Intercept Shield Update
Returning visitors can click the links below to jump to the updates you've not seen. First time visitors catching on on the situation, start at the top and work your way down.
- Intercept Shield Update -- Tuesday, December 23, 2014
- Intercept Shield Update -- Wednesday, December 24, 2014
- Intercept Shield Update -- Thursday, December 25, 2014
- Intercept Shield Update -- Friday, December 26, 2014
- Intercept Shield Update -- Saturday, December 27, 2014
- Intercept Shield Update -- Monday, December 29, 2014
- Intercept Shield Update -- Tuesday, December 30, 2014
Apparently, the launch of the long-awaited Intercept Shield Double Protection Box was over almost before it even started. We are hearing from our US contact at Lighthouse Publications that for some inexplicable reason this popular product was launched early by Lighthouse with almost no inventory on hand.
Imagine what would happen if Pineapple announced the re-launch one of the pPhone, a best-seller that had been off the market for four years. Scheduled for a January 2015 debut, the pPhone actually arrived at Pineapple’s US warehouse in mid-December 2014 and Pineapple began offering the pPhone for sale early to its retail customers without advising resellers of the early availability. Resellers, upon learning of the early release by Pineapple, scrambled to get opening pPhone orders placed with subsequent orders to follow quickly once the situation had been assessed. Three days later, on the last Saturday before Christmas, these retailers (with throngs of people lined up outside their doors to get new pPhones) begin to offer the pPhones received the day before for sale. The initial shipment of pPhones sells out in just a few hours. Retailers begin taking back orders for pPhones for fulfillment out of subsequent purchase orders of pPhones sent to Pineapple over the weekend. But, on Monday nothing is heard from Pineapple. When the resellers contact Pineapple on Tuesday to get shipping dates for the pPhones they need to fill backorders, they learn that there are no more pPhones available. A Pineapple representative adds that perhaps an equally small number of pPhones might be available two months away in late February (but he is not sure about that). The Pineapple representative further advises that a communication has been sent to Pineapple HQ in Germany but he is not sure whether or not Pineapple executives have read the communication or are otherwise aware of the issues. Lacking any information of substance and having heard nothing from Pineapple HQ, he speculates that retailers may be given answers to their questions by a Pineapple HQ executive who is planning to attend the upcoming Florida trade show in two weeks (but he is really not sure about the getting answers part of that either).
Change “Pineapple” to “Lighthouse” and “pPhone” to “Intercept Shield Double Protection Box” and you pretty much have the situation that played out in the numismatic supply market this past weekend. From what we can tell, the re-launch of this product was done with just a few hundred boxes available. From innuendo from our US Lighthouse contact we think it was around 500 pieces. Wizard received 180 pieces. Both numbers are paltry sums that are frankly rounding error in the market for this product.
Despite consulting quite a bit with Lighthouse on their endeavors with Intercept, their plans to launch early with so few pieces were not revealed to Wizard until after the product had effectively sold out. We have asked for answers and solutions from Lighthouse. So far we have neither. But, we will remain persistent with them and share what we learn here. Stay tuned.
Okay so late yesterday our US Lighthouse contact told us our guess of 500 pieces was in fact the exact number produced for the launch. We were also told that the production lot (maybe) coming available in late February is similarly of just 500 pieces. No information was shared about availability beyond this possible February production lot. It doesn’t sound like Lighthouse has planned anything beyond that. Otherwise, we don’t have any new news. We are told that Lighthouse US has communicated our concerns to Lighthouse headquarters in Germany. But no response has been received back and we are told it still isn’t likely that we’ll be given additional information before the FUN show in two weeks. So far, not a single peep out of Lighthouse HQ. No public statement. No apology. No explanation. No solution. No answers.
Merry Christmas everyone. No news today, which I guess isn't a surprise given it is Christmas. In the absence of more information from Lighthouse, let’s look at the numbers and see just how epic of a miss this is for Lighthouse.
We heard about the early release of the Intercept Shield Double Protection Box through one of our customers. The customer told us he’d received an email from Lighthouse that the Intercept Shield Double Protection Boxes were now available and he wanted to know if we had them. We sent a note to our contact at Lighthouse to confirm that they were indeed available. We received a note back that the boxes were available but that “[Lighthouse US] did not receive the quantities that [Lighthouse US] had ordered.” So, we hurriedly sent an opening purchase order. But, we only advised 684 customers that the product was again available (due to the statement from Lighthouse US about not receiving requested quantities). These 684 customers were the ones who had previously asked us to let them know when the product was back in stock and provide their contact information for that purpose. Now, our complete customer mailing list is over 100,000 collectors. Had it not been for the comment about Lighthouse US receiving less than ordered quantities we would have heavily marketed the product including notices to all 100,000 plus customers as well as marketing in other channels. As bad as it is to have the several hundred upset about the product selling out before you could place your orders, we feel fortunate that we did not further advertise the product and have tens of thousands of disappointed customers.
Even though we only told 684 people that the product was available, we still sold out of our allotment in 11 hours, 35 minutes and 50 seconds. It took just 30 people to buy all 180 pieces. That's an average of 6 Intercept Shield Double Protection Boxes per customer. Thus, the launch quantity of 500 Intercept Shield Double Protection Boxes was only enough for 83 customers. With such a small amount (and just a portion of that for Wizard), even out of the small group 684 customers we notified, 654 of you didn’t get any. Some of you wanted us to bring product to the FUN show for you. Others of you were glad to know the product was back in stock and planned to include some in your next order in the coming days or weeks once the holiday was behind you.
Now let’s look at the numbers from another angle. The Intercept Shield Double Protection Box’s purpose in life is to preserve the condition and value of certified coins. Certification of coins is primarily a US practice with NGC and PCGS leading the way. NGC certifies the most coins and they passed the 30 million mark on tax day earlier this year. PCGS is currently at just over 29.5 million coins certified. Add to that the unknown quantities of coins that ANACS and ICG have certified (likely at least a few million each), plus add in what a host of third tier slabbing companies have put in assorted branded holders, and finally add in the self slabbing options such as the Coin World Premier Holder and Lighthouse’s own Everslab. We don’t know what that ultimate number is but it should easily be 70 million coins in slab type holders.
The coins that make it into grading service holders are typically the best coins. They are the highest valued coins and the coins of the highest graded. All are ideal candidates for the preservation qualities of the Intercept Shield Double Protection Box. Moreover, that they now reside in such holders is evidence that their owners are willing to spend additional money on these coins to properly preserve them. In the case of PCGS and NGC, grading fees start in the teens and go up from there. Even the Coin World and Lighthouse Everslab self-slab options represent a willingness to spend a couple of bucks to better protect a nice coin. Virtually all of these 70 million or so slabbed coins is a coin who’s owners have recognize them to be more valuable and worthy of protection and who’s owners have exhibited a willingness to spend a several dollars each to provide them with that protection. Despite the fact that the popular Intercept Shield Double Protection Box had been off the market for 4 years, Lighthouse set out to address that 70 million market potential with just 500 pieces. Folks, it is head scratcher for sure.
Well folks, it was another day of no news from Lighthouse. We appreciate your continued support and patience with the situation. Between dealing with your communications on this issue and trying to enjoy a little time off with our families for part of the day yesterday, we have further pondered a curious statement from our US Lighthouse contact.
Our line of questioning that is relevant to this statement had to do with our asking how they could be producing lots so small and so slowly. The excuse given was something to the effect that “making the box is very labor intensive and [Lighthouse] has had difficulty hiring adequate staff in [Lighthouse’s] factory in China.” That’s probably not the exact words despite the quotation marks but it is as close as I can get from remembering it a couple of days later (and certainly very close if not exactly what was said).
Let’s think about that statement a minute. If Lighthouse is having trouble hiring staff, the staff must be very low paid. For the most part, people pass over low paying jobs for higher paying ones not the other way around. Sure, sometimes there are other factors involved but pay is typically the big one. Second, if these boxes are so “labor intensive” that Lighthouse’s factory can only push out 500 every couple of months, then they must be largely, if not entirely, made by hand. This makes absolutely no sense. This is a box that should be made in large quantities on heavily automated equipment. There must be hundreds if not thousands of factories around the world with the capability to mass-produce this box and yet Lighthouse has chosen to have it hand made in small batches.
But, that explains another issue we had with this box. We were initially shown a prototype of the box at the Chicago ANA back in August. At that time Lighthouse told us the MSRP was likely to be in the $20 range. Our feedback was that that was too expensive, particularly given that Lighthouse has a much smaller discount to resellers than did the prior manufacturer a portion of which we pass through to our buyers. Even though we told them there target MSRP was way too high, they ended up with an MSRP that was 30% more than even that overpriced target. We now know the reason for the dramatic price increase is that Lighthouse has chosen to make extremely small production runs of only a few hundred boxes and have them largely made by hand. One mystery solved; quite a few more to go still.
Thank you for your support in this matter. The frustrations you are expressing are felt by us many times over. We are doing everything we can to get answers and a solution as soon as possible. Unfortunately, we don’t have anything more from Lighthouse to report. By this time, the prior manufacturer would have been air freighting in Intercept Shield Double Protection Boxes to fill the back orders and maintain customer goodwill. Given that we’ve heard nothing official from Lighthouse on this issue, we don’t expect a quick ultimate resolution to the issue either.
Many of you have asked how we will distribute the product we get (if any) from the next production lot. That’s a good question. There’s really no good way to do it given it too will be only address a tiny fraction of the demand. It is assured that no matter what we do almost everyone will not get product and will be disappointed.
We could limit order to one box per person but this ultimately wastes your time, our time and fills the coffers of the shipping companies as those of you who need more than one box have to come back and order multiple times to ultimately get the supply you need over several production lots.
We could just put it on our website and let it go first come first served again. But now that you all know that there is short supply and likely will be for some time, what lasted a few hours last time will no doubt sell out in minutes this time. Those who aren’t actually reading their email when our email hits their inbox will miss out. So that doesn’t seem fair either.
We could manually take down names and numbers of interested people and sell them product in the order that the names are added to the list. But this requires a lot of manual work on our part to maintain the list, contact people one by one and wait to hear back from one person on quantity and confirmation before moving on to the next person. This would require a level of personnel that we don’t have and the cost is not factored in to our pricing.
Whatever method we chose, we wonder how we can prevent opportunistic individuals from attempting to game the situation with quick large orders or putting multiple names on the list and buying as many of the short-in-supply-but-high-in-demand boxes and then seeking out those of you willing to pay considerably more to have the boxes sooner.
Unfortunately, we have no idea at this point. Ultimately, how we do it will depend on when and how many boxes Lighthouse is able to make available to us for all of you, how quickly after that there will be more and their ultimate plan to meet the demand.
We received a call this evening from our Lighthouse US contact with a verbal update. He has advised us that no more of the Intercept Shield Double Protection Boxes will be produced before the 500 scheduled to arrive in the US in late February. At this point, Lighthouse is unable/unwilling to accelerate production of more of these boxes as doing so would require delaying production of some other product. Our contact stated that Lighthouse is working on a schedule of production for the factory for March 2015 and thereafter. He has indicated that he will apprise us of the production schedule in writing once finalized. Likely, this means April is the earliest possible for a subsequent delivery. Product made in March would take about a month for the boat ride from China, US customs clearance and then transportation within the US.
Today brought both a bit of good news and a bit of new information from Lighthouse. It was the first firm signal we have seen that Lighthouse HQ is now on the job and beginning to take action to address this situation.
In the category of good news, our Lighthouse US contact let us know that Lighthouse has freed up enough additional Intercept Shield Double Protection Boxes to fill your back orders. We will be shipping these tomorrow! Our warehouse staff has instructions to make sure all back orders are shipped before we close to ring in the New Year. So, look for shipping confirmations and tracking numbers for all of your orders tomorrow.
In the category of new information, our contact advised us that Lighthouse HQ has now scheduled a significant production run of these boxes in Lighthouse's Chinese factory for the March/April time frame that will result in them being in the US sometime in May. While the date is later than we had hoped, we are encouraged to hear that the size of the production run is more appropriately matched to the demand for this product and more along the lines of what should have been produced initially. While we still don't know how things will play out with the February delivery, it does appear that if we all can hold on until May, things will begin to normalize a bit.