Wal-Mart Droid Factory Sets

[Keonobi]

I was just trying to do some quick math, anyone have any concept of how many complete sets the typical Walmart store would have of these?  I'd guess somewhere in the neighborhood of 30 sets * 5 packs per set * 3700 stores * $17 per = about $9.4 mil gross sales.

[JACKOFTRADZE]

I was just trying to do some quick math, anyone have any concept of how many complete sets the typical Walmart store would have of these?  I'd guess somewhere in the neighborhood of 30 sets * 5 packs per set * 3700 stores * $17 per = about $9.4 mil gross sales.

Kenobi,
To further detail/illustrate your evaluation WL would expect around a 45%-55% profit margin on a non TV promoted item like this. Hasbro is probably selling these to WM in the ballpark of $8.50-$9.00 but to keep it clean and easy just say 50%. So WM would make around $4.7 Gross profit if your numbers were correct.
(Keep in mind guys this is all ball park estimation)

To figure out what Hasbro made start out by dividing the retail price by 4. That will give you a ballpark idea what it cost to manufacture. That pans out to be $4.25 give or take. Once again for simplicity if we stick with the 50% rule above Hasbro made half of what WM did $2.35 million on this one SKU.

WM is probably getting at least 10-15 per set per store on average but no of us will ever know the exact number but this should illustrate how some things work.

Good job on the math/production run Kenobi!

[Keonobi]

Wow, I figured the first reply would be "my store doesn't get any exlusives, so your numbers are #$%#@%$^".   

[CorranHorn]

Wow, I figured the first reply would be "my store doesn't get any exlusives, so your numbers are #$%#@%$^".   

No that will be the second reply 

As a backup to what JOT has said, Wal-Mart as the biggest retailer in the nation (the world actually) has tremendous buying power, they often make or break many products solely on the determination of selling the product or not. Hasbro has indicated this in the past and it has been referenced in business news many times over the year. So it's certainly likely that this price point is set by Wal-Mart as at best the explanation JOT provided or at worst a perversion of tremendous proportions. If this set is anything like the last set which was reported as clearancing out all over the country, WM and Hasbro will be disappointed in the overall results.

[CHEWIE]

Does that make sense to everyone? So it's a little of both that's responsible for the price, the retailer and manufacturer.

Yeah, it makes sense.  I actually worked with some of the wholesale purchasing with Walgreens for a while, so while I'm not an expert on the subject, I do have an idea of how it works: 

Sure, a retailer has to agree to a price - that's the way a vendor relationship works.  What I am saying, is I doubt that Hasbro is passing these off to Wal-Mart at basically the same price as last year. 

Anways, my whole point was that it's not soley Wal-Mart that dictates the price.  They HAVE to include a markup that makes it worth their while, otherwise there is no reason for them to carry the product.

Back to the sets... I hope I pass on them.  I really do.  Other than the two protocol droids, and the Darktrooper, these suck. 

[Adam_Pawlus]

I was just trying to do some quick math, anyone have any concept of how many complete sets the typical Walmart store would have of these?  I'd guess somewhere in the neighborhood of 30 sets * 5 packs per set * 3700 stores * $17 per = about $9.4 mil gross sales.

I can pretty much guarantee Hasbro isn't making 111,000 of each 2-pack, as your numbers would estimate.  Since we don't know the markups-- margins on Hasbro Star Wars toys tend to be pretty thin, history shows-- they may not be making quite what you think.  I think Kenner 1990s items did some items in the 100k range based on leaked data, but verrrrry few exclusives were that high.   (As in, I've only heard of one in particular with those kind of numbers, and I haven't been able to get a second confirmation on it.  A lot of the 12-inch exclusives were supposedly closer to 20k.)

Based on last year's various exclusive numbers as printed on some areas, I would guesstimate the run is 30k-45k sets (150k-225k individual 2-packs), tops.  With the higher prices, it might mean that Wal-Mart insisted on a smaller run and passed the anti-savings associated with a reduced quantity along to us.

My Wal-Mart got 4 of this year's sets.  Last year, most of my local stores got 0 (that I saw on visits every 2-3 days), but one got about a dozen which languished for a few weeks.   I may be wrong, but didn't Hasbro also say this run was going to be lower than last year's while at Comic-Con?  If accurate, that explains the higher prices and probably means my numbers are <i>way</i> too high.

[Keonobi]

Thanks Adam, I meant to imply that I had no good handle on exactly how many sets were received by the stores (I haven't seen the new ones yet).  Maybe the three closest Walmarts, to me, "lucked out" last year, as the way I recalled it, they had a whole endcap filled with these.  IIRC each tray had two complete sets, and they easily had 15-20 trays (30-40 sets +).

[Darth_Anton]

Wal-Mart tells Hasbro what they'll pay, not the other way around. My wife's father knows this for fact.

Sure, a retailer has to agree to a price - that's the way a vendor relationship works.  What I am saying, is I doubt that Hasbro is passing these off to Wal-Mart at basically the same price as last year.  I think you're saying the same thing though.

So, let's look at last year as an example.  Let's assume that the sets Wal-Mart sold for $9.96 were being purchased from Hasbro for $6.00 each, roughly a markup of 66%, which gives them a decent GP of 39.76%.

Now, let's assume that Wal-Mart needs to make that SAME GP (or better) this year.  Let's assume they want it to be a flat 40% GP.  If they are selling the sets for $17.00 each, then they are paying $10.20 for each one they order.

That comes to a MARKUP from Hasbro of 66.67% they are passing to Wal-Mart.  Does Hasbro really need to raise the price up that much?  I think that's insane.

Granted, these numbers are based on assumptions, but if the price increases to the retailer, they have to pass it along to the consumer.  Wal-Mart had to agree to the price of course, but I don't blame the retailer for marking something up to keep up with what the supplier is doing.


*DISCLAIMER - My math is correct, I think.  But I could be making a mistake... multi-tasking while at work.  

No. We're no saying the same thing. What I'm saying is that Wal-Mart goes to Hasbro and says - we'll buy your product for $X and if you don't like it, we won't buy it and you'll loose half of your profit because we're the top retailer. Assuming inflation, it only cost Hasbro about a penny more per unit to make these over last year and I guarantee that Hasbro is not charging 70% more for these. This is WM price gouging, not Hasbro.

No offense, but you have no idea what you're talking about.

Agreed 100%.

Anton, I think your logic is very flawed my friend.  If it were true, then Wal-Mart would say "We're only going to pay $2.00 for each one, so we can sell them for $2.97 each."

Look at it this way... Hasbro is doing essentially the same thing with the Target 2-pks - the price is a few bucks cheaper, but that's most likely because there isn't a big Dark Trooper part included with each one... unless of course you're saying that Target goes to Hasbro and says "We'll buy your product for $X and if you don't like it, we won't buy it and you'll lose half of your profit because we're the SECOND top retailer."

I'm only going by my Father-in-Law's experience dealing with Wal-Mart for Rubbermaid in the years surrounding Sam Walton's death. He had been in charge of selling Rubbermaid's new line of products for 15 years. After his 1994 presentation with WM (two years after Walton's death,) the buyers sat him down and said, "great presentation, but here's how it's going to work from now on, we'll buy for $X." Granted, it was less than a dollar below Rubbermaid's wholesale price per unit, but the end result would have production jobs moving from the USA to China. WalMart didn't care. Rubbermaid had meetings, did cost analysis and determined that without WM, they were done for. They had no choice but to capitulate and lay more than 2000 US workers off. Apparently many of the other sellers for other companies had the same experience in the following years (this was learned at wholesaler conventions.)

Since my In-Law also sold to Target, Sears, K-Mart etc... he ran the numbers. Leveling the purchase versus sales versus profit playing field (taking into account WM's larger bulk discount over K-Marts etc...) WM's exclusive "deal" was earning them an additional 15% on top of standard profit despite the fact that the products were being sold for a fraction of a percent less (at least in Target's case.) In other words, WM forced Rubbermaid to sell to them for less, but didn't pass the saving onto consumers. I don't know how else to take that story.

Edit: mistakenly used MSPR in stead of wholesale.

[Phrubruh]

So are you guys seeing these things selling or are they collecting dust? I walmart I checked down here had them only for two days.

[jedi_master_sal]

I say we make WM eat these things and force them to clearance them for us. $17 is way to much for these especially when much of it is reused stuff. At most they should be $12. I'm sure their argument would be that the packaging is what cost so much.

SOOOOO, don't make idiotic packaging that drives up costs so much that your core consumers for said product bitch about it before it even comes to retail.

Hasbro is partially to blame for this, but WM certainly takes a share in the blame here to.

I'm going to do exactly what I said I would. That is to buy a set at retail, then hope it sells on clearance, buying another set, then taking it right back to get my money back from the full price set.

One way or another, they are going to lose that full price amount on me. This is not something I normally justify doing, but WM and Hasbro are getting out of hand. Have either looked at the economy lately? Shouldn't they be thinking about making things more AFFORDABLE than the other way around?

Take action with your dollars folks. It's the only way we're going to really see Hasbro and WM change.

[Adam_Pawlus]

Actually, the packaging is probably some of the most efficient Hasbro has done-- it's tiny and generic, they seem to be reusing the same background in every single one.  They didn't seem to spend a lot of money here.   If anything, I prefer the smaller form, it takes up less space in my trash can.

Is $17 too much?  That's subjective, but looking at other Wal-Mart exclusive sets (particularly Hasbro Marvel) it's about par for the course.  2 figures at $8 a pop is $16, plus a bonus part... it's not outlandish so much as it is unfortunate.  Last year's sets just provided a much better value, $60 got you 13 figures rather than $85 getting you 11, plus the 2008 ones had more changes if you're a nut for such things like me.

If Hasbro was being up-front about the run being lower, clearance won't be an issue.  And these are affordable-- $17 isn't exactly a lot of money, particularly when you look at the 3 3/4-exclusive tally for the rest of the year ($630 and counting, assuming the tags at Comic-Con had the right prices).  I'm not saying it's "nothing," $85 is a lot of scratch, but if you're already buying everything anyway it's really no different than if these had been put out as Battle Packs or basic figures or what have you.

It's just unfortunate that they're that much compared to previous 2-packs, particularly that this is not a "deal."  (But if you want pain, look at the 7" Marvel Legends 2-packs at Wal-Mart.  Those things are like $26 a pop!)  I gotta wonder how much is Hasbro, how much is WM, and how much if any is a smaller MOQ.

...for the record, I'm happy with my full price set although I really do wish Boba was the "movie" deco on the "animated" mold.  Which I probably won't shut up about.  Oh well.   BL-17 made the collection, Droids cartoon-y things make me happy.

[Keonobi]

I just don't get why Walmart's reaction to last year was "Oh, they didn't all sell, lets order less".  From what others have described, Hasbro developed the idea, and I presume they hoped the Dark Trooper was meant to drive sales, but it really feels like they made an interesting figure, but then priced themselves out of the market.

Instead of improving the margin on a small run of figures, they should have done what Walmart does best, VOLUME.  Here's my idea.  Make 5 packs that people will buy mulitples of, price them to move ($10-$12) and watch the money roll in.  But, how do you make packs that people would buy multiples of?

Pack 1  Stormtrooper and New Rebel Fleet Trooper (make him with a brown shirt, so you can repack on a single card the blue shirt version)
Pack 2  Snowtrooper and Hoth Ground Crew  (I'm thinking that once the Imperial troops entered the base someone was trying to fight them off...)
Pack 3  Scout Trooper and Rebel Endor Trooper
Pack 4  Tie Pilot and Generic Rebel Pilot
Pack 5  Death Star Trooper and Yavin Honor Guard

5 packs that people would buy multiples of.

[CHEWIE]

Great call Keonobi - I think what really bites on these even more than the price is the figure selection.  I was thinking that some trooper vs. trooper pack-ins would have been a lot better. 

[Adam_Pawlus]

The problem/question is this:

Will more collector Army Builders buy more Troopers...
OR...
Will more general people buy Vaders/Lukes/Bobas/etc.?

I'm not saying I know-- or any of us do, really-- because we're never going to buy those goofy Saga Legends Vaders that Hasbro keeps making and selling by the bushel.   Exclusives are not sold exclusively to collectors, and it seems that their goal with 2-packs is to put one "general fan figure" in there so someone buying for a kid or a gift or whatever will go "I don't know what this guy is, but I want to spend $10/$15/$20 and this has a Darth Vader in it so at least I know they'll like that.  I am a wonderful aunt/uncle/creepy dude on the subway."  (Examples: Vader/Palpatine in the Squall sets, the Order 66 packs, most comic packs.)

And the days of the $10 2-pack are *over*.  The $13 one is probably limited.  I'm sure they'd be a huge hit if sold at cost or a loss, but unfortunately those kinds of loss-leaders are uncommon.  Until Christmas rolls around, anyway, things go crazy in Nov-Dec.

Troop collectors do eat up a lot of figures, sure, but the appeal of generic figures is pretty much exclusively focused on that audience, whereas a someone with an actual specific name tends to have appeal to a more general audience.  I'd personally prefer to get something new OR troopers over Vader #57, but that's me.  That, and you never know how "full" a trooper collector may be.  I've got PLENTY of Death Star Troopers to the tune of my not wanting any more, ditto Rebel Pilots due to the various specific ones being made over the past 12 months-- but again, that's me.  (How many did we since 1/1/08?  Like 15-20?)

You generally want a figure in each set to appeal to a group outside the likes of us, and while I personally would love to have a couple of those, DS Trooper and Yavin Honor Guard?  Really?  Wow, I dunno but that sounds like retail poison to me.   On the other hand, hopefully Hasbro is listening and says "Hey, you know what'd be awesome?  Clean shaven Legacy Hoth Rebel vs. Snowtrooper."

[Keonobi]

I'll admit #5 on that list was simply to fill a fifth spot, and probably would sit. 

I think the point that Walmart and Hasbro have a larger (much) audience in mind than simply the couple dozen collectors that have posted negative comments on this, and other, sites is valid.  However it may be just my impression, but exclusive items are generally geared more towards collectors.  My specific character selections might not be the right mix (there's a reason I buy toys, not sell them), but my impression is that exclusives are meant to get people who know about them into that store, as opposed to a competitor, to buy items.  I think there is a major market for interesting collections of figures in the $15-$25 range.  They work for great presents.  But the casual buyer of those sets isn't going to care if they get it at Walmart vs. Target.  So they won't know the set they buy is or isn't an exclusive.  Maybe I'm missing the advertisements, but with the exception of the Target Imperial Shuttles, I can't recall seeing an significant advertising for any big box exclusives.  Meaning those exclusives are aimed at people who are actively looking for information on new releases; adult collectors and the most avid of children.
Maybe I'm undermining my own point by saying that the market for these sets is small, thereby justifying a smaller run...  And clearly there isn't the untapped market for trooper/generic sets that I imagine, else Hasbro would be going after it harder.  Just seems to me that Walmart and Hasbro didn't accomplish what they should have done; convince people to buy toys (the margin on a toy not sold is a lot lower than on a toy that does sell).

Adam, we'll get this straightened out just as soon as the Waltons hand the keys over, ok?