Market Value Vs Catalogue Value

The idea that a dealer, or anyone for that matter, is bidding YOU up at auction simply to make his stock (artificially) more valuable is ludicrous. Dealers (again, or anyone else) are bidding you up because they would be interested in buying that lot at the current bidding level! The dealer doesn't know when you are going to drop out. He is raising his hand (or clicking his button) with the hope that you drop out before his 'price', so HE can buy it. THAT is the whole principal behind an auction, for goodness sake. Do you expect the entire philosophy and historical precedent go out the window when your hand goes up?

Some of the best relationships I've had have been with dealers. There was definitely a dealer/customer vibe going one. NOT a shyster/victim vibe. He's a source of stamps and info. I'm a source of money. Symbiotic. As in any industry, some dealers are more reputable than others. A dealer that you can trust and converse with (you know, cuz they are human beings) brings so much to the relationship. As with any purchase I make, if the price is higher than I care to pay, it is my responsibility to walk away from the deal. Even on something that I really want --- if I have to walk away, I figure I just don't want the item badly enough, NOT that the dealer is trying to rip me off. Well, not usually.

As for the middle man that seems to be jacking up prices in the marketplace, the internet has had quite an impact on how he does business. Not just the mechanics of it all, but the economics, too, undoubtedly. This sea change in the stamp trade has affected CV's (among so many other factors) over the past 25 years or so. Actually, I think it has had a bigger effect on MV's and that CV's have lagged. MV's have always reacted more quickly to economic conditions than CV's. When I started collecting in the 1970's, I could buy a typical example of some stamp for about 33-50% of catalog. A typical, sound, FVF, example. In the late 80's or early 90's (perhaps someone can better remember when this happened...) Scott announced that they were going to adjust their CV's to better reflect the market. In theory, we would be paying 100% of CV for what we had been paying 50% of CV for, earlier. They dropped their prices somewhat. It wasn't long after that that we were back to paying half CV, but at their revamped CV's. It seems to me that 'the collector' is programmed to pay 50% of CV. Yes, that sounds ridiculous, but I think there's a kernel of truth in there. Of course there are areas in the hobby where that isn't true. Specialized areas where CV is MV. Anyway, perhaps the editors at Scott (and the dealers, et al, that provide them their data) could see the softening of the market around the corner, and disguised their prediction of the future market as a 're-vamping', rather than tell everyone that they think the future wasn't all that bright. I don't really think that was how it worked, but I've never seen the inner working of the Scott Publishing Co.

IkeyPikey, you raise some good points. Though I do not believe my comment about penny starts indicates a misunderstanding of how they work. In theory you are correct. But here is the problem: E-bay is not as well trafficked as you think it is. Yes they get a lot of traffic, but they use secret algorithms to manipulate and control the amount of exposure that items receive on their platform. This is a well known fact to sellers who pay attention to the traffic section of Seller Hub. I'm not going to argue this point, because frankly it is a fact that you or anyone else can verify with any experienced seller you know, or by reading the comments on E-commercebytes or any other forum in which sellers discuss the issues they face. What this means is that yes, the buyers that initially see your listing, and have placed bids and have the item on their watch lists will compete for your item. But if E-bay only decides to display your item for 1 hour every day of the 7 days your auction is running, then the number of potential bidders for your item will be VERY limited. This is why items that start at a penny seldom bring anywhere near what they would if an established auction house sold them.

This happens all the time. E-bay does it, because from their perspective, they maximize profit when all items sell, not when a few items bring the highest prices. So, if there are listings for 10 identical stamps, E-bay would rather that all 10 sell, even if they only sell for the minimum bid, then to have 3 items sell for high bids. This way they can spread the sales revenue around and can rope more sellers into paying fixed monthly store fees. It's a very brilliant, if somewhat sociopathic business model. The buyers are none the wiser, and even if they were most wouldn't care, because they are getting items cheap.

The losers in this situation are the collectors and heirs that consign items that genuinely are worth more than they sell for, even if what they are worth is just a fraction of catalogue. If the true MV is 20% of cat, or 10% of cat and it goes for 5% of cat across the board, then as a seller you got hosed. It is as simple as that. To the people here who think dealers are bad when it comes to paying people pennies on the dollar, E-bay is 10 times worse, because they project the illusion that it is a fair, open and free market when it is not. It used to be, before the company went public, but since at least 2007, and certainly since 2012 it has not been.

I didn't use the word reputable in order to bolster my argument, I used it genuinely: if you take material on consignment then your first loyalty should be to your consignors period. If you are selling your house through a realtor and he doesn't act in your best interests and unloads it for 10% below what you could have sold it for to someone he knows you'd be furious. A reputable auctioneer or broker should know the market well enough to start the bidding at 60-70% of what that value is. That is low enough to get people started, while excluding those bidders who aren't interested in paying 60% of market value. If you attend any floor auction you will see that is how it works - that is the only way they can get through thousands of lots in one sale.

Clarification..
ebay has one simple goal, get a buyer to buy something. There are no secrets in this formula, if a buyer searches for something it is paramount that they get listings returned for them to view.

I do agree that if your listing is one of 10,000 similar listings, than the ranking and search order are manipulated. But make no mistake about it, ebay will send every buyer to your listing if it contains something that few others are selling.

It should be noted that all search engines work this way. The objective is simple and clear; match the searcher with search results. Also note that ranking algorithms are kept always kept secret for a VERY good reason. Having them known results in every person manipulating what they can to get their stuff to the top of the list.
Don

Yes Don, You are partially correct. But I'm telling you for a fact that if you type in a particular item that E-bay will absolutely NOT show you every item in their database. I have been an E-bay seller for almost 10 years. I've had numerous situations where a customer buys a stamp from me that I have had listed for 2 years or more and tells me that they've been looking all over for it. I just sold a Canada #193 VFNH to one of my regulars this weekend and it was this exact situation. He told me that he was glad to see me "put it up" since he had been looking at all the listings for #193 several times and couldn't see my listing until Saturday. I listed that stamp 2.5 years ago on a Good-Till-Cancelled listing. So please don't tell me that I don't understand E-bay's motivations, or how search engines work.

I agree that sellers used to be able to manipulate the search engine. But they have not been able to do that since 2012. The reason E-bay keeps the factors secret is because very few people would sell there if they knew what went on. The only way to identify what the factors are is to experiment with your listings and monitor the effect on traffic. If you sell there full time for long enough you can see definite patterns in traffic, and when they change suddenly and for no apparent reason, you can be pretty sure that it is because they have changed the algorithm, or you have made a change that the algorithm has picked up and acted on. One such factor is how frequently you list new items. If you don't list a new item every day, you will be penalized in search. If you don't offer free shipping, you will be penalized. If your item remains unsold after more than 30 days and you don't lower your price, you will be penalized and so on.

E-bay's goal may be to get the buyer to buy something absolutely. But they don't actually care if you wind up buying what you actually want or not. They just care that you buy something. So, in the case of my customer looking for the #193, they want him to give up and just buy the F-VF copy that they are showing him, rather than my VF, because they want to give the seller of the F-VF stamp a sale. The other thing they are doing now is making it very difficult for you, as the buyer to save on shipping by buying all from one seller, by making it very difficult to see all the items a seller has. They would rather that you bought 10 items from 10 different sellers, because that way they spread the sales around. They don't care if it costs you $30 in shipping, because they make 6.2% on that as well.

I know that may not be easy for you to believe or accept, but I can assure you that what I am saying is the truth. Thousands of sellers say the same thing. There is no way we are all wrong.

I have 25 years as VP of Engineering at technology companies, believe what you want. I am done with this thread.
Don

Brixtonchrome, you are partially correct. If you use ebay's default "Best Match" sort order, or their "recommendations", then yes it is subject to ebay's algorthmic manipulation. However, I personally don't know anyone who uses this default sort order. ebay newbies might, until they learn better.

Every one of my saved or bookmarked search uses either the newest listed or ending soonest sort order, which does not fall prey to the algorithmic prioritization, hiding, or other shenanigans. I have yet to ever NOT be able to find a certain listing when using those sort orders, nor have I ever had a buyer tell me they could not find my listings when using them.

Q/ When an ebay seller uses the auction format:

A) it is for items on consignment from someone else, or

B) it is for items that they own, and chose to sell via bidding.

Please clarity your thinking as to %A versus %B.

My understanding, as a casual ebay bystander, is that %A is near zero, and that auction-style bidding is a choice (versus fixed-price listings) of selling method, and has nothing to do with who owns the item.

My guess is that you are mistaking IRL auction houses (who do take items on consignment, as well as buy items outright to sell at auction) with ebay auction selling (which is a choice, not a business model).

Cheers,

/s/ ikeyPikey

Ikey, there are numerous ebay sellers that sell on consignment. A stamp dealer may be utilizing both of the scenarios you mention, selling both consigned and their own material.

So am I!

"The idea that a dealer, or anyone for that matter, is bidding YOU up at auction simply to make his stock (artificially) more valuable is ludicrous."

Although this is almost always true, there have been occasions where this has happened. For example, the deaccession sale of revenues by the BEP. There was at least one dealer who bid on every lot in certain sections to insure that the price he paid for the early lots was maintained in the later ones. He would not allow anyone to get a similar lot any cheaper then he paid. And I also know of a dealer who would deliberately outbid collectors for unique items in certain areas and then offer the item at a higher price to the underbidder. If they refused they might never see important material in their area again. And if they were exhibiting, then they were over a barrel and stuck anyway. This particular dealer was specialized and had a broad enough clientele to get away with it.

Thanks ---BRIXTONCHROME, excellent postings

We have discussed this subject between ourselves at the local stamp club which has 6 active E-bay sellers of which three are very active .

Your correct in most of what you posted ,we came up with the idea that EBAYS algorithms is set so that the United States is divided into sections and your items that you list is placed at various times and many times kept in certain sections for sale . We never considered it a time placement but a section placement of your listing on ebay .

There is also another factor that comes into play and that is the big well known stamp sellers also get some 20 to 30% of the first or first two pages under the major headings .


BRIX- again thanks for some very interesting points about ebay.

hmmm... I beg to differ.

I think this happens in small EFO segments (say 100 available), like modern, as well. There are ~5 dealers in this segment who target this area and know if they win the material, they are the only source and subsequently set the price, mostly based on availability. One need not look further than the ebay EFO section, to see the top 5 players. Because there is such low supply, you can often see an ebay listing pop up shortly after a SAN auction with the price around cat and can easily confirm with the images.

If I was a dealer particularly in this segment, I would be underbidding every single item up to 50% cat regardless. Do you not see how this makes market sense? Not only are they protecting the prices of their existing inventory, but they get the advantage should they win of retaining control of all available supply.

Clearly, this is not a strategy used on more common stamps like Zepps or Columbians but as revcollector also cited, I think it _is_ a technique for certain areas of philately.

Don

You are welcome! I am always glad to share my perspectives, largely because I know I am probably not alone.

I too have experienced the geographic phenomenon. A disproportionate number of my customers are in Quebec when there is no good reason for this. So that is a factor too.

I don't think anybody except the top coders at e-bay know what all the ingredients are in the "special sauce". In fact I wouldn't be surprised if they subcontract a lot of the programming out in such a way that nobody knows all of it, so it can never become public.

No large company that relies on software is going to outsource their most precious algorithmic secrets. NDAs and giving the engineers large equity grants are much better protection.

If the ebay ranking system is based on machine learning models (like ANNs) -- and this is very likely nowadays, as it's exactly the type of problem ML is good for -- they may be a "black box" to even the coders working on them. ML models optimize themselves over training data; simply knowing how the ANN works, by itself, is useless in replicating or reverse-engineering the model. You need huge amounts of training data, at the very least, too.