Lego tried and failed to make oil-free bricks. So what's next? Millions of people buy, sell and resell Lego through BrickLink - a kind of marketplace for bricks and brick designs. So what can the eBay of bricks tell us about Lego's future challenges?
Produced and edited by Tom Hannen. Additional production and filming: Petros Gioumpasis. Camera: Josh Ausley & Cedric Pilard
00:00 What makes Lego unique?
01:34 The ecosystem of Lego
03:08 Rise of the AFOL - adult fan of Lego
04:11 What is Bricklink and why did Lego buy it?
05:30 A toy company, or an entertainment company?
08:09 Can you make money as a Lego reseller?
11:49 Lego and sustainability
14:34 A single product company that has grown remarkably
#lego #legoland #mattelinc #hasbro #toy #plasticbricks
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Lego's fundamental
business model is it buys ABS plastic
for about $1 a pound and sells it back to us
for about 50 times that. There's probably more
Minifigures on the planet than there are humans. I mean, there has to be. I buy and sell new and used
Lego by the individual piece. Currently, I'm down
to 1.965mn pieces. Lego is one of the most
extraordinary companies I cover. It competes in toys against
the likes of Mattel and Hasbro, which have thousands of
products and hundreds of brands. And Le
go, basically, just has
the brick and the Minifigure. I think it's quite
unusual to have a toy that was invented
in the late 40s, 50s that people are still playing
with today with the same kind of passion and joy. They've grown pretty
impressively, especially in the last few years. They're growing
faster than ever. That's pretty rare in business
for a company to grow that much and change that little. So at one point Lego was
the largest manufacturer of tyres in the world based
on the number of t
yres that they were producing. It's almost a software
model for profitability. The margins are so
large, it's almost like a software business. The company is making big
efforts to become sustainable. And they do own one service
that might provide an answer, but it's complicated. As a seller, they've not
done a single thing for me. When you think about
Lego, you probably think of kids buying
new sets, but it's become much more than that. It's really an ecosystem now. The products come with games,
TV shows, films, and apps alongside them. They've evolved
from a company that simply makes a box of
bricks to really a talent agency for Minifigures. They really do try to create
vivid Minifigures that people want to spend time
with in worlds that they want to
immerse themselves with. And that's been very
successful for them. It's also no longer
just about children. All over the world
there are loads of resellers buying and
selling bricks, Minifigures, and whole sets, and
plenty of adult custom
ers as well for some
really big sets, like cars or architecture. When I was studying Lego,
and this was many years ago, they had just done
a research project where they found that the
average adult fan of Lego spent 20 times more on Lego
than the average family that bought Lego for their kids. I have around £50,000 worth
of Lego stashed in my house, my parents' house, and my
university accommodation, which the mother's
not as happy as I am. So the first children
to play with Lego were the kids o
f late 60s, 70s. Once those children had
grown up and become adults, we start to see the emergence
of the AFOL, Adult Fan of Lego. Was a Lego fan for a few
years when I started. And during lockdown
I picked it up, so then I started selling it and
then realised there was quite a lot of money in it. So since then, I've
kind of kept it up, and it's just got bigger
and bigger each year. I had gotten up
to 2mn, and then I had a sale at the
beginning of the month. And I sold 191,000
pieces in four day
s. So I'm a medical student
at University of Sheffield, so I'm studying to be a doctor. And I do this to fund my
degree and my accommodation. I started taking it seriously
coming to these shows under a year ago. And in that time it's
over tripled in value. Oh, thank goodness
for the internet. Now, people could find other
AFOLs all over the world, connect, start going to
these events together, start sharing pictures
of what they were doing. Crucially, also selling
with each other, trading, and th
at kind of thing. So it's like a revelation
for a lot of people. BrickLink is a site that you
can go to to get used Lego sets, Lego parts, new Lego
sets that people bought and want to resell. It's a sprawling kind
of eBay for Lego. My computer system, we're
going to go to BrickLink, which is my marketplace. That's where I sell everything. And I've entered in
the ID of the part. BrickLink was originally
started as a trading website. And mostly it was a place where
people could come and trade Lego
. BrickLink is part of a
large ecosystem that's sprung up around Lego where
people resell Lego, where people even make new
types of pieces that can combine with
Lego pieces to make different kinds
of constructions. It eventually grew
to what it is now, which is the largest
online database outside of the Lego Group itself. BrickLink started to do
something really interesting, which was design
sets that you could build with the pieces
available on BrickLink. Some of those set
designs were really g
ood. And I don't think
it's a coincidence that Lego soon after
BrickLink started doing this bought BrickLink. It was starting to intrude
in an interesting way into Lego's core business. Lego is, by some distance,
the world's most profitable toymaker. It's involved in this kind of
alchemy of taking cheap plastic and turning into
it expensive toys. It flirted with
bankruptcy in 2003 but has come back stronger
and stronger since then. Where I see that
taking Lego is a way from simply making
boxes o
f bricks to being much more of
an entertainment company and much less of
a product company, that I see them not
really competing against Mattel and
Hasbro any more but competing against Universal
Studios and Disney now. And that is a much bigger
market to compete in than simply making plastic toys for kids. Lego's revenues are
more than 50 per cent bigger than Mattel and
Hasbro, but it's a fraction of the size of Disney. And when you speak to Lego
executives and the founding family, you can hear
their
ambition is getting bigger. They've got Legoland theme
parks, stores, and apps. So how far can they
take the brick? I think the large multinational
entertainment companies are beginning to realise that they
have a new competitor in Lego. Lego is putting
out feature films. Lego is putting out TV shows. Lego is creating the characters,
the intellectual property behind those, but Lego is
increasingly inserting itself into Disney's core markets
in a very successful way. There was once this
bi
g worry that Lego, like other toymakers, would be
disrupted by digital devices, iPhones, and games consoles. But today there are
more physical sets than there have ever been with
a dizzying number of bricks and Minifigures. And almost all of them come
with a digital or entertainment tie-in, so there's
so much for fans to choose to buy or collect. The adult fan community has been
hugely influential on, I think, Lego as a business. Not just the
products themselves, but then when we look at the
Leg
o movies, for example, I mean, these probably
wouldn't exist if it wasn't for AFOLs
making stop motion animation with Lego, which they
were doing long before Lego decided to make a film. The Lego movies
are a playful way of showing both kids and
adults using the bricks, but there's big business
behind this, too. People really want a specific
brick, a specific colour, a certain Minifigure, and
they're prepared to pay for it. When I first started
I took $1,000, and I bought a collection
from a tee
nager. He was 16, and he
wanted to buy a car. And his parents said put
some skin in the game. Put some money towards
the downpayment, so he sold his entire
Star Wars collection. And I purchased it
for $1,000 cold cash. I was sweating the entire time. I was thinking I can't believe
I'm dropping $1,000 on Lego that my son isn't
going to play with. Within two weeks I
had sold a third of it and made my money back. And I thought, wow,
I can really do this. I can really make
this into a business, and
it can become profitable. So originally I
worked in a shop, and I saved every penny I
made from that job in the shop and put it into this business. So you know, about £10,000
of my own money went in. And now, it's actually
self-sufficient, which is great. So I've now been able to
quit that part-time job, and I do this as my
full-time part-time job. And I reinvest almost everything
I make back into the business. And hence, how it's
growing at such a speed. All right. And Miss Susan just
wants two
of those. I moved here in March
of 2022 out of my house and moved into 1,400 sq ft.
And I went from 500,000 pieces to over 2mn. There's a lot of scepticism
in the reseller community as to what Lego really
wants to do with BrickLink. Do they want the customer data? Do they want to develop it? Or do they want to essentially
shut down something that had become competition? Lego has always been
a nullifying factor in the second-hand community. They don't like us. They don't want us there. And they
are very quick to
put the kibosh on anybody who is selling Lego off-market. The status of BrickLink is
very much up in the air. It was hit by a big cyber attack
last year that hurt businesses like Ginny's badly. So I need 1,500. Not quite there. So I would love to be all
bright sunshine and roses about my business. The reality is that this
has been my very worst year in business in seven years. So when November
1st came around, I realised I wasn't going
to be able to make my rent. So I put a 50
per cent off
sale on my store, which is the reason I
sold 191,000 bricks. BrickLink is the world's
largest online community and marketplace for
adult fans and we're proud it's part
of the Lego Group. It currently has 1.6mn members
and more than 18,000 stores. And we will continue to
invest in the platform and grow membership
and engagement. We've introduced the successful
BrickLink Designer Program, recently launched a My
Own Creation Shop pilot and made improvements
to the marketplace. BrickLin
k represents
a challenge for Lego in terms of bricks
that already exist, but Lego also faces a
big sustainability issue with the new bricks
it's producing. Their bricks are made
from plastic, which makes them highly durable. The last time I visited
their headquarters they gave me this brick
from the 1950s, which still fits perfectly together
with this one from 2024. But they still have a big
sustainability issue to solve. Lego is fundamentally a product
that is petroleum-based. I mean, ABS plast
ic has a
core element of petroleum. Their entire product
is based on oil. I don't see a way
that they can truly reduce without offsetting. One of the analyses I used as
an example was Xbox versus Lego. Which has the greater
environmental impact? I took the median
Lego set, which has a little over 400
pieces, median in terms of cost and complexity. And I compared it to
the use of the Xbox, which is about 300 watts. And figured if you played
with both for nine hours then the environmental
impact w
as about the same. If you continued
playing with the Lego it was actually better
for the environment, used less fossil fuels than
if you continued playing with the Xbox after nine hours. We want children to
inherit a healthy planet. We're determined
to play our part in making that happen by,
one, making our products and packaging more sustainable. That means overcoming
some unique challenges. Materials must be durable. They must also meet the highest
standards of safety, quality, and precision.
Two, minimising the
environmental impact of our operations. Three, creating new ways to
keep Lego bricks in play. We know there's no silver
bullet, but we've set targets, we're tracking our progress,
and being transparent. Lego is investing massively
in sustainability, but they've had setbacks. We broke the story of
how their big attempt to make fossil-free ABS plastic
was abandoned after they worked out it would lead to
more emissions in total as they needed to buy
new machines, new moulds, et
cetera. So now they're looking
at working gradually to make each chemical part
of the plastic greener. And they're looking at giving
their bricks as long a life as possible, working out how people
can resell, recycle, and reuse them. Because at the core, despite
all these apps and films, they're still all
about the brick. They are really a
striking example of basically a single
product company that has grown dramatically in
many different directions while still staying focused
on that single pro
duct, generally, without acquisitions. There are plenty of
questions for Lego to answer on sustainability,
on digital, on reselling, but they have this
incredible strength. They're a family-owned business
from the Danish countryside beating big listed US companies. Parents like buying their kids
a toy that keeps them away from screens. If they can keep that up while
dealing with the other issues, they still have the
recipe for success.
Comments
I see no problem for LEGO to use plastic.. No one is going to throw away Lego when they finished it. It can be make into other design for years to come or resell so other can enjoy it. This is same as the argument with plastic christmas tree is more environmental friendly than cutting a tree from forrest every year.
Hi, its Tom - the LEGO reseller you interviewed! Thank you so much for having me. If anyone is interested in learning more about LEGO reselling, I have recently created this channel - I will be sharing more about the business over on here (after my university exams!!). Thanks! :)
Useful for my assignment thanks Financial Times
I don't know why, but lego fascinated me as a child. Of all computer games I played, I estimate 5 to 10% were lego themed, and it was never weird to me that those games depicted plastic figures. Lego sets were my favorite presents. As an adult the only reason I'm not into lego anymore is that I can't afford it. I don't know what it is about them that makes everyone so excited. You could probably write a phd thesis on that.
Lego basically has monopolized ABS plastic and made it a drug as addictive as brown sugar. Hail King plastic👑
Lego is doing with Bricklink what Ebay did with Craigslist (or variations in other countries): Making sure that it's JUST as successful that no competitor can take over that market - but not more than is needed for that. And by owning the platform, Lego (or Ebay for that matter) can make sure that they dictate the limits of the market that platform covers. Most importantly, they make sure that Bricklink doesn't opens up to alternative bricks.
What a wonderful little film about Lego which is very interesting and informative. Thanks so much for including a clip from our video "Theseus Takes a Walk". ✿(◠‿◠)✿
Lego e o legado passado...como será o legado no futuro?! É certo que as peças de lego dão asas à imaginação ...mas os bonecos são esquisitos!! O que está por trás de blocos da Lego?! E o que a Lego tenta mudar ...além do seu bloco de plástico?!
Is this the guy that does the great art explained videos??? Voice is identical?
Some statements in this were factually incorrect. Or perhaps they misspoke. Bricklink was never a trading site. Lego group doesn’t owe sellers anything. Being a seller on Bricklink doesn’t make you an enemy of Lego group. While Lego company could potentially ruin Bricklink - so far they have not (fees have stayed the same), they have actually improved the site - getting rid of Bricklink inferior custom products. I’ve been using Bricklink since it was brickbay and I am pretty sure it was never a trading site - it was always a selling site. Lego made one good movie and a couple of niche shows. They’ve failed miserably at apps. Stick to the brick and they’ll keep having success. Try to become a multimedia company and they will fail.
Yes, environmental concerns about Lego VS XBox in hours/played when deciding what Christmas present the kid will get. This is a totally valid, logical, and future-positive way to raise a human offspring.
✌️
Lego bricks are never becoming co2 so who cares. They are meant to be kept around forever
😊
Thanks for adding the background music track. It really helped me concentrate on what the speakers were saying!
That dude is never going to be a doctor might as well carry on with his lego business. He'll be so much happier 😂🎉😊
How much plastic in Lego vs an EVs?
Yet Lego don’t even have a patent on their core product. You can buy identical bricks from companies like Cobi (🇵🇱🇬🇧) or countless others from 🇨🇳 whose products are cheaper (and sometimes better?).