Dealers? We Don't Need No Stinkin Dealers!

"You are currently attempting a copy-cat business model of buying stamps cheap and looking to flip online with good customer service. No innovation here. Your expectations need to be in-line with what you are attempting. You have dissected the tactical business operation in great detail. But the strategy is weak."

I'm not sure what you are talking about. Have you been to my website? I'm actually not looking to flip online. I'm trying to build an in-depth specialty stock that I sell online, backed by consistency - of descriptions, of quality, or grading and I publish two blogs that are packed with information for the specialist that I've been told is an invaluable resource for free. I'm not sure how much more innovative a dealer can be than to give you a personalized retail experience at close to wholesale prices.

My statement about E-bay is that they manipulate visibility of items. I know it is difficult to accept. But it is happening. I've said it before, but I'll say it again here. E-bay makes the most money by selling store subscriptions and advertising - these things have no marginal cost, and they represent a stable, guaranteed income stream. But unless the market of buyers grows at a faster rate then the sellers, there will come a point where a lot of sellers quit because they are not making enough and E-bay loses out on the fees. Because final value fees are so much lower than store fees, one lost subscriber costs e-bay way, way more than a few lost sales. So, E-bay's algorithm adjusts the amount of traffic well performing sellers get in order to give it to the newbies to encourage them to sign up for a store, and to ensure that the maximum number of store subscribers stay in the game. This is unethical, because they are meddling in the free market. If you pay rent in a mall you expect to have full access to that mall traffic, not to have a mall representative decide "Ok well you've sold enough this month, it's time to give your competitors a turn." It's wrong, especially if you just took out a business loan, made commitments and hired people because you were growing, and now you are screwed through no fault of your own. You don't think that with all the information E-bay has access to that they can't do this? Well, ok. You are entitled to your opinion.

That is what I have been saying all along on here. I have the numbers to prove what I am saying is true. But I sell using fixed price listings with best offer. So please don't come and tell me about how you sell at auction and your sales are growing. They may well be. Your business model is different from mine. My issue with E-bay is their complete secrecy and lack of transparency. If I had known what I know now, I would still have opened a store, but I would have done it very differently. I would have sold cheap common modern mint stamps for 99c a piece. You'd be surprised how well that stuff sells and E-bay rewards you handsomely for that. But I would not have bothered wasting my time listing single stamps between $20 and $200, because it doesn't matter how cheap you price them, they won't sell because they only get seen 10% of the time, and if they don't sell within that first month, they drop into the abyss.

But Rismoney, I really don't understand what you mean when you say my strategy is weak. You claim to want to offer helpful advice, but I cannot tell what observations you are basing it on, so it is basically useless to me. But if you would care to clarify it, I'd be much obliged.

"I think the reason we may tend to remember the "bad" dealer(s) is because it sours our enjoyment of the hobby"

I agree with Stampman. It's like at the grocery store checkout line. You have a stronger impression of the time you choose the wrong (longer) line than when you hoose the one that moves quicker.

I'm sorry but this is hardly the purview of a flea market (or ebay). There are dealers flying the banner of the ASDA, with consent, who are known to alter stamps or purposely misidentify them. And other (large, well-known) dealers consistently overgrade gum condition and then blame it on their eyes or subordinate staff. Nonsense. I don't believe it for a second. If their eyes are bad, isn't it time to retire or at least stop grading gum??

The worst offenders for misidentified or overgraded materials are often the largest sellers with the vastest means which provides the greatest access to play the game. I see this on ebay, I see it on Hipstamp, heck I even saw this in Columbus last summer. But this isn't new, is it? Didn't we all see philatelic grifters in the past?

The market has changed due to the internet, period. Supply and demand are the irresistible forces over which none of us has control. Collectors are NOT looking for bargains; they are looking to buy fairly in light of new market conditions that have evolved since the 1990's. If Scott's has not (or will not) kept up with the evolution, then collectors have to run to a different % of catalog. If a seller wants to buy at 15% and sell at 85% of Scott, then it's essential to recognize the market conditions under which you will compete with those metrics. Some will buy your stuff, some will find it too expensive.

Just sharing my feelings here, but when I see dealers writing about how ebay has ruined the stamp market, it sounds like so much whining. The world has changed, and frankly none of us should pine for the old days/old ways. That ship has long since sailed.

Read the book Blue Ocean Strategy or at least Google it. My belief is most dealers are in the Red Ocean, and you have entered it as well. Their local presence used to be enough, but in the global market place differentiation is really challenging outside of price.

Building a site with a lengthy URL, a niche site within a niche population of users are hurdles I just don't think you can overcome. I'm not trying to be a naysayer. I have seen this pattern fail. Your time is worth something and you won't be able to compensate yourself enough for what you bring in.

Being a seller in ebay is a craft unto itself. It is completely different from being a good philatelist, a really knowledgeable dealer, and a really strong accountant. Marketing a listing for sales against an audience as wide as ebay provides, is a discipline unto itself. Trends are very complex to distill and it's very easy to allow sample size bias to color your judgements.

My belief is that folks who claim to know all the pieces and more probably know each piece a little bit less than they think they do.

I commend you for becoming a stamp dealer in 2019. I just fear that this boyhood dream of what a modern day stamp shop is, isn't just a deep blog, or a shopping cart, or a chat feature or really good looking site (I do really like what you have done) that works on mobile.

On the dealing side, my firm belief has always been the risk is too high for all but the best funded players.

The businesses that facilitate the transactions like a hipstamp or ebay will prove to be the most viable since they just want a cut of your action. They need folks like you to open stores and hawk wares. You will always be at their mercy, unless you go high end offline, treaty sales and mingle in the upper echelons of philately.

The stamp business has and is changing, and I see your business as so far in the middle, that it becomes irrelevant. Can you make it work yes. But it's not going to be a home run. It's just too red.

I also believe the backroom trading the dealers do is the lifeblood of their operations. One dealer gets an error but isn't an error dealer, so he trades wares with the known error dealer and he hooks him up with stuff reciprocally. It's the same dealers doing the same things for decades on end. It brings a lot of consolidation, and creates specialized groups that engage in cornering. Then the supply side is wrapped up, the flight to quality is managed and the subpar stuff is fanned out to the rest of the masses.

Rismoney, I appreciate your last response. I just googled the book and read a quick synposis. I agree with you that the existing stamp market is a red ocean. There is no question about it. But creating a blue ocean is exactly what I am trying to do, and I might add having some success. On E-bay I did quite well selling modern specialized varieties that other dealers either did not have tie expertise to identify, or were unwilling to take the time to identify. My sales were growing and brisk, until the algorithm limited them. If that were not the case, I would not be saying what I am. I would simply have gone back to accounting. But I have seen enough success and enough momentum that I know I'm on to something - creating a new market among collectors who have been largely ignored by the upper echelons of the hobby.

I don't want to compete over the ability to sell the top grade material. I'm quite happy to let the big boys duke it out. I'm quite happy to focus on stocking every printing variety of a modern definitive set, because when I get a want list I KNOW I can fill it and I can generally get a very good return on what I paid, because in that scenario I am really helping a collector fill a space that they want to fill, without them having to go buy another collection or large lot just to get a few stamps.

The blogs are there to inspire collectors to go off in new directions and there are very few if any dealers doing what I am doing.

So, I don't think my strategy is weak at all. I would agree with you if my goal was to be like every other dealer. But it is not. Maybe I'm doing a good enough job communicating that on my website. I'm actually quite sure I'm not. That is why I am planning to make a major investment in marketing.

I know it is risky, but if I don't try I will never forgive myself.

Another thought I had is that there is no way that I can possibly convey all the thought and consideration that has gone into my business plan. The written plan I just completed and presented to the Business Development Bank of Canada is 85 pages of text and about 50 pages of spreadsheets and calculations. You folks don't know me personally, so it is easy to assume that when I speak of stamp dealing that my approach is the same.

I know being a dealer today is risky and hard. But I'm not here for easy. I'm here for hard and tough, but meaningful and satisfying. Like I said, I can't think of anything more meaningful that serving this great hobby that has saved my life, countless times and I'm sure it has done the same for others.

Welcome, my friend, to the peculiar and strange world of philately where you no longer have to worry about regummed or reperforated stamps; have to compete with others over a "regular" postage stamp that is microscopically better centered than another; or need a special light to study the tagging on the stamp.

If I have helped to convert you to the far limits of what can be loosely called "stamps," then I am quite happy.

Muh wah ha ha ha ha (he cackles in glee as he adds a check mark next to your name on his list).

Jim

I have been told many times by many dealers that if something is not in the stamp catalogue then it doesn't exist and it does not interest them. Unfortunately, catalogues are not always a source of the most accurate information and it can take years at times for some catalogues to change and correct things even though much information has been published on something. This can be advantageous to those who can obtain certain varieties that others are unaware of because it's not in the catalogue but it is also disadvantageous to most who do not have the most up to date collecting information available which makes them miss out on things that they may have or come across.

I love dealers like that; I have found some very nice things that way.

Yes Jim, I'm down the rabbit hole.
Bought the first collection a couple days ago... went for way cheaper than I was bidding on it too. :)

Step #1 – Spend a number of years enjoying a hobby and gaining knowledge
Step #2 – Think to myself 'hey I know a lot about this stuff, I could make some money doing this'
Step #3 – Ruin my hobby by turning it into a business
Step #4 – Once I no longer enjoy the hobby, I become critical of various things in the hobby

I tried turning my hobbies into businesses twice before and it went down exactly as described as above so I learned my lesson and will not try this with philately. My opinion is that successful businesses solve problems, so it is inevitable that I end up associating those problems with the hobby. If I work all week then the last thing I want to do with my free time is more work. So now any time the thought crosses my mind to turn philately into a business I say to myself "Doh, why would I want to ruin something I enjoy?"

Knowledge gets you a job, but wisdom gets you a life.
Don

Depends on the person, and depends on how it's done. I work in the hobby, but I work for other people. I love it, it's the best thin ever. And I still love collecting as well.

I agree that there are some dealers who are truly excited by the hobby, but in my opinion the majority are not. Some are motivated by making money, some are burned out, some are just bitter people. But when you run into a dealer who is truly passionate by the hobby, they a huge asset to philately. So the question becomes, in the internet age how do you relate your excitement and translate your passion into value-add for potential buyers?
Don

Don, I agree 100% that if you become a dealer because you are motivated by money, you will end up hating the hobby. I have been doing it now for 4 years and it is, bar none the most difficult thing I have ever done. Building a loyal collector base is extremely tough because there is very little customer loyalty left in any business let alone stamps. In fact, it can be argued now that most businesses don't have customers in the truest sense. What they have is buyers. The difference is subtle, but very significant. A customer is someone with whom a commercial relationship exists and usually if serviced well will return because they value the product or service and the company's value proposition. A buyer values none of those things and usually only cares about price, so there is no relationship and no loyalty.

But having said all that, the sense of satisfaction that comes from actually succeeding in building that base, even if it is not enough to make a full time living on, is very hard to beat. It is more satisfying than anything else I have accomplished in my professional life.

I'm not saying by the way that you were motivated by money when you tried to turn your hobbies into businesses. I am merely going by what you said "Hey I know a lot about this stuff, I could make some money doing this.". If you replace that with "Hey, I know a lot about this and there are plenty of ways I could help collectors fill needs that other dealers and auction houses ignore", then I think it is possible to succeed.