If you are selling LEGO pieces or sets on eBay, Bricklink, or BrickOwl then you’re buying and storing an inventory somewhere in your home (e.g. closet, spare room, basement, sauna–okay, please don’t store your inventory in your sauna). Inventory refers to goods an individual or business keeps in stock in order to sell. Let’s consider some of the common benefits and costs of building and maintaining a LEGO inventory.
Benefits of building and maintaining your LEGO inventory:
Time
Having inventory in hand gives you flexibility and control over order lead time. Order lead time begins when the buyer places an order and ends when they receive their purchase. For example, a customer buys ten dark gray minifig shortswords on Monday. If the buyer receives the package on Thursday, then the order lead time is three days.
Seasonal Demand
LEGO parts, and especially LEGO sets, increase in demand in Fall and Winter months. Building up your inventory in advance of the holidays can help you meet the seasonal demand and prevent product shortages.
Uncertainty
Your inventory serves as a buffer for uncertainty, helping you weather fluctuations in supply and demand of LEGO sets and pieces.
Economies of scale
In some cases buying LEGO pieces in bulk can decrease the amount of money you spend on each piece.
Appreciation in Value
Sometimes LEGO pieces or sets may increase in value over time.
Costs of building and maintaining your LEGO inventory:
Dollars
LEGO inventory doesn’t appear out of thin air! You have to spend money to buy LEGO sets or pieces to resell.
Space
LEGO inventory occupies precious space in your house or apartment. Lucky for you, though, LEGO is generally smaller than many other products (e.g. golf clubs, televisions, cars, etc.). Many LEGO resellers store inventory on a bookshelf, in a spare room, or in the basement.
Time and Labor
Even if you are a one person operation, maintaining your LEGO inventory takes your time and effort. Some examples of labor include: researching sets and pieces to buy, receiving inventory, checking the quality (making sure “new” LEGO pieces aren’t “used”), and pulling, packing and shipping orders.
Deterioration, Damage, Depreciation
LEGO pieces, like anything, can incur damage. Damage and deterioration will at best decrease the value of your LEGO pieces. At worst, you may have to dispose of pieces all together. Since the LEGO resale market is just that–a market–your pieces or sets may depreciate in value over months or years.
Theft or Loss
Not much to say here but if theft happens, you lose your money and your investment. Also, you or someone else with access to your inventory may misplace pieces over time or during a move.
Holding Cost
Keeping inventory in your possession costs money if it’s just lying around collecting dust. Holding cost includes some previously mentioned costs. One holding cost is storage cost (i.e. rent). Holding cost also includes opportunity cost. If too much of your money is tied up in inventory, then you may miss out on future purchasing opportunities. Also, the longer you keep an item in inventory, the more likely the item will incur damage, theft or loss.
Work Cited:
Muller, Max. Essentials of Inventory Management. 2nd ed. New York: AMACOM, 2011. Print.