Can Dealers Compete With Ebay?

I had a fabulous time working for two "retired" Chicago stamp and coin dealers in 1970s Pompano Beach, Fl. Started when I was 18, and kept working until completed college. They paid their rent by maintaining a very significant difference between buy and sell prices.

World stamps sold at -50% of Scott, except for British (and colonies) which were -40%. I think there were some exceptions, for some reason, I recall early Italy sold at -90%. I introduced them to foreign stamp catalogs, and these were accepted at 100%. I am sure using such doctrinaire prices allowed smart collectors to gain good items, but my bosses kept their shop going for over a decade. I helped the surviving wife sell off a vast inventory into the mid-1980s.

When it came to a purchase, it was for a very small percent of catalog, with attention to the expensive items. Sure, if you had MNH VF Graf Zeppelins, they'd work with you for a 10% brokerage fee, but otherwise, not too much for your stamps. Oftentimes the collection obtained an offer which could be recovered with the sale of a few high end items.

One of my bosses told me that if collectors wanted to obtain top dollar, they were welcome to invest all the time needed to learn the trade, and pay their own bills for rent, electricity, salaries, etc.

Attending local stamp clubs might have given you a better shot at higher prices, but most folks didn't have the patience to study stamps. Frankly, they are not as easy to master as most coin collections. Today, the NET has made information easily obtainable, but I wonder if a few dealers with shops will continue to thrive, albeit in large urban centers, simply because they've amassed the knowledge that gives them the advantages of my old masters from the 1970s?

PS I mention the VF MNH Graf Zeppelins because we had a set, and laid it out for shots with our Polaroid Camera...came back the next day, and discovered Palmetto bugs had eaten small bits of the gum...oh the humanity!

Can dealers compete with ebay -------No , because the market place has created 100's if not 1,000 's of SEMI-ILLITRATE dealers who now set themselves up on ebay and have become successful power sellers .
I have watched dozens of these ebay DEALERS out bid me for lots at major auctions and act as vacuum cleaners picking up all the large lots of bulk material that was my hunting grounds for years before ebay came along . They have push up the price at auctions to a ridiculous level that they have cut each others profits down to the point that their profits now depend on shipping overcharges .
Angry ,who me ,not really it just push me to buy and collect highly specialized studies and collection that almost all of them don't understand . At major stamp auctions I usually sit with a few dealer friends and we all just shake our heads watching these so call ebay DEALERS overbid and cut each others profits bidding on lots .
I thought by now a lot of these want-a-be dealers would fall by the way side as profit margins between high stamp auction prices and low prices on ebay would squeeze them out of business ,but I am wrong quess a lot of people enjoy working for $5.00 a hour in the stamp trade .

Oh, the irony.

Very interesting observation Floortrader.

I've bought half a dozen collections at auction this year, thinking I'll use the age-old tactic of taking what I want and breaking down the rest to fund the stamps I've added to my own collection. Having taken a much closer look at ebay, it would actually have been much cheaper to have bought exactly what I wanted at 'dealer' prices. Not unusual to find good sets going for 10% cat. from these guys.

What have you got to be buying at to turn a profit once your overheads are factored in!? Less than 5% cat? Not easy, even for wallpaper sets, let alone quality.

All the successful power seller stamp dealers I know earn much more than $5 an hour ...

A lot of well known big time show dealers also sell on ebay. Eric Jackson and Doubleday are there and so are many others. ebay is just another venue for selling, but if a dealer is smart they will find some sort of venue online as the traditional ones are waning.

Not only do many big dealers sell on ebay, they also frequently buy there as well. I've been outbid by Eric on more than a few occasions.

re.

SEMI-ILLITRATE

now that is funny,

Pagoda

why am I thinking about the Pot calling the Kettle Black,

Pagoda

I have a dealer friend who is moving into the auction business big time. He states it's because where the "money is" at this time. While I understand where floor trader is coming from, it is not only ebay dealers who are invading the auction buyer territory previously only attended by advanced collectors and dealers. Savvy everyday collectors can attend those auctions online and bid up those prices too. c'est la vie - these days.

Hey, maybe we've got it all the wrong way around...?

Buy all your stock on ebay, submit it at a traditional auction and then watch the ebay dealers bid it up. Brilliant!

In the past, only dealers would buy large lots and collections to break down and sell, as the regular collector would have no outlet for the items in the collection that they didn't want or need. Now, collectors are able to buy these lots and then sell the parts they don't want on E-bay, either as a whole collection or broken down to individual lots. These fundamentally changes the economics here. Dealers can no longer buy a collection for pennies on the dollar to break up and sell, as the same people they are planning to sell the high priced items from the lot are now willing to buy the whole collection. Sure, in the past you could have bought the collection and resold the pieces you didn't want to a dealer or consign it back to an auction, but the dealers would pay much less, since presumably the collector took the high value items for their collection, and the remainder is time consuming and harder to sell, so the dealer will pay you virtually nothing for it. And going back to an auction takes time. Listing it on e-bay takes minutes, and you will have the results in a week. You can get paid before the credit card payment on the original lot comes due.

Not sure about adcaplan's point here.
My limited experience with live auctions proves one thing for sure -- auction houses have the contacts to purchase or accept on consignment multitudes of larger collections; often cartons full, or "hoardes". And these larger lots are available at a small fraction of CV. And I believe many dealers stock their inventory buying from auctions.

Collectors like me in turn will purchase a single album on ebay from one of those auctioned off collections which come from estates or sellers interested in cashing out of their collecting days.

I may not want to purchase bundles of the same stamp, tons of FDCs, hundreds of mint sheets, or boxes of kiloware, but I may bid on a single album that was part of that large lot.

I have reveled in my purchase of many very nice old albums and multi-page lots on ebay that are at such reasonable prices that it's obvious to me that the original collector - or their estate -- must have received a tiny fraction of CV for their entire "hoard". Maybe 5% on average for average collections.

Based on my experiences selling my extra dupes or unwanted nations I have been shocked at how low ebay bids can be for average material. As your own collection improves, these low sell prices make it difficult to consider buying albums that may contain >50% or 60% or 70% duplicated stamps. Reason tells us we are very unlikely to get equal return when selling average items.

The majority of collections sold at traditional auctions goes to dealers, not collectors, and the biggest of the dealer buyers are ebay sellers and dealers who break down the collections and offer them is smaller lots in their own auctions.

Want to help ensure more kids get into stamping?

If you love stamping, please check out the idea discussed on the other thread linked below. And consider getting involved with a concept a few of us are discussing in our Forum...
This is an idea to create a current marketing effort to appeal to tweens and teens while exposing them to the world of stamp collecting:

Here's an idea that could use your knowledge, ideas and support. Please check out this thread and consider getting involved in a worthwhile project:
https://goscf.com/t/46924#402846

I hope you want to get involved in some way!

Cheers,
Dan Carazo
Syosset, NY USA