Two days ago, I was at dinner when I received notification of five offers from E-bay. Immediately I went to go check them:
1. First offer was for $1 on my asking price of $1.20. Ok, I thought, good, reasonable offer. So I accepted it.
2. Second offer was for $1.25 on an item I had priced for $4.00. It had a catalogue price in Unitrade of $5.
3. The third through fifth offers were the same as above: $1.25 on $4. Each item had a Unitrade value of $5.
So basically, this customer wanted us to sell him $21.50 of Unitrade value for $6.
As dealers who make our living supplying stamps to collectors, there is no way that we can accept an offer of 25% of catalogue from a customer under any circumstances. The reason we can't is because in addition to the actual cash outlay associated with my inventory, we have other costs that we have to cover, which include:
1. Interest costs on money borrowed to purchase inventory so that we actually have it on hand when our customers come looking for a particular stamp to buy.
2. Listing fees, monthly store fees and final value fees that we pay to E-bay.
3. Paypal fees that we pay to Paypal for accepting online payments.
and then the biggest cost of all:
4. Our time, of which we only have about 120 hours a week. Half of that time is spent sending out orders, performing administrative tasks and writing blog articles.
You would be surprised at just how much time it takes to list 1,000 stamps on E-bay, with every stamp being accurately graded, described and scanned - all so that our customers can browse for their stamps, order them, pay for them and receive them - from the comfort of their own home. Customers do not have to drive to a bricks and mortar shop, spend money on gas, find parking and pay for it. It takes us an entire month of 60 hour weeks to list 1,000 items - some 240-250 hours. The minimum wage is $11.25 per hour here in Ontario. So that means that our profit needs to be upwards of $2,700 for those 1,000 items just to justify our labour. Assuming that all 1,000 stamps sell within a month, maybe at 40-50% of catalogue, we could do that.
But the problem is they don't sell that quickly, even if the prices are low. I would say, from experience, that in order to supply collector demand, adequately we have to carry more than 20-30 times as much inventory as we expect to sell in any given month. Those blocks probably cost us 50c to 75c each, so while a gross profit of $3.25-$3.50 might seem excessive to you, it really isn't when you consider how many we have to sell to pay ourselves minimum wage for 250 hours per month. If I were to accept the offers that we received, we would have had a gross profit of only 50c to 75c on each item, which is hardly worthwhile when you consider that it takes about 10 minutes to list an item. The other thing is that we had to spend time with our ultraviolet lamp to properly identify the paper type on each of these items too, over and above the time we had to spend grading them and listing them.
I would point out at this juncture that fewer and fewer professional stamp dealers are willing to go to all this effort for modern material, and I can now understand why. Most don't grade for centering, treating everything as VF, even if it isn't, and most don't check paper types, which means that if you are looking for this material as a collector, you are on your own. Your only viable option is to purchase large lots at auction and go through them yourself, figuring out what to do with all the duplicate items you don't need or want. That is fine if you are familiar with the paper types and printing differences. But what if you aren't? What if you are just starting out? What if you have bought a dozen large lots, gone through them all and still have gaps that you want to fill?
So with all that in mind, I politely countered the customers four offers at $3.00 each, which was $1 off our original asking price, or $2 less than the catalogue price for each block. A short time later, I received an e-mail from my customer with the following message:
Before we decided to pursue stamp dealing full time, I was a partner in a mid-sized Toronto accounting firm, earning over $155,000 annually. My passion for stamps, and my desire to contribute to the development of this wonderful hobby of ours was such that I was happy to forgo this level of income and comfort to become a full time dealer. My partner, Steph had a career in home health care that she left to help me with the business. I felt for many years that there is a very large contingent of collectors whose needs are not being served as well as they could be by the existing dealers and auction houses. For one thing, many collectors are on tight budgets, and can simply not afford to spend the amounts of money, in one month, that they would have to spend to participate in most auctions. Others are interested in forming specialty collections of less expensive stamps, and cannot buy anything other than large lots at auction, which may not suit them. Still others, are so specialized that they find that many dealers are unable to help them, either because their level of knowledge exceeds that of the dealer, or because the dealer just doesn't have any of the material they need. Steph and I also feel that not enough is being done to introduce newcomers to the hobby, whether they be young children or older adults. We also sense that the hobby has developed a reputation among non-collectors as overly serious, stuffy and elitist - something that we do not think bodes well for the future health of the hobby.
So we decided to do something about it. We started writing blogs on a weekly basis, in which we share our philatelic knowledge, and love for the hobby with anyone who cares to read our posts. I started building a specialized stock of Canada and British West Africa so that eventually we could offer any collector of these countries whatever material they are looking for. We hope to do so with the most accurate and thorough descriptions possible and with fast, reliable and friendly service. We consider it an honour to be able to help our customers build their collections, even if our involvement in that regard is limited to just a few stamps. We are well aware that many of our competitors can offer individual stamps more inexpensively than we do, but we am also confident that they do not offer the same range, nor depth of material that we do. Nor do they describe it as thoroughly. So we do not feel that anyone owes us their business, nor do we expect that most of our customers will buy all their stamps from us. Realistically we expect that most of our customers will come to us when they are tired of looking elsewhere for the material they seek, or when they value our service and are willing to pay more in order to receive it.
We believe that there is absolutely nothing wrong with attempting to build your collection as cheaply as possible. Buying large auction lots at 10-30% of catalogue, going through them, picking out what you want, and finding a way to dispose of what you don't want is an excellent way to do this. But understand that it is a lot of work. It might be work that you enjoy doing, and if it is part of your hobby time, you may not have an expectation to receive financial compensation for that time. However, your ability to buy at such low prices is effectively upfront compensation for all that work. As a professional, we have to generate a return on that time, otherwise we cannot remain in business.
So I believe that it is completely inappropriate to approach a dealer for something specific, like this gentleman approaching us for these blocks on a specific paper type, and to expect the dealer to sell to you for the same price you would pay when you are buying in bulk and sorting the material yourself. When you do this, and your justification is that you could find the item yourself in a bulk lot, and why should you have to pay more, you are effectively telling the dealer that he or she should be willing to work for free. It is akin to going into a retail store and offering the salesperson 25% of the sticker price, or going to a restaurant and offering the waiter 25% of the menu price because "I can always cook this at home". The only response that one can give to this is effectively "Good. you do that".
We are very happy to entertain offers on our material that are reasonable in relation to what I am asking. Even if you read this blog every day, ask us questions about stamps and never buy a single stamp from us, that is completely fine. All we ask is that when you do come to us for a specific stamp, please show us some respect for what we do and either be willing to pay our asking price, or a reasonable proportion of it.