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2017 worst year yet!
Worst year since I started 9 years ago.
Total sales less than half my best year, my prices considerably below 6 month average, in my best year they were +15% now at -15-20%
Which puts current profitability at less than 20% - which lies mostly in unsold inventory. It was at 50% with less than 25% in unsold inventory.
Oversupply, falling prices mostly to blame. See some crazy sales going on so guess it’s across the board
fortunately my overheads are very low and not dependent on this to live! Well at least my tax bill will be low :)
How about all of y’all?
Total sales less than half my best year, my prices considerably below 6 month average, in my best year they were +15% now at -15-20%
Which puts current profitability at less than 20% - which lies mostly in unsold inventory. It was at 50% with less than 25% in unsold inventory.
Oversupply, falling prices mostly to blame. See some crazy sales going on so guess it’s across the board
fortunately my overheads are very low and not dependent on this to live! Well at least my tax bill will be low :)
How about all of y’all?
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> Which puts current profitability at less than 20% - which lies mostly in unsold inventory. It was at 50% with less than 25% in unsold inventory.
You can't make a profit until a sale is made. Unsold inventory is an asset, so should be on your balance sheet, not in your profit & loss ;)
> > @Graham said:
> > Which puts current profitability at less than 20% - which lies mostly in unsold inventory. It was at 50% with less than 25% in unsold inventory.
>
> You can't make a profit until a sale is made. Unsold inventory is an asset, so should be on your balance sheet, not in your profit & loss ;)
Depends which accounting method you use. On the 'cash basis' method in the UK, stock would already have appeared as an expense in your accounts, thus affecting P&L.
Same with LEGO, I aim to just make a profit ... I think in 2017 I "made" $1200 ...not quite minimum wage hahaha
Thanks much for the compliment- much appreciated :)
@pwpeter
That is very cool, actually an area I was hoping to head, sorting out a space for people on the autistic spectrum to get together and build. One of my kids has Asperger’s and I could see that being very beneficial. We’ll see it’s been a plan for a few years now!
@JayB-SoCal
Thanks for the input, not being particularly computer savvy I realize that is quite a weakness as this endeavor really calls for the ability to analyze data. Over the years I have noticed the more successful stores do seem to be more able in that area.
@all
thanks for the responses, not about to quit anytime soon, just sharing my observations;) I finally got a decent accountant who switched me to the FIFO (first in first out) method, hence my (perhaps erroneous) reference to profit being in unsold inventory? Just kind of the way I see it anyway
FIFO: my personal suggestion: if you wanna listen to your accountant: fine, but do keep in mind that (assuming you do) you consolidate, if you have old stock of 'something' and you keep adding to the older lot(s), in the end, you'll be selling your 'new' stock at discounts > discounting based on 'lot' age ain't the right move IMHO, unless you do it 'manually'.
Secondly, people part out all the time, very often at 'appearance' of sets, obviously prices are 'low' then, because hundreds of other sellers do, and everybody has the same reaction: I need to keep moving things (and so they drop their prices).
Items that do stay in stock are not 'lost', oftenly they just need to reach a point where 'availablity' runs a bit lower (a couple of years after appearance) and 'bang' they sell. And if you wait longer, then your availability grows (number of lot's wise), so over time, you're available 'variaty' increases and that variaty might actually trigger 'better' orders in the long run. So it's not black and white, running a store requires 'tuning' and a lot of reflection and market investigation (which most sellers hardly do).
Personally, I do not consider my unsold inventory as a 'loss' or a 'blocked amount of money', it's simply 'future benefit' (then again, it's just a side job, I have a decent 'dayjob' so my sales do not affect my 'earnings' that much).
That said, 2017 hasn't been a good year for me either, it was my first 'full' year as 'proffesional', but my worst year in 5 years 'sales wise' (so I was actually doing 'better' as 'hobbiest' before), doesn't mean I didn't make any 'benefit' though, more then I assumed/wished/thought actually.
Market flow (and the amount of sellers), my personal occupations besides LEGO and some other factors added to the 'drop' of sales, but I don't consider it a 'final' call, I know I stocked a lot, lot's of stock remained 'sealed', which in the long run might actually give the same profit (or more), but less work (wrapping up a set is faster then picking 200 parts and packing them up).
One thing is clear though: the availibility of lose LEGO parts is increasing, the amount of sellers with 'reasonable' stock is increasing, so the 'pie' has to be cut into more pieces, for now: live with it and 'cope', time will tell...
So my only suggestion: be 'smarter' (as in: how you operate) then 90% of sellers and you'll still be running 'good' a couple of years from now, while others might have 'given up'. But do keep in mind there will be a 'crash' on LEGO (just as with the Bitcoin) sooner or later, by that time you need to make the right moves... It's like playing 'chess' with 'stock' ;-)
Cheers, Eric
As to AFOL's and their spends, that's quite hard to say, some might spend a few hundred per year, others thousands, simply because not all people have the same budget to spend on it. On top, sites like this also attrackt 'short term' buyers like parents, buying stuff for their kids, from a couple of purchases to a few dozen, while their kids are in the age to 'play' (but that 'play' timeframe is clearly getting smaller). There have been years where I could easely spend 5to700 per month just collectingwise, an additional 1000 for resellingpurpose. Nowadays, the 'collecting' amount has dropped towards maybe 200 per month, and I stay low on 'proffesional' investments as my current (unlisted) stock is that large I can sell for years without buying a single box. But that doesn't mean it can quickly change if I can grab good deals, or if I manage to free up time to sort and list and clear out some sleeping stock.
I do know one thing when it comes to marketflow: the pile of 'over stock' is getting bigger by the year, and sooner or later that bubble is going burst... see what @leopard37 says: how quickly the averages are dropping on most pieces > Quite true, and only proves that the averages on part outs drop. When I look at SW partout values, many hardly generate a 20%-30% markup, from an economical point of view, that's not even viable when looking at the time spend to part out, stock and pick orders.
On most sites there is no data available of the growing 'unsold' stock, I do notice however, that compared to a couple of years ago, the amount of 'retired' sets put on clearance in local toy stores is getting bigger again (a few years ago hardly the case), which means there is overstock, that stock is being bought by resellers, and ends up on sites like this, generating overstock on those sites...
Just look at the available data on BL: 2 years ago there was 275 million of parts available, now it's 476 million. That's 200 million parts of 'extra' stock in 2 years... I call that unbalanced: even though sales wise, new and existing buyers are buying more then a couple of years ago, the unsold stock keeps growing and that's not 'sane' market wise. Sets as well: early 2016: near 700,000 sets, now near 1,5 million... Sleeping stock is simply too quickly outgrowing 'demand', in any economic business, it will cause prices to drop...
If those 'big boys' started to see turnover drop drastically, you can bet they will also look to compete on price and it's at that moment that the bubble will probably burst (for everyone else). The market will reset eventually.
The absolute worst thing you can do is buys sets to part-out just because they're available at a good discount.
> i'm not seeing this trend but we have alot of overhead due to the counseling cost we have for our employees. we mostly work with young adults with autism and adhd to prepare them for a job and learn social skills :D
Very nice to read this, thank you! I'm diagnosed Asperger myself. What you are doing is great, wish I had such an opportunity when I was 14!
Good points as always. I switched to FIFO to avoid (legally) a very large tax bill!
Accountant (a professional I might add) I used for 2014 dropped a zero so that a $xxxxx profit read as a $xxxx profit - resulting in reporting 10% of “actual” profit! Which I didn’t notice at the time due a pretty complex return...
The only option was to defer the pain for later by switching to FIFO - still left a hefty bill!
I see no point in NOT consolidating inventory, and ending up with multiple lots of the same item?
As an observation I have noticed that when parting out the same sets that I did earlier, that part out value of most current sets is falling on average 10% per 3-4 months using BS (BL) six month average.
I am also holding on to complete sets, rather than part them out - for same reasons as you.
With no overheads I can certainly “weather the storm” :-*