How much does TRU, Walmart, Target pay for their Lego?

[Brickbuilder0937]

Um, natelite, Asterios, didn't you see Ice's post about no more flaming. Please stop before we have to lock the topic or something worse.

[Asterios]

Do you pay like $20,000 a barrel of oil or something? I guess it's time to save up the plastic bags from grocery stores, not becoz I care about the environment but becoz they are expensive. :D

Vat is value added tax. Retailers pay tax on profit and is called corp tax. Vat is a form of consumption tax which consumers pay to consume. Guess who's the real 12yo here? Corps do not pay vat or sales tax on their inventory. Go look it up. What "value" do you even add on an already finished product?! You have no concept of a value chain, no idea about how things are produced, no idea about commodity markets, talk crap about stuff u can't back up, and spout garbage all day long.

If lego is so expensive, I guess everything else that tru sells is subsidizing it's lego sales. If you're a business man you would know the first thing to do is to cut dead weight. But what do I know? Guess all those lego must be causing customers to also shop for googlie bands??? I wonder why even carry any lego at all? Why borders or bn even bothered with lego when they are already losing profit margins currently? Bring in another low margin good to sell and speed up the demise? Common sense fails you!

Final fact. I guess walmart's too dumb when it comes to lego. They squeeze pennies out of every supplier just so they can sell lego at a loss. Yup. That makes super perfect sense. While TLC makes 34% gross margin on the lego it sells to retailers, walmart bend over to TLC just so it can sell lego at a loss to consumers. If anyone believes that, I guess they also believes elvis is still alive and aliens exist. Yup, they are advanced and smart enough to have travelled millions of light years to end up under a scalpel.

VAT is charged to all parties, retailersa have to pay it so they add it to their cost and charge the consumer, you are inferring that VAT is sales tax which it is not, like I said don't believe me then go ask on BL or scared of the truth? Also if your in the US then the truth will smack you in the face when Obama is able to pass his VAT law.

read it and weep:

http://en.wikipedia.org/wiki/Value_added_tax

[Asterios]

Um, natelite, Asterios, didn't you see Ice's post about no more flaming. Please stop before we have to lock the topic or something worse.

Not flaming, just trying to educate a child in his teens and has no clue about Import duties or VAT.

[natelite]

Um, natelite, Asterios, didn't you see Ice's post about no more flaming. Please stop before we have to lock the topic or something worse.

Not flaming, just trying to educate a child in his teens and has no clue about Import duties or VAT.

referring to yourself? your flaming is so old and lame. i'm not even going to try anymore because frankly you need spanking not educating.

btw, i'm still waiting for your "proof"...other than your words of course kiddo.

[Asterios]

and I told you go ask, your under the assumption all countries are like the USA they are not they have import fees and VAT taxs which the USA has none, you haven't shown any evidence to prove other wise, you showed us what LEGO's base price for a set was and the USA avg. mark up is only 10% of that or so, so where is your proof?

[natelite]

where is YOUR proof? nuff said.

[Asterios]

where is YOUR proof? nuff said.

here is my proof (you remember this pic you so fortuitously showed):



the pic shows LEGO 's wholesale price and you compare said price to USA retail and it is not even 10% more, unless your saying LEGO charges differant rates to differant countries since the Canadian Dollar is almost equal to the US dollar.

[redacted]

[natelite]

unless your saying LEGO charges differant rates to differant countries since the Canadian Dollar is almost equal to the US dollar.

there's your answer. [redacted]

and this...

Do you pay like $20,000 a barrel of oil or something? I guess it's time to save up the plastic bags from grocery stores, not becoz I care about the environment but becoz they are expensive. :D

Vat is value added tax. Retailers pay tax on profit and is called corp tax. Vat is a form of consumption tax which consumers pay to consume. Guess who's the real 12yo here? Corps do not pay vat or sales tax on their inventory. Go look it up. What "value" do you even add on an already finished product?! You have no concept of a value chain, no idea about how things are produced, no idea about commodity markets, talk crap about stuff u can't back up, and spout garbage all day long.

If lego is so expensive, I guess everything else that tru sells is subsidizing it's lego sales. If you're a business man you would know the first thing to do is to cut dead weight. But what do I know? Guess all those lego must be causing customers to also shop for googlie bands??? I wonder why even carry any lego at all? Why borders or bn even bothered with lego when they are already losing profit margins currently? Bring in another low margin good to sell and speed up the demise? Common sense fails you!

Final fact. I guess walmart's too dumb when it comes to lego. They squeeze pennies out of every supplier just so they can sell lego at a loss. Yup. That makes super perfect sense. While TLC makes 34% gross margin on the lego it sells to retailers, walmart bend over to TLC just so it can sell lego at a loss to consumers. If anyone believes that, I guess they also believes elvis is still alive and aliens exist. Yup, they are advanced and smart enough to have travelled millions of light years to end up under a scalpel.

[redacted] your proof consists of half facts and made up stories. on the other hand, operating margin is kept almost constant for most businesses. margin here is 30%.

btw, that pic was snapped in early 2009 during the toy fair. notice that's the endor base set. by your logic, the margin was much higher since CAD:USD then was 1:0.77. suddenly the "facts" per your "logic" seems to support my view! US$70 vs retail of US$100! whee...

[Ice]

Topic temporarily locked until further notice.

[Ice]

Topic has now been unlocked.

[locutis]

I work for a company that does retail in stores, wholesale to dealers, and mail order to consumers. We purchase our product from the producer who also sells directly to customers, to other distributors, and through the internet themselves. The producer is located in Canada, and so are we.

Firstly, let me clarify the taxes issue. When we order product from the producer in Canada, we pay them 5% GST (Goods and Services Tax, or VAT in other countries). In Canada, we get to claim that back from the Government against GST we collect when we sell it. If we collect more taxes than we pay, we have to remit the difference back to the Government. If we pay GST and then export the product out of the country, we don't collect GST from the consumer (out of country, no taxes) and we receive that amount of GST we paid back from the Government. GST is a consumption tax, net paid by CONSUMERS in Canada. Businesses do NOT pay any amount of GST in Canada that is retained as an expense by the business. All GST in Canada (paid on inventory, maintenance, repairs, phone bills, gas, etc.) is rebated back to the business that paid it. I can confirm that in Europe it is a different case. We purchase product from Britain and are regularly billed VAT, which we have to first prove that it will be exported out of Britain in order to be exempted from paying. Any business in Britain though does pay the VAT, and it is NOT rebated back to the business, so any product purchased by a business has the tax embedded into the price, and must be charged to the consumer as well.

We also import items from the United States and other countries, and when it comes into our country, we pay the 5% GST on the product, which as indicated above we get credited back. There are NO duties which we pay for products we bring into Canada. A large percentage of things that are imported into Canada have no duties, only GST applied when importing (and PST in some provinces, which is another tax paid to the province).

Now, I will address the discounting issue. We carry product which the producer also sells, and this producer is the only one who produces this product, ie: they have a monopoly, similar to Lego. Many products are available to us that the producer also sells, but a handful are exclusives that only that producer, and sometimes a partner dealer can carry. No other dealers or distributors may carry that product. Different products are intended for different "markets", and thus have different margins.

Some products have only a 0-2% margin, we can carry them only as a convenience for our customers, and we make NOTHING selling them. Some products which the producer sees as "better" have an 16-18% margin. These products typically have a retail price of between $300 and $3000. Most products have a 22-24% margin. Some products, which are deemed as "giftable" and intended for very large retailers (think Shoppers Drug Mart, Wal-Mart, Toys R Us, etc.) have a 36-42% margin, because these retailers refuse to carry anything with less than 40% (and keep in mind, these larger retailers actually get a higher margin than that, the numbers are OUR discount levels).

We can sell the product for any price we wish, however, we are frowned upon when we advertise a discounted price. Many consumers of our product automatically assume we have a 50-70% markup on our product, because of the simplicity of the product and the raw cost of the materials. This is not so.

I know for a fact that one product which we carry, which has a retail price of $25.95, cost to us is 24% less, and it costs the producer about $5 to manufacture. When I say costs $5, I can guarantee it's no more than that, and could possibly be even HALF that, because I've seen what they do there. As well, many components and manufacturing processes used in this low cost-to-manufacture item are used everywhere else in other products, and it's only the packaging which differs on this product.

Sometimes when the producer is overstocked on an item, they will contact us with a large inventory and offer us to take the entire lot for a very deep discount (like 80-90% off), which we can then offer at a discount ourselves.

Now, let me address the loss-leader philosophy. We never sell a product for a loss to bring in customers, because our market is very competitive for business, and someone will ONLY buy that one product you have on sale, and nothing else in our business. It is not like the grocery store example stated (at least in our industry this is the way it works). You would go broke in our industry selling loss-leaders. Now, on the other hand, sometimes you gauge inventory incorrectly, and are stuck overstock with items. You want to clear them out for various reasons, so you say "okay, we made $10,000 selling the ones we already sold, and the remainder cost us $X.XX , so let's work this profit into the cost of the remaining items, and sell them off to get rid of them, and call it a bad buying decision and move on". Using this example, on a $1000 item which we receive 24% discount, it costs us $760. If we sold 50 of them, and have 50 left, and work in the profit into the cost of the remaining, they cost us $520. We could sell them at $600 each, bringing a total net profit for the whole item carried to $80 per, even though we sold half at less than cost. Some people would look at the price and say "wow, they must get 80% off to sell it at that", but that's not the way it works.

Any questions?

[Asterios]

Any questions?

yes you make no mention of things like the Customs Broker Fees on product coming into Canada? nor the customs paid for items coming into Canada not made in the USA or Mexico?

[locutis]

Any questions?

yes you make no mention of things like the Customs Broker Fees on product coming into Canada? nor the customs paid for items coming into Canada not made in the USA or Mexico?

Our shipments come in via Fed-EX. Fed-EX does not charge a customs brokerage fee, it's included in their cost of delivery service. I believe last time I ordered, Lego S@H also used Fed-EX, so the same applies to them.

In regards to customs paid for items not made in the USA or Mexico, for the items our business sells, they are exempt from duties regardless of where they are made. In regards to Lego, last time I came back from the USA with a load of Lego for myself, Canada Customs and Revenue Agency (CCRA) billed me for just GST and PST on the amount I paid, converted into Canadian dollars at the rate applicable on the date I brought it back into Canada. They did not charge any duty for product being brought back into Canada from the United States, which was made elsewhere.

Please note, in North America, we have in place what is called the North American Free Trade Agreement, which allows goods to flow between any of the countries which are signed on. Currently this includes Canada, the USA, and Mexico. Goods made or finished in any one of these three countries can pass into any one of the other countries free of any duties.

[locutis]

I should add that when our business imports a large amount (think container from a ship) we ask a broker to prepare and submit the paperwork for us.

The charge for a broker to do this is NOT a percentage of value, but simply a flat charge. Usually about $100 for an entire filing. So, if Lego is importing a ship container of Lego, the brokerage cost to them is $100 for the entire load, which is very small per item which would be inside a container.

[locutis]

Lego is made from ABS plastic, and in case you are interested, raw ABS has a tariff classification of:

HTS 3903.30.00.00
Acrylonitrile-butadiene-styrene (ABS) copolymers
Reported quantity: kg
Import duty 6.5% of raw cost

However, if it is a finished toy, it should fall under chapter 95 of the HTS tariff classification, which means zero import duties into either USA or Canada, regardless of where it's made.

Unless you can find differently, I would say Lego falls under this HTS code as a finished product:
9503.00.00.80 Tricycles, scooters, pedal cars and similar wheeled toys; dolls’ carriages; dolls, other toys; reduced-scale (“scale”) models and similar recreational models, working or not; puzzles of all kinds; parts and accessories thereof ................. Free of all import duties

This is in my HTS import schedule "Harmonized Tariff Schedule of the United States (2009) – Supplement 1" which may be out of date. Your mileage may vary.

[locutis]

Further to the comment regarding import duties into Canada, CCRA HTS Agenda classifies Lego as:

9503.00.90.21 - - - - - -Reduced-size ("scale") model assembly kits for trains
9503.00.90.22 - - - - - -Reduced-size ("scale") model assembly parts and accessories
9503.00.90.23 - - - - - -Other trains, battery powered
9503.00.90.24 - - - - - -Other trains, not battery powered
9503.00.90.29 - - - - - -Other reduced-size ("scale") model assembly kits, whether or not working models
9503.00.90.39 - - - - - -Other construction sets and constructional toys
9503.00.90.42 - - - - - -Other construction sets and constructional toys of plastics
9503.00.90.49 - - - - - -Parts and accessories

All are free of all import duties and tariffs into Canada.

Canada's HTS Agenda can be found here:
http://www.cbsa-asfc.gc.ca/trade-commer ... u-eng.html

[natelite]

ah...i can already tell that you and i are going to be good pals! welcome locutis!

[locutis]

ah...i can already tell that you and i are going to be good pals! welcome locutis!

Thanks natelite.

I always try and backup my statements with facts. I found a quote a while ago, and it really applies to this thread:

"Condemnation without investigation is the height of ignorance."- A. Einstein

[Asterios]

Any questions?

yes you make no mention of things like the Customs Broker Fees on product coming into Canada? nor the customs paid for items coming into Canada not made in the USA or Mexico?

Our shipments come in via Fed-EX. Fed-EX does not charge a customs brokerage fee, it's included in their cost of delivery service. I believe last time I ordered, Lego S@H also used Fed-EX, so the same applies to them.

In regards to customs paid for items not made in the USA or Mexico, for the items our business sells, they are exempt from duties regardless of where they are made. In regards to Lego, last time I came back from the USA with a load of Lego for myself, Canada Customs and Revenue Agency (CCRA) billed me for just GST and PST on the amount I paid, converted into Canadian dollars at the rate applicable on the date I brought it back into Canada. They did not charge any duty for product being brought back into Canada from the United States, which was made elsewhere.

Please note, in North America, we have in place what is called the North American Free Trade Agreement, which allows goods to flow between any of the countries which are signed on. Currently this includes Canada, the USA, and Mexico. Goods made or finished in any one of these three countries can pass into any one of the other countries free of any duties.

But you still paid taxs on the LEGO you bought in the USA and brought back to Canada? yes, thats what natelite said you don't do. as I said I've had product shipped to Canada, and they ended up paying taxs and/or customs on the product they received, even complained about it asking why i couldn't list item price as $20, so please explain that?

[locutis]

But you still paid taxs on the LEGO you bought in the USA and brought back to Canada? yes, thats what natelite said you don't do. as I said I've had product shipped to Canada, and they ended up paying taxs and/or customs on the product they received, even complained about it asking why i couldn't list item price as $20, so please explain that?

I don't understand your question. Any Canadian pays 5% GST (or HST for BC, ON, etc.) on anything they buy in Canada from a business, regardless of where the store is. You also pay this same tax if you bring it back from the USA, unless you stay long enough and what you bring back is tax-free upto a certain limit. However, there is no import duty or tariff on any Lego brought into the country. However, it's added onto the price after you purchase it, NOT included in the price like in Britain (where it's called VAT and included into the price of something in the store).

Please clarify exactly what you mean, because what you typed doesn't seem to make sense. Sorry if I seem inept, but I don't understand it.

Let me go back to the beginning of this thread and re-read all of the posts, and make notes, because it seems to me that the subject has now changed. I could be wrong, but that's the impression I get.