Could an old time dealer build his business today with the same premium-pricing business model he us

Longacre

In another thread, a very astute member of these boards made the following quote, in response to my question about whether the current red hot market has actually caused a decline in numismatics (lightly edited): "Could an old time dealer build his business today with the same premium-pricing business model he used 40 years ago?"

I found this quote interesting and worthy of futher discussion. With the advent of Ebay, and everyone and their grandmother calling themselves a coin dealer, there is certainly more competition in the marketplace. Heck, even Longacre was actually thinking of not working for a living and dealing coins instead.

For those old time dealers who have been in the marketplace for longer than the past 3 years during the white hot market, do you think they could use the same premium-pricing business model that they used decades ago? What has contributed to this change in the market? Is it simply more avenues to purchase coins, or is it the availability of more information in print form or on the internet? Do we blame Whitman for this change? Or is this simply the market forces working as they should, and a more informed buyer will drive prices to where they should rightly be?

ilikebuffaloes

The internet has caused most of this in my opinion. Access to information about coins is easier and faster (and it is easier to spread false information to manipulate the market some too). It doesn't take much to set up a web site in your home and you can accept credit cards through a number of services without really setting up a merchant account.

But the ability to make enough of a profit to make a living at it is another story. It is not as easy to acquire an inventory of classic coins when you have to go to auctions or estate sales as it is when you have a B&M store that people bring the coins to you. This is another reason why there are more modern flippers/dealers. You buy direct from the Mint and hope the item sells out and jumps up in price (if it happens before the 30 day return is up then you really do well). But this doesn't always work out either especially when the Mint changes their order policy after the fact or a sold out item becoms available again.

So while the barrier to entry might be low, the ability to survive long term is tough. But dealing part time has become more of an ideal way of making some extra cash without quitting your day job!

Just my 2¢

crypto79

Have you guys been to a well established B&M lately, they're not giving the stuff away for free. But back to the point there will always be premium dealers w/premium product in the coin world because at the end of the day if they have a rare coin that a few people want, you must play on there terms. and besides I believe in the premium for being able to go into a place with like minded people to touch and see what I'm looking to buy and talk about stuff I can't or won't buy.

MrObvious

I cannot manage to recall where I read this, but there was a relatively recent essay by a well know dealer (Halperin perhaps?) addressing just this point. He felt, and argued fairly persuasively, that the internet and the explosion of information will eventually blur the distinction between dealer and collector to the point that neither will mean what they have in the past. In the future, he speculated that there will be neither collectors nor dealers, but simply "numismatic enthusiasts" who buy, sell, and trade numistmatic items for fun and sometimes for profit. Like this thread, it is a thought provoking idea.

mrearlygold

It's absolutely true what DaveG said and its great that someone had the balls to bring it up. Personally I find myself fighting for 5 and 6 % on coins valued at 50-100K

The business is MUCH more competitive for classic rarities than ever before.

Dentuck

While doing some research for the upcoming Guide Book of the Official Red Book of U.S. Coins, one of my editors found this in the December 1996 Numismatist, written by Q. David Bowers, telling about his first ANA convention, in 1955:

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"A dealer from Nevada at another table, who called himself the 'Butter and Egg Man' because that was his business back home, had hundreds of sparkling $20 gold pieces. At the time, the price of gold was $35 per ounce, and as strange as it may seem to read today, the coins sold for just a dollar or two more. For about $36 each, you could buy all the double eagles you wanted. How a profit was made in such transactions seems puzzling in retrospect."

= = =

Obviously such "bulk-order" transactions of low-margin material offer great opportunities for cherrypicking (not just varieties, but highest-quality coins with strong strike, full details, superb eye appeal, etc.).

Equally obviously: sparkling Mint State double eagles are no longer humdrum "3% over spot" commodities. But what is the equivalent, in today's hobby? What has that potential to take off in the future? Medals ... tokens ... world coins? So-called dollars? Civil War tokens?

au58

No, the proliferation of information (printed, electronic, etc.) precludes this.
The first, most signifcant difference was the grey sheet. The latest, most significant difference is the internet.

The world is a much smaller place now. Even car dealers can't sell at the same margins they used to sell at.

Steve27

"Could an old time dealer build his business today with the same premium-pricing business model he used 40 years ago?"

No, first his overhead is much higher than the cyberspace based dealer, and the widows, from whom he bought material at low prices, now have access to the internet (at least some do).

pennyannie

No it would be tough. I am around quite a few coin stores on a weekly basis. I would say the bulk of the profit comes from non collectors bringing collections to sell through the door. So you have to have a good amount of walkin traffic. I think today you have to have a large network of customers and other dealers to make it work. Just unlocking the doors and turning on the lights is no quarentee of sucess anymore. My best deals come from B&M's. It just takes time for good stuff to come threw the doors and the patient are rewarded. I know many collectors that have never bought a single coin from ebay and have 6 figure collections. Ebay is a dirty word to some collectors and dealers alike. I would think to truly do well you would need a balance of all the above.