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LEGO’s New Long Tail

THE LONG TAIL

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PATTERNS The Danish toy company LEGO started manu- This requires transforming the supply chain
infrastructure, and because of low volumes
facturing its now famous interlocking bricks
in 1949. Generations of children have played LEGO has not yet fully adapted its support LEGO
LEGO Factory builds a
with them, and LEGO has released thousands infrastructure to the new LEGO Factory model. LEGO has to provide Long Tail community
of kits around a variety of themes, including Instead, it simply tweaked existing resources + and manage the around customers who
platform and logistics are truly interested in
space stations, pirates, and the Middle Ages. But and activities. LEGO users can make that allow packaging niche content and want
over time, intensifying competition in the toy In terms of a business model, though, LEGO their own designs and delivery of custom- to go beyond oΩ-the- Thousands of new,
customer-designed kits
shelf retail kits
made LEGO sets
industry forced LEGO to seek innovative new took a step beyond mass customization by enter- and order them online LEGO Factory substan- perfectly complement
tially expands the scope LEGO’s standard sets
paths to growth. It started licensing the rights ing Long Tail territory. In addition to helping = Customers who build of the oΩ-the-shelf of blocks. LEGO Factory
to use characters from blockbuster movies such users design their own LEGO sets, LEGO Fac- LEGO Factory new LEGO designs and kit oΩering by giving connects customers
post them online become LEGO fans the tools to who create customized
as Star Wars, Batman, and Indiana Jones. While tory now sells user-designed sets online. Some key partners generating build, showcase, and designs with other cus-
such licensing is expensive, it proved to be an sell well; some sell poorly or not at all. What’s + content and value sell their own custom- tomers, thus becoming
LEGO has not yet fully designed kits LEGO Factory’s existence a customer match-
impressive revenue generator. important for LEGO is that the user-designed LEGO allows users adapted its resources depends heavily on the making platform and
In 2005 LEGO started experimenting with sets expand a product line previously focused to post and sell their and activities, which are Web channel increasing sales
user-generated content. It introduced LEGO on a limited number of best-selling kits. Today designs online optimized primarily for
the mass market
Factory, which allows customers to assemble this aspect of LEGO’s business accounts for only =
their very own LEGO kits and order them a small portion of total revenue, but it is a fi rst LEGO Users Catalog
online. Using software called LEGO Digital step towards implementing a Long Tail model
Designer, customers can invent and design their as a complement—or even alternative—to a
own buildings, vehicles, themes, and characters, traditional mass-market model.
LEGO Factory aims to generate small revenues from a large number
choosing from thousands of components and LEGO Factory leverages production and logistics costs already of customer-designed items. This represents a valuable addition to
dozens of colors. Customers can even design the incurred by its traditional retail model traditional high-volume retail revenues
box containing the customized kit. With LEGO
Factory, LEGO turned passive users into active
participants in the LEGO design experience.

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