pricing tell you the add on of the national VAT's, they do not clearly lay out the other embedded taxes which get added to the final price at every stage. Retail space in Europe is much more expensive than the US, Warehouse space is much more expensive. Employee work rules are much more expensive. Transportation costs and Energy costs and energy taxes are much more expensive. Little by little it adds up. Remember those base minimum costs I talked about above? Well they are not static or flat across the world. The Base costs for entry into European markets are much much higher than the same base costs in the US. (This is buffered somewhat by Europe having slightly lower escalating costs, at least until very deep penetration into the US is achieved, at which point the US costs will drop precipitously.)

Further, one of the other causes of the higher European prices can be seen in your response to me. Look at Germany. On it's own it is TLG's best client. Deep penetration, higher sales than the US, Stable finances. A fairly predictable and easy to work with transport system. And fairly sane labor laws (for Europe). Other than the high costs of energy, transport, real estate and taxes, Germany should in theory have some of the lowest prices for Lego. But because of the Euro, German sales are subsidizing the costs and sales throughout the Euro zone. How much Lego is sold in Greece or Italy vs Germany? What are the costs for operating in Southern Europe vs Northern?

And yes, there is a bit of psyschology and marketing going on in Europe. The Europeans get charged more for this specific product, because Europeans have been so accustomed to paying more for everything, that it is simply a reflex for them. Heck it's built into the politics and governance of most of Europe. 'We're willing to sacrifice and pay much more for the things we want". Isn't that the core of the European Social Welfare philosophy, and the justification for the high taxes? TLG, like every other merchant doing business in Europe, is simply following the herd in this regard. In one of the other threads I had used the term "People have mental thresholds for pricing, hard lines above which they are not willing to pay". Americans by nature and tradition tend to have much lower such thresholds than Europeans do. (Heck America was fought for and founded because one such threshold had been exceeded.). So yes Lego like every business will put forth the pricing that the market can bear in order to maximize their profits and therefore their growth.

My entire point is that International pricing is a much more complex problem than what it might seem at a casual glance. It's a great case study of an industries microeconomics applied across the globe. It also clearly shows some of the problems of the rapidly developing information age. For the first time in history, the common consumer can see the relative pricing of a product not simply locally, but across the globe. This has a sharp effect on the consumers mental thresholds of what they are willing to pay. And modern person to person transport and shipping makes shopping outside of your borders possible. But the underlying large scale microeconomics have not changed. The same old forces are still driving the regional and local pricing. These forces will eventually start to flatten as companies expand more and more to be true global operations. But they still face a huge amount of hurdles, from political / national, to shipping and energy to a host of others.

[AndyC]

Faefrost's explanation is correct, although extremely simplified. There are reams of other factors to consider, for example a direct currency conversion ignores the fact that wages differ across nations so whilst the cost may appear higher, as a percentage of typical wage it may well not be. You'd have a much stronger argument if you can find consistent examples where competing products, say Playmobil, don't vary similarly in price.

[BrickG]

You know, honestly I don't care. I view this as trying to cheat the system. I call it fair game on Lego's part.

Plus this ignores a lot of economical factors that some people have already addressed. Economics are more than just currency conversions. There's a lot of factors in play. You guys get some other stuff much cheaper than us. One reason America is so fat is our "terrible for you" food is 1/4th the price. Healthy food is 4x the price. Often it's worse. Of course that's just an example that doesn't explain anything. :P

[Minifig_Matt]

Using the straight currency conversion argument, when the AUD depreciates to 0.60 to he USD or even to 0.47 where it was in the early 2000s we should expect a doubling of LEGO prices in Australia?

[BrickG]

Straight conversion arguments are crap.

There are so many factors. I completely support Lego's decision here.

I mean the average pay in Australia is almost twice that of the united states. The shipping is much more expensive.

There's other factors like the fact that the US has fewer government benefits (often none for stuff like working illegal immigrants) creating a cheaper local economy. The US has a crappy healthcare system and in general citizens get less of everything from help to cold hard cash.

The real question is why is America so cheap? With the hundreds of factors I won't go into I'll just say it's what the economy supports. I'm honestly a bit sick of the complaints from Australians and others that use the illogical and ignorant direct conversion argument. It's just stupid.

No I'm not saying everything is equal or anything. But it's not THAT bad. If anything compared to what Australians get as average pay and what they get from their government I'd say that Lego is TOO CHEAP in Australia. They need to raise those prices.