Is it necessary for coin dealers to carry an inventory?

Longacre

I view coin dealers as two general types-- the "Walmart dealers" who have literally thousands of coins in inventory, and the "boutique dealers" who have a few coins in inventory just for show, but not an exhaustive selection. Because each coin is unique, I wonder whether it makes economic sense to tie up large amounts of capital in thousands upon thousands of coins in inventory. Assuming that you can get adequate personal service at both types of dealers, isn't it better from a dealer's perspective to know his or her client and place individual coins with that client? Or possibly it should be the client that says to the dealer, "I'm building a set of XXX. Keep an eye out for a nice XX, XX, and XX, and if you see one, call me." Wouldn't this individual placement approach be better for both the client and the dealer? The risk of the dealer having too much capital tied up will be greatly reduced, and the quick and easy guaranteed profits/sales would allow the dealer to purchase a second beach house on Maui. What do you think?

WTCG

There are coin dealers who operate both methods of business that Longacre described. Both methods have positives and drawbacks. The way each business operates is based on the dealers' preferences.

TheRaven

I think you might start off as a smaller dealer, but if you start buying some sizeable estates you could easily turn into the former kind.....

My preference is for a dealers have continously get a flow of coins whether they be large or small.....

RYK

Longacre,

I think that you are on to something, and I think that many dealers, especially specialty dealers of higher priced coins, work this way. However, in order to attract new business, I think it helps for a dealer to have an inventory to show a potential customer the types of coins he/she buys/sells. Having an inventory may inspire a collector to move ina certain collecting direction. Also, some customers are singles hitters (ie they may never come back again for a coin), and you would hate to exclude them from your client base. Also, many coins are sold on memo, so just because a dealer has a coin listed in inventory does not mean that he/she owns it.

Cladiator

<< <i>Or possibly it should be the client that says to the dealer, "I'm building a set of XXX. Keep an eye out for a nice XX, XX, and XX, and if you see one, call me." Wouldn't this individual placement approach be better for both the client and the dealer? >>

Would that actually be a "dealer" or more like an "agent" for the client.

BAJJERFAN

There is nothing MORE DISAPPOINTING than going to buy something only to find out that the dealer doesn't have it and I'm not sure when I will have another. You can't sell what you don't have and if I see that you usually don't have what I want then I probly won't be back.

Julian

There is less and less necessity to carry an inventory of valuable coins. It is so easy to work from another dealer's inventory.

Dealers that deal in valuable material recognize that the margins are not as large as they once were and either purchase popular coins advantageously or extremely rare coins and name their own selling price. The seller must then be very patient, because there may not always be a ready and willing buyer. Remember, numismatics is a luxury!!!

However, as a coin store owner, I purchase anything of numismatic value, so I build up an inventory, but they are not of high value coins.

BillJones

"You can't sell from an empty wagon." If you don't have anything or not much of anything in your case, you are not going to attract any lookers or customers at a show. You have got to have something to draw their attention.

I love want list work. When I have a reliable buyer, he gets my full attention. BUT I've never gotten a want list customer without first selling him something at show or on the Internet. Therefore a decent inventory with a couple of eye catching coins is a requirement.

At the same time I don't want to be "inventory poor." I need to be liquid enough so that when I do get a want list customer, I can find what he wants.

Buying nice coins or taking them on consignment used to be lot easier. Today many dealers can sell all of their good stuff, and they neither need to wholesale it or loan it out on consignment. AND the prices are a lot stiffer than they used to be.

A dealer who is pretty close to me size was telling me the other day that he would like to see a downturn or correction in this market. I fully agree. It's just hard to get good stuff, and the way things are going run-of-the-mill collectors are getting priced out of the market. What I would lose from on the items I have in inventory would be more than offset by the opportunies to buy in a down market.

DeputyPud

Location, location, location. A little different twist on deciding how to stock a coin shop.

I work at a shop part time (work is a loose term doing the thing I love most). This is a very large shop in a small but extremely busy antique / historic oriented town. About 1/8 mile away is a very large flea market setting that is open 3 days a week, a Menonite home cooking restaurant that seats about 600 people, and at least 20 different antique and craft shops.
If the owner of the shop doesn't have at least one of everything imaginable in U.S. and foreign, coin, currency, tokens, medals, supplies, ect... he would lose thousands in sales each day, and eventually his customer base would drop off tremendously. That isn't the case. Each year he grows, and there is always something else that another collector needs and expects him to be able to provide it.
Luckily, he still loves the hobby after over 35 years in business. When the shop isn't open on Sunday, he's at a show buying up what he needs to fill requests.

If his location weren't just right, perhaps he would be forced to downsize inventories. But as soon as he does, he'll start noticing his customer base dwindle.

SFDukie

As collectors we NEED dealers who carry an inventory. No, those here with refined tastes and advanced eyes may not, but they did at one time. IMO, there is nothing like seeing a group of coins that one can examine, inquire about, etc for teaching onself about likes, dislikes, grading, and so on. Yes, coin shows are part of this but not everyone can visit shows frequently easily, etc, and shows can be intimidating for all but the advanced collector-whom to trust?
Lower to mid level "impuse" or gift purchases are fun too-and I trust my local dealer much more than some fly by night "estatedoctor" on ebay.
Don

PerryHall

<< <i>Location, location, location. A little different twist on deciding how to stock a coin shop.

I work at a shop part time (work is a loose term doing the thing I love most). This is a very large shop in a small but extremely busy antique / historic oriented town. About 1/8 mile away is a very large flea market setting that is open 3 days a week, a Menonite home cooking restaurant that seats about 600 people, and at least 20 different antique and craft shops.
If the owner of the shop doesn't have at least one of everything imaginable in U.S. and foreign, coin, currency, tokens, medals, supplies, ect... he would lose thousands in sales each day, and eventually his customer base would drop off tremendously. That isn't the case. Each year he grows, and there is always something else that another collector needs and expects him to be able to provide it.
Luckily, he still loves the hobby after over 35 years in business. When the shop isn't open on Sunday, he's at a show buying up what he needs to fill requests.

If his location weren't just right, perhaps he would be forced to downsize inventories. But as soon as he does, he'll start noticing his customer base dwindle. >>



Pud---Sounds like a great place to shop for coins. Tell us where your shop is located. It won't be spamming since someone asked and you're just answering.

DeputyPud

I don't want to take advantage of this board in any way. My goal is to learn and share.
Since you asked, its in north central Ohio. If you have a desire to take a visit there, email me for more info.
clanewen@worldnet.att.net

MrEureka

However, in order to attract new business, I think it helps for a dealer to have an inventory to show a potential customer the types of coins he/she buys/sells.

Agreed, especially because a dealer's willingness to invest his own money in certain types of coins tells you a lot about his capabilities.

carl

I'd go there Pud, but not sure exactly where Ohio is located. Is it one of our Chicago Suburbs? Just kidding, maybe. But you are so correct as to the location thing. At coin shows everywhere I've been I've noticed that a dealer with a limited amount of coins gets a limited amount of customers. The dealer with mountains of coins gets a continuous stream of customers and many buy something. At coin stores or counters in stores where coins are sold if the quantity is limited, so are the amount of customers. However, if the location is such that other items of hobby interests are carried, the customers also may just buy a coin or two whereas if only coins they may not have stopped at all. Now back to Ohio. Just where is that place? Ohio, I mean.

DeputyPud

Just south of "that state up north".