Can Dealers Compete With Ebay?

I agree with Kevin on a couple of points. Most serious collectors are convinced they know more than a dealer.

All sellers on ebay should be required to collect sales tax and have a business license. That would level the playing field a little bit.

Tom

Good luck with that. The UK tax authorities are not, of course, oblivious to ebay, but individuals selling their own possessions do not constitute businesses. I'd have to sell an awful lot more than I do to reach a Value Added Tax threshold. To be liable for Income Tax, I'd also have to make an overall profit, which, as my ebay sales simply partially defray the cost of my non-ebay purchases, I do not. Not sure that the Inland Revenue would really want to look at the notional books of millions of sellers of junk!

Geoff

Have to agree with GEOFF , the I.R.S. doesn't want to look at a bunch of nickel and dime dealers to figure what the profit margin is ,besides most of us buy much more material than any extras we sell . As in the UK, tax authorities are well aware millions of dollars are coming into the British economy from overseas and going into the pockets of regular people ,why shake the boat where it could cost more to audit it .

sdtom: If I use your example - he would be paying income taxes if he took all his payments via Paypal. If you have $20K or more and 200 individual payments per year then Paypal will issue a 1099-K and report it to the feds. Part of the $20K plus also includes all the shipping fees charged to the buyers too. Paypal has everyone's SS numbers on file.

Odd enough - I have never ever paid taxes on a purchase at stamp show, nor on any auction items or most stamp stores except one. Maryland Stamps & Coins in Bethesda, MD has been the only philatelic venue I've ever paid taxes as a buyer. No, I don't have a tax number either.

Your example also has other issues is it's not solely about price.

A dealer is not just selling an item and nor is the price the bottom line. It's also about SERVICE. Better service and a better buying experience can bring in buyers and more important repeat buyers. Most of below would primarily apply to the variety of ebay sellers - dealers or the occasional sales from a collector trying to unload dups.

Location - some buyers feel better about buying locally rather than from another country - cheaper shipping, speed of delivery and mail safety concerns. This is not a major concern, but it's there and of course some sellers limit where they sell to.

Knowledge of the seller can be a factor and larger dealers don't have a monopoly on any particular philatelic knowledge. A smaller dealer could be better able to sell a particular type of stamps or covers if they have more experience with material than larger dealer that doesn't and vice versa. Size doesn't matter in this case, but experience and knowledge helps to promote sales especially if it can be used to create better listings and able to share that knowledge with the buyer.

Quality of listings count - not just the actual quality of the material. A seller needs good photos and great descriptions to be found in the sea of millions of other listings. Too many dealers big and small skimp on this aspect too much and wonder why their sales are poor. If two sellers have like items, a better described item will be noticed a lot more regardless of price.

Scale of listings is a factor - the more you have to offer, the more buyers you will find. Larger dealers might have an edge here due to higher volumes of material, but it only counts if they can list it in an efficient manner. The more material listed the more chances you have to have a buyer come and look at your other listings especially since buyers like to combine shipments.

Quality and uniqueness of material - Dealers with deeper pockets might win some sales over another dealer who doesn't, but finding the right material is matter of lot of factors more than just having the capital. Lot of times I find just being at the right time and place can help me land some great material for very little. Sometimes it's just dumb luck or seeing things other dealers don't. Unique items help to bring in buyers for sure if you are the only seller that has it and so does better quality items (not necessarily always high dollar items).

I'm sure there's other factors to this multifaceted issue, but price is only one aspect in which dealers compete. You have to adjust for service, experience, location, knowledge, volume of material, quality and uniqueness.

Edit - Also if any online sellers were required to collect taxes for every state and municipality, and it has been proposed, the online stamp business would virtually dry up overnight. It's a logistically nightmare and undue burden. Also there's no reason to have a business license to sell stamps online. Half and sometimes more of what I sell goes overseas - can't legally tax exports.

Battlestamps, your points "hit the bullseye".

Also, the only stamp show dealer I ever paid taxes to was one whose ex-girlfriend (falsely) reported him to the IRS.. He was a little paranoid about the tax collectors.

I think it's a given that we all agree that ebay has initiated a fundamental shift in the overall value of the majority of stamps. Other than the rare and the unusual, most stamps on ebay trade to a significant discount to catalogue prices. Yes, there's plenty of mis-described crap on ebay but that's only the half of it - much of it is as good as (or actually is!) regular dealer stock.

So here's the question.

When are the catalogue editors going to acknowledge this fundamental shift and start reflecting the real world? If you think Scott is top heavy, take a look a Gibbons - their prices are in la-la land compared to the market.

Interesting times for philately...

I would guess never. Stamp dealers (i.e. advertisers in these catalogs and other publications put out by catalog publishers) would never accept the catalog value of their stock being greatly reduced by editors switching to real world values. Dealers have good reason to maintain the status quo on inflated catalog prices.

You brought up a point that I didn't think about. Sales tax on $20,000 is $1400 at 7%. A brick and mortar store has to charge that tax, a disadvantage. I think we'll see more tax collecting down the road.

I still think that price is the number one factor in a purchase. I'll give another example using something that I did buy which was a Kitchen Aid 4.5 quart mixer. I shopped and bought it at Walmart who had a lower price than anyone else. If I was looking for a sheet of my avatar stamp of the motion picture 50 year anniversary I would google and seek out the lowest price. What sort of service is involved to pay $3.00 more to a dealer we know about.

The problem with sales tax on online sales - it's based on the buyer's location not the seller's. That's why I said it would be a nightmare since there are literally thousands of different tax districts across this country was all sorts of different rules.

sdtom: The problem with your example is that many people hate Wal-mart with vengeance and would rather spend more money at another business even if the price is higher. I feel that way about Sears (worst customer service EVER from my personal experience) and I don't even bother to look at their ads. Just one example of how a personal experience can affect buying habits. Good selling establishments get my money or those with bad service. I avoid K-Mart for the same reason too. Not everyone shops around just like everyone doesn't use coupons nor shop the sales. I watch people at the grocery store buy grapes for $3.99/lb at Price Chopper. They are less than a buck a pound at Hannaford. They probably don't even know as some people just don't shop around or it's easier just to go to the one store. People probably buy stamps and covers like that too - go where the service is fine and it's a predictable experience. It's one thing if the price difference is $1000 versus $50, sure. But the different between $7.50 and $10? Eh - no a big difference. Just look at any given item on ebay that had duplicates - there's a varying range of sale prices for all items - it could just be the time of the sale and who the buyers were when listed or it can be a combination of factors I listed in my previous post.

I can tell you for a fact that I've purchased items from Amazon and I was charged the Minnesota state sales tax so I guess I'm saying it can be done. I don't know what will happen in the future. Perhaps my feeling is tainted by the thrift store where I work which is a whole different world. Primarily older people I can tell you that they'll pass on a 25 cent sale because it isn't senior discount day where there entitled to a 20% discount. We're talking about a nickel here but I've seen it happen. They pay in cash, getting out there coin purse. They must be hoarding pennies because they have them! I don't have to deal with it as my expertise is sewing machines but these same older women got their sewing machine from their mother's mother and there old enough to be motorless (treadle). A couple of side points to show that there is another world out there of people who survive without cable, cell phones, and computers. Rabbit ears are a popular item! I think I'll start a new post and see what people are willing to pay for a sheet of stamps. I think there may be more penny pinching than you think.

There's a HUGE difference between Amazon, a multi-billion-dollar company with virtually infinite resources, and Bob the stamp collector in his basement, in terms of being able to collect, report, and submit sales taxes to a zillion different states and municipalities at different rates.

That's why virtually every proposed version of the "Marketplace Fairness Act" and other legislation making online transactions taxable regardless of nexus have had an exemption for entities with annual sales below $XXXXXXX. It's a mandate that places an incredible burden on small businesses.

Good point. I guess they would have to come to a fixed percentage which could be impossible or a daunting task.
Tom

Actually, this has happened in the past. After the last boom year of 1980, stamp values declined all during the rest of the 1980's. Scott did not make the adjustments, so dealers were selling MNH material at 40% of Scott, and in mail bid sales it was routinely possible to buy stuff at 1/3 or less of catalog. Finally, Scott bit the bullet in 1989 and made drastic adjustments in pricing to be somewhat more aligned with the marketplace. No one really liked it, but we all got used to it since we quickly figured out what used to be 40% of cat was now more like 60% of catalog (or whatever the ratio was at the time).

What's really funny about this is that Apfelbaum's, in their infinite greed, refused to use the new pricing. For something like 10 or 12 years, all their pricing was done against the 1988 Scott's

The question of sales tax is a tricky one. We are supposed to pay sales tax on philatelic purchases here in Florida, but just about no dealer adds it in. They all pay it out of gross profits. There is one exception- a dealer from Venice Florida who does a lot of advertising as a buyer of collections. I've watched him literally dozens of times charge buyers sales tax, but he NEVER records a single thing and never offers a receipt.

Although I never wanted to do business with him, one time he had a Bermuda KGVI keyplate that I knew was a scarce shade and worth much more than he was asking for it. I examined the stamp and knew it was the "good" shade, and engaged him in some minor dickering. After we agreed on the price, he tells me he needs the price agreed upon plus 7.5% sales tax. So I asked him for a written receipt for my records. OMG he was so insulted and weird about, it was so obvious that he was simply padding his sales by adding on sales tax. So finally he pulls out some scrappy little pad of printed paper that looked like a waiter's order ticket and begrudgingly scratched out a written bill of sale. Before giving it to me, he said he needed to see my ID! Dude- I'm paying you flaking cash, what the hell do you need with my ID???

Needless to say, he doesn't like me and I sure as heck don't like his arrogant backside. If a dealer feels they must add the sales tax on top of the agreed upon price, then they should be professional and ALWAYS write up a sales ticket with the taxes broken out FOR EVERY SALE.

Enough of ranting, this is a great thread...

sdtom: You were charged tax by Amazon because Amazon has a presence in the state. If you live in a state that doesn't have an Amazon you don't have to pay a tax. Amazon also has very specialized software that can do it and the workforce to implement it. Doubt there are many stamp dealers can ever do that regardless of business size.

The Mainstreet Fairness Act was something that was going to collect have online sellers collect tax from all their buyers - https://en.wikipedia.org/wiki/Main_...Fairness_Act As far as I know it's dead in the water, but it would have been an utter nightmare for the average joe ebay seller to have to figure out how much taxes to collect from all their buyers across thousands of different tax districts. There was talk of exceptions however that would have exempted probably 99% of ebay sellers anyway since I think one had to have something like $2 million/year or more in sales. Hardly any stamp dealers would be affected on ebay, but like I mentioned before sales tax doesn't seem to be much of factor in transaction between sellers and buyers on any venue except a few brick & mortar stores (and not even some of them) since sellers don't charge sales tax.

By the way - under most current state laws, if the seller doesn't charge the buyer sales tax, then it's the responsibility of the buyer to pay the tax to their state government - also know as the "Use Tax". If for when you buy something where the seller doesn't have authority or means to collect it or you buy something from another state that doesn't have a sales tax. It's self-reported and exceptions vary from state to state, but many people don't report it unless it's an item that has to be registered like a car.

Of course there's people in this hobby that are penny pinchers. Some are on fixed incomes or have other reasons. However, you'll find people of all economic means and varying degree of willingness to spend. I've seen people turn down a decent dollar cover because the dealer wouldn't take 50 cents for it and I've had people wanting to spend the money for international registered airmail to help protect the shipment of a 99 cent item.

As for that stamp sheet - if it's the same one as your avatar then I know of a local dealer who would sell it to me for 70% of face, but it actually sells for more on ebay.

edit - revenuecollector already hit on my point about taxes for the most part, but I also echo his concern about how much a burden that would be on any ebay seller except the corporate ones.

I am far from an authority on tax laws so I am a bit confused. In my state, they only add sales tax on merchandise, not services. Additionally, I think they only collect sales tax on new merchandise, not 'used' merchandise. So in other words if I go to a local shop and buy some new merchandise, I am charged a sales tax. If I resell the item I just bought and charge someone else sales tax, the state has received sales tax twice on the same item. Is collecting sales tax multiple times on the same item acceptable? Is not the purpose of having a reseller license to address this issue?
Don