Can Dealers Compete With Ebay?

DJCMHOH & TheArtfulHinger: Agreed and many dealers are doing this. Traditional sales methods and venues are hurting for business in some areas thus ebay, Delcampe, BidStart and other multidealer venues/personal websites have flourished as dealers seek buyers and vice-versa. I mentioned Doubleday the cover dealer. He and his wife have put together a great business model of working the shows locally and regionally as well as ebay, their own website and even ads in the APS magazine. Each venue can be used to advertise to another venue.

adcaplan: Sounds good. The sum of the parts tend to be greater than the whole.

Adcaplan - you seem to have found the perfect scenario. Buy an album, take out the stuff you want for your own collection and then sell the remainder on ebay for a profit. Do you do this regularly or do you think it was a lucky one-off?

Anyone else take this approach? Seems like a fun way to add to your own collection at low cost but buying an album blind at auction also seems a risky venture...

I have done this a few times. This one is working out the best so far. I try to not pay more for the collection than I value the items that I would add directly to my collection, so that if I am unable to sell the rest, I am still not out anything. In this scenario, any amount I get for the items is a net positive to me, it takes the stress out of selling. Any money I make gets added to my stamp budget. I am not trying to live off the sales. I don't buy collections just to break up and resell. The biggest problem is that I end up with a lot of stuff that piles up because it is not worth the time to list. This collection was easy, since I have scans of all the items in my collection already, and there is no need to scan the actual item, so I can list items quickly.

Auction companies and dealers weigh labor vs value. I was at the Charlotte show earlier this summer and bought a (mostly) US revenue 2nd & third issue collection + a book of MNH classic US and possessions in those very old mounts that are almost impossible to extract stamps from. The mounts are the tightly folded over on four sides versions with the black paper backs. The dealer counted the high dollar revs and inspected some of the mounted stamps. Even though the was LOTS of value in the mounted stamps, he must have given up on those. He said there was just shy of $2k catalog and I bought the collection for $180. There ended up being almost 4K of value but it took me a long time to get to it! Quite a few went into my collection and I've made my money back already. But not my labor.

Yep, if selling stamps is a dealer's only livelihood, he's got to bring in probably at least $10K a month in gross sales or more to cover his expenses and have enough left to pay his own bills and keep food on the table. And even at that, he certainly wouldn't be living the high life. As such they're naturally going to gravitate to those high-dollar items they can turn around quickly and they won't care so much about those high-effort, low-payoff items.

That dynamic is a lot different for a collector who just wants to get some money for his extra stamps and duplicates. It's a big part of why prices of low-to-middling material have languished. ebay makes it very easy for individual collectors and part-time dealers to do this and that type of material has flooded the market as a result.

I can relate it somewhat to wedding photography when I worked at the photo store. People would come in and buy basic equipment and announce I'm going to do weddings. Mr X charges $300 for a wedding. I can do it for a $100 and get rich easy. Same principle. A stamp collector who likely works full time wants to pay for his hobby by selling stamps on the side through ebay and boast to friends he has a business on the side in addition to his full time job.

I always factor in "keeper value" and "flippable value" when evaluating lots. The ideal is to be able to pull items I want to add to my collection and still be able to flip the remainder for at least what I paid for the lot. Not always an achievable goal, but depending on the proportion of, or quality of, the keepers, at the very least it reduces the out-of-pocket cost of the keepers.

I don't claim to be a dealer, or that I have a business on the side. I consider it like having a garage sale to get rid of stuff I don't need. If there was a better way to do it, I would. I don't necessarily want to spend the time and effort to sell the items, but I don't have room for them, and throwing them away would be ridiculous. So, the best option is selling them.

Pretty much what I just said




And being in the position your in you can sell for much less than a dealer who works full time at it.

Right. So, in the past, a dealer would make his money by buying a collection and selling it to people like me at full catalog value. Now, the dealers need to change there business model, or go out of business, because the older model no longer works. Dealers have to be smarter, looking at the market and identifying and exploiting inefficiencies in the market using their knowledge. They need to identify where the catalog value for items are under what the real market is. Not rely on the fact that the catalog value for items is triple what the market is and continue to sell above market. They need to add value by being able to find items that are not readily available online. Offer service that you can't get from someone on the internet. Some dealers do this very well. There are a few dealers I see at shows that make a good living selling at the low end (<$10 an item) where it is impractical to buy online (postage costs become a significant portion of a purchase, for example), or specialize in an area (revenue's, for example) where they can know the market better than the guys writing the catalogs. Trying to compete with the internet has brought many good companies down. What they need to do is leverage the internet. Take advantage of the global marketplace. There are going to be successful business models for stamp dealers, however, they are not likely the same business models that the dealers are using today. Unwillingness or inability to adapt is probably the biggest issue.

Another down side of ebay, as opposed to selling duplicates through an auction house or through the APS Stamp Store, is the cost of shipping accruing to the seller. When I prepared some good stuff for sale to the former Michael Rogers auction house in Florida in recent years, I had to ship just the one time. I had a good idea as to what would sell there and was usually successful. Only a few items got sent back to me due to lack of saleability.

Also, as I've noted, I've had good luck with the APS Stamp Store in either selling, or getting a tax write-off for the few items that did not sell. Had to ship there just once, for each grouping of items.

Another option that no one seems to want to talk about is the notion of working with local philatelic libraries. There are a number scattered through the country. Tomorrow (Oct. 24) is the annual large lot sale of the Rocky Mountain Philatelic Library in Denver. I may go as there are a couple items that interest me. I've donated stuff to the RMPL that wouldn't sell through normal channels, like APS, and taken a write-off. The stuff goes into the mix for the next annual large lot auction. I have more material to go to RMPL next month, after the dust settles from the sale tomorrow.

In addition, I'll offer that local stamp clubs; or specialty philatelic societies; may be able to offer tax write-offs for donations, if they have the .501(c)3 IRS tax status.

There is also the matter of having to deal with ebay seller ratings; less than honest buyers; etc. Bottom line is ebay, or internet sales in general, is not the only game around for small scale sellers to move duplicate or unwanted philatelic material and make some money while doing it.

Many ebay sellers charge the buyers for shipping so that's not really a downside.

I can see the attraction of selling through the APS stamp store since the APS basically does the selling and shipping for you. But of course the APS still takes a cut and you only get paid so often. On ebay, the buyer pays you directly and usually (more or less) immediately.

I just placed another stamp store order this morning and I may consider selling a few items that way in the future to see how it goes. ebay will likely remain the first place I look for items for my collection, however. It's very convenient using my proceeds from selling there to buy other items I want for my collection. I look at it as trading, in a roundabout way, plus I get ebay bucks, which can add up to a significant amount of money over a quarter's time. I've had probably a couple thousand or so total transactions on ebay, both buying and selling, and I've only been frustrated a minuscule number of times.

It depends on what we're talking about.

For example, I got to sit with, although too briefly, Jim Lee and Stanley Piller this morning. They don't carry the sort of stuff you're apt to find on ebay.

Also, I have found that many of the "bargains" on ebay aren't the bargains that they seem to be.

And it's a hefty cut too at 20%. That's quite a bit more than the combined 10% of ebay and PayPal. Of course, the APS handling the order fulfilment is worth something.

A bigger issue, especially for those who traffic in lower-priced items, is that the minimum commission is 50 cents per item. It pretty much means that anything listed for less than $2 isn't netting you much after the $0.10 listing + $0.50 commission and the shipping costs to get the items to the APS.

It used to be that the submission fee was capped at $30 (I think) so if you submitted a boatload of items at one time you could drive down the per-item listing cost.