Can Dealers Compete With Ebay?

revenuecollector,
What you say rings very true -- collectors of high value/high quality stamps demand a level of quality that requires a willingness to pay a premium; there are dealers who cater to this more demanding collector.

pk-short,
thanks for your personal illustration; it explains another strata of collector; one who is willing to pay a premium at times to purchase a long sought after gem or in my case to complete a set.

artfulhinger,
I think you hit it on the head in describing the "value added" proposition provided by a higher-end traditional dealer; I agree 100% that these dealers can not compete or replace the online-only dealers. The dealers I see predominate ebay by offering quantity over quality. Many collectors can bid for and win a nice starter US collection in a 1960's Scott album for $200 to $400. But after we fill many of the most common issues, we find it's nearly impossible to find higher value rare, often higher denomination issues without looking to other sources.

There is most assuredly a benefit in working with dealers. Yes, we pay more. But when purchasing high dollar Washington-Franklins, we also purchase peace of mind - namely fake. I work with a dealer who is reputable. He will also accept returns no matter what.

Jack Kelley

As much as I like buying on ebay, I shudder to think if that was the only option out there. Long-time, full-time dealers become experts in their fields, and I'd hate to see that kind of knowledge disappear from the hobby. The full-service dealers I've purchased from have provided excellent service, but as mentioned in the OP, my pocketbook dictates that I can't do all of my buying from them. My experience echoes his, i.e. I can find the same stamps on ebay in similar quality for half or less a typical dealer's price.

Thus the decline of the full time dealer.

TheArtfulHinger,

Yes; Agreed. I only purchase large value stamps from dealers. All else from ebay, BidStart, etc.

Jack Kelley

Don't assume all items offered on E-bay are low quality. That may be the case with the higher end stuff, but there are modern items that are hard to find other than on E-bay. Especially with foreign items. I collect Israel, and find that I can buy many of the items I need cheaper on E-bay, since I am basically buying direct from the person who sells to the dealer in NY that I buy from. Cutting out the middle man helps. Also, I sell a ton of items on E-bay that I picked up multiple copies of over the years. These are items in the $10-$50 range that the auction houses won't take (since they want items that list separately to be at least $200, and that dealers will only pay you pennies on the dollar for, while I can get 75-80% of the value out of them on E-bay, after fees.

Yep, that's pretty much the sweet spot on ebay, at least for me, although I'd bump it a ways north of $100 in terms of MSRP...er...CV. Full-time dealers typically ask 60-90% or more of CV for those types of items whereas (depending on the stamp of course) they'll go for 10-40% on ebay. There are a lot of stamps currently occupying spaces in my albums that would have remained forever unfilled if I had to pay full dealer price for them.

Surely the trick is buying from those that sell to the dealers. In other words, getting to the source before the prices have been uplifted and the better stamps lifted from the album page.

Question is...how?!

Actually, it is better to buy from collectors (or their heirs) disposing of the collection for most items. For most modern items, you are going to pay face value, or some small premium over face value when buying from either the primary source (post office), or secondary source (wholesaler). The premium is larger when you go to people who buy and re-sell the items. When you buy from a collector (who maybe bought more than he needed), or their heirs, then you have the opportunity to get it below face value. When selling US stamps in the US, you are likely to be able to get some reasonable percentage of face value (70%?), but with foreign material where there is no possibility of the buyer actually using the stamps to mail stuff, getting even half of face is challenging. For some items, like single stamps (non-tabs) from Israel, there is virtually no re-sale market for.

Here is one typical example, in the nineties, the Israel philatelic service put out a limited number of imperf souvenir sheets that were sold through the philatelic service for around $30. Dealers were selling the same for around $40. Now, you can buy them on e-bay for $15 or less. Dealers are still trying to get $40, and catalog value shows around $50, but the real market is much lower. Condition is not the reason for the price to be lower on E-bay, it is the fact that the supply greatly exceeds demand. No dealer would buy them, they can't sell the ones they have and they refuse to realize the market has changed. Of course, there are examples where the price has gone the other way, and you can actually make a decent profit by buying items from a dealer at full catalog and re-selling on E-bay at going market rates. Too few dealers pay attention to what actually is selling on E-bay and what prices are.

That's not unusual. Buying stamps from the post office for your collection is like buying a brand new car: you lose 20% of the value just by driving it off the lot. There was a recent blog post about how it pays to wait a few years after their release to buy stamps because you'll get them for half the price:

http://www.apfelbauminc.com/blog/it-pays-to-wait/

Now, I suppose you'd run the risk that some stamps would go up in price and end up costing you more, but the stamps that you'd get at a steep discount would more than make up for it.

I'm so glad I sold off my modern U.S. and foreign mint stamps in the early days of ebay. I actually sold it all for more than face since demand was still higher than supply at least online. Now I see at local shows that much of the modern U.S. can be had for 70% face and the same goes for modern Canada. Dealers are only paying around 35 to 50% of face. There's just too much supply. Even at 70% face the dealers local to me can't get buyers.

I'm surprised that no one has mentioned buying (or selling) from the APS Store, or using APS member mail circuits. I've gotten good items via APS. Some of the specialty stamp societies, like MEPSI for Mexico, offer sales books provided by members with prices at a reasonable level. Dealers who tend to advertise in journals of various specialty societies also seem to have good, reasonably priced, material.

Finally, I'll offer that for specialty material, ebay is unable to effectively compete with dealers. As an example, I recently priced some Zambesia & Portuguese India material on a couple of ebay sites. Not only was the stuff way overpriced, it seemed like the ebay sellers were basically clueless in terms of what they had.

I use the APS stamp store (both buying and selling) and the circuits (buying only). The problem with both is that the turnover is very slow. They are great resources in addition to other channels, but not by themselves.

Climber_Steve: However, there's quite a few ebay dealers that are regular show dealers so it is hard to generalize a difference between them since they are increasing becoming the one and same. Take a cover dealer like Doubleday - he sells via shows, but also ebay and has his own website. Other dealers have flocked to ebay and other online sites since the traffic at the shows is dwindling at many venues. Their customers from their mailing lists are dying off.

Also are the prices online higher than a show dealer since there's a global market? For example - covers from Malaya and Straits Settlements have no buyer's audience in Albany, New York. I can pick them up for next to a song, but if I sell them on ebay they fetch prices well beyond catalog just because it's a global market with buyers from that region. Singapore buyers are very competitive. Are those items your interesting selling at those prices or they just sitting there. If the former then you are being out priced by the global market, but if it's the latter then yes they are overpriced.

I joined the APS about a month ago* (member #225109) and just received my first stamp store order. I actually think I'll be using the stamp store fairly often, going forward. The selection of German material on the stamp store is fairly decent and contains many items that don't show up all that often on ebay. The prices are typically a little higher than what I'd expect to pay on an ebay auction, but they're usually a little lower than dealers selling the same items. I've already got a large "wish list" put together that I'll be ordering from in the future.

*Technically I'm still an applicant as my name has to be published in the American Philatelist first, but I doubt there will be any issues.