You just gotta give props to the dealers who have large inventory.
topstuf
Posts: 14,803 ✭✭✭✭✭
I am stunned at times at the proliferation of varieties, types, and scope of offerings from HUGE inventories.
Sure, I know ...some...are "partnered" with other dealers, but it still takes enormous guts to carry lots of inventory on merchandise that can sell slowly or only to specialists.
Bravo to the comprehensive dealers! 
4
Comments
I agree. It probably takes at least $400K in inventory to keep even a small coin business going,
RMR: 'Wer, wenn ich schriee, hörte mich denn aus der Engel Ordnungen?'
CJ: 'No one!' [Ain't no angels in the coin biz]
WAY low.
and remember it takes cash to .....KEEP GOING!
It is daunting.
Yup, tying up too much cash for items that are hard to move !!!
I based that estimate on what I have seen in the inventories of a couple of the B&M shops in Tucson. Mostly what I call 'starter coins'. However, the larger ones do have to have a larger credit line and investment in inventory.
RMR: 'Wer, wenn ich schriee, hörte mich denn aus der Engel Ordnungen?'
CJ: 'No one!' [Ain't no angels in the coin biz]
with most of the coin market flat, I wonder how they sleep at night?
Xanax?
A few dealers own their inventory outright. Many are heavily leveraged. One little insider secret that I learned a couple of years ago is that the big auction companies financially back many dealers. Scary stuff sometimes happens when the market tanks. Lots of risk. Security issues. Some upside potential. It's real work and takes some acumen to be successful.
When I see a new patient in the office I can tell within 30 seconds if they're a surgical candidate. Sometimes I change my opinion after I do a more thorough exam or learn more about their problem, but it's unusual. I think it's the same for dealers. The good ones have a pretty good "feel" for what a potential customer is likely to do. Start wasting their time (or ability to transact business) and things aren't always smooth from there.
And we start threads about why they're sometimes grumpy.......
They have been kept afloat by trading gold and silver (coins, jewelry, flatware).
RMR: 'Wer, wenn ich schriee, hörte mich denn aus der Engel Ordnungen?'
CJ: 'No one!' [Ain't no angels in the coin biz]
"Coin" was only on my sign to make me feel better.
"Pawn" was there to bring in the money.
Look at CVM's inventory (his ebay id is friscomint1793)...he's got 4,647 items listed (as of right now). I can't imagine trying to keep track of that quantity of inventory. Wonder how many cases at a show 4,647 coins would fill up.
I would guess that less than 20% of the major dealers carry substantial long term debt, maybe less than 10%. And smaller dealers are even less likely to carry debt.
But to be fair, I don’t think anyone really knows.
Doggedly collecting coins of the Central American Republic.
Visit the Society of US Pattern Collectors at USPatterns.com.
Plus the eyeball in the case..ala Old Pueblo!
@MrEureka
I hope you're right. Maybe I'm talking to people who don't represent the larger market. I admittedly know very little of the inner workings of the biggest dealers.
And a sweet inventory it is!
Smitten with DBLCs.
You just reminded me of my local dealer’s ongoing pricing ‘malpractice’ ...
I have always been amazed at the large inventory displayed by many dealers at a coin show... and they obviously have more 'behind the table' and 'back at the shop'...I know they do not have the 'inventory turn' of a supermarket. So in a slow or flat market, things must get tight. Cheers, RickO
They blow out what they need pay bills write off Loss sch c.
Until recently, coin inventory was also perceived as "safe" savings, too.
) has interjected uncertainty or "risk" into the arena.
Now something (I wonder what
Oh well. Watch and see.
I am still stunned by the scope of some inventories.
Recently? LOL!I haven’t thought of coins as “safe savings” since early 1989. Still, I’m happy to own too many coins. First, because there’s profit in turning them, even in a soft market. Second, because I like them. And third, because I have a good sense of value, which helps me avoid holding the coins with the most downside.
Doggedly collecting coins of the Central American Republic.
Visit the Society of US Pattern Collectors at USPatterns.com.
Yep. I "liked" them, too. I was a "collector/dealer" ....
....and would KEEP especially nice coins.
This wasn't a real problem as, being in the Sacramento area, I had no REAL buyers anyhow.
Back in the 70's I would travel from Stockton to Sacto to BUY coins FROM dealers every Wednesday.
These coins could be sold to DEALERS in Stockton for a profit the next day.
It has to be attributable to Sac being a "government town" and ENORMOUS risk aversion among the populace.
Stockton, although a place to be from was an amazing source of all sorts of historic collectibles.
As well as having customers who would actually BUY what they liked.
Still, I’m happy to own too many coins. First, because there’s profit in turning them, even in a soft market. Second, because I like them. And third, because I have a good sense of value, which helps me avoid holding the coins with the most downside.
You sound like a SMART guy. One who knows that even when .....DEALING..... in a down market, as long as you sell at market and buy lower, you'll be fine.
Collectors seldom have that luxury.
What always got/gets me is the dealer who will hold and not budge per the current market unless he is selling for more than he paid.
Doesn't always work that way.
But ..you... TURNING inventory will do just fine.
I believe it is one of the most stressful jobs out there. Retail and supply is a tough gig and subject to quick market changes you have no control over.
You can see it takes a heavy toll on some of us, we’re human after all.
The flip side, takes it to make it and if run with a solid business plan and effort, business and inventories grow over time.
It is pretty crazy to think about the total value of some dealers inventory. But it’s like that with any business - they need inventory to function.
I used to work for a party rental company, they set up those big white tents for weddings and other parties and also did exhibit booths for conventions and trade shows among other things. The amount of inventory they needed to function was staggering. We’re talking a few MILLION dollars worth, and they were just an average sized company for that industry.
There’s a small shop in the state I live that I pop into a couple times a year. I remember one of the first times I was in there the dealer gave me a box he said was full of his newer purchases that haven’t been put into the display case yet. It was one of those long red boxes that fits I don’t know how many 2x2s. But it was chock full of coins ranging from $50-$500. That one box alone had to have over $10k in it.
So I wouldn’t be surprised if some of the bigger dealers have inventories valued in the millions of dollars.
I think this is more accurate. The coin dealers I know are generally NOT leveraged and only take out short term loans.
I think people are misunderstanding a lot of the coin business. Big specialty operations are rarer than small operations which mostly make their money on wholesale flips, widgets and "scrap" (90%, gold and silver jewelry) etc.
Most of those small operations are NOT carrying large numbers of varieties and specialty coins because of the inventory cost issue. They may specialize in a coin type and have varieties in a limited area. But even a small operation is usually carrying a couple hundred thousand or more in inventory. [It adds up quickly, believe me.]
All comments reflect the opinion of the author, evn when irrefutably accurate.
Work is work. Inventory is heavy. A life in metal. What's new ?
``https://ebay.us/m/KxolR5
I have been involved as a business lawyer (M&A) for 20+ years and recently have been dabbling in business brokerage, so I have a pretty good idea how various businesses generate money.
I would think being a general coin dealer in 2018 would be a very hard way to earn a buck.
Indian Head $10 Gold Date Set Album
in 2018, 2017, 2016... LOL
Normal businesses laugh at margins in coins. What other business asks you to lay out $1200 bucks to (hopefully) get $1250? [ounce of gold - and that's a GROSS margin]
All comments reflect the opinion of the author, evn when irrefutably accurate.
...as I've said at numerous shows,
I'd rather be a coin dealer today
at 68 years old than a coin dealer
today at 23 years old.
Turns Ratio is the key, how many times you turn your inventory in a year. So if you have $1m in inventory, and sell $3m a year, your ratio is 3/1 = 3. Auto manufacturers were content at that ratio, until the 1970's when the Japanese came in and their turns ratio was over 100, ie, average part stayed in inventory about 3 days. When I managed a manufacturing plant for Amazon, typical was sell on Day 1, Day 2 receive raw materials and produce finished goods, and ship on Day 2. Effectively only bought to manufacture what was already pre sold. Margin was FAR FAR FAR higher than coins.
With ebay, internet, BST, web sites, etc., the reason to even have a significant inventory becomes VERY murky. There is only 1 manufacturer (US Mint). Wholesale is a phantom mis statement, as "wholesalers" are merely swapping/buying stuff, marking it up, without any value added benefit. They do not control the creation of new products, and with the exception of SAE's and such, have no "exclusive". Real quick, with ebay, internet, BST, web sites, savvy buyers will knock out the parasites in the middle and deal directly with the asset holders.
Vision a world where EVERYONE had an ebay type site, all coins (or whatevers) were listed at auction. All the grannys, widows, hiers, etc, skips the B&M and lists on line. Inventory ceases to exist except to modulate supply imbalances and speculative buying. As it is individual to individual sales , probably will not bust the $100K sales tax limit, so no sales tax.
Traditional dealers will be hard pressed to validate a reason for their existence.
Many "manufacturers" are cutting out their wholesalers, distributors, stockers, etc. and going with direct sales. Instead of selling it to a wholesaler at $50 who then sells it to the distributors for $63, who then sells it to the stocking store for $78, who then sells it to the customer for $100, the manufacturer sells it on their website for $75, Manufacturer's profit is up 30% and the customer saves $25.
What percentage of these dealer inventories are consignment coins? No one has brought this up (or if they did, I missed it).
"Seu cabra da peste,
"Sou Mangueira......."
Most sleep very well. Anyone big in the market does a few things, Hedge pricing, buy quality items and accrue reserves.
Best place to buy !
Bronze Associate member
This is a true statement. It is not unusual to make a $300 gross profit on a $100,000 sale of gold eagles. Even though it only takes an hour or so to handle the trade, you have a certain level of risk. That's why we focus on collector coins as the core business and precious metals are an auxiliary revenue stream. We depend on finding varieties in bulk deals that we purchase, and/or getting better-than-expected grades on rare coins that we submit to the two main grading services. To make it work, you have to work super hard and you better know your stuff.
It is a lot of hard work, with many risks, and daily headaches. For example, when someone walks into your store to tell you that some of the coins you purchased from a customer 2 months ago are actually stolen. That was a few days ago. Or, when two masked thugs blow out the front door of your store and steal two duffle bags of your coins and end up in a high-speed police chase. That happened in November. And don't forget the nearly daily occurrence when people come in with counterfeit coins, bullion or jewelry. That is happening more frequently. And that is just a few off the top of my head.
Indian Head $10 Gold Date Set Album
Big profit margins.
I like NGC holders.
But more and more I notice that the dealers I work with are strictly PCGS.
Hard to find nice NGC coins due to the above.
IF they are buying AND selling in the flat market.
I hate to say something nice about him, but MrEureka is one of the smartest dealers in the coin business. Don't tell him I said that!
It varies dramatically from dealer to dealer, and from time to time. But generally, consignments don't make up a big portion of most dealers inventories.
Doggedly collecting coins of the Central American Republic.
Visit the Society of US Pattern Collectors at USPatterns.com.
I can't tell you what the percentage of dealers caring loans is because I don't talk to very many dealers so my sample size is very small. I did speak with 2 that have what I consider a large inventory, close to or over $1 million dollars and both told me they have loans for the coins in their inventory.
Donato
Donato's Complete US Type Set ---- Donato's Dansco 7070 Modified Type Set ---- Donato's Basic U.S. Coin Design Set
Successful transactions: Shrub68 (Jim), MWallace (Mike)
IF they are buying from the public and selling to collectors.
Tremendously interesting thread. I know that despite a certain degree of grading acumen, a good business sense, a personality that lends itself to the bourse, and a willingness to accept minimal profit . . . . there is NO WAY I would leave my current career and EVER attempt to make a living in coins . . . . .
Drunner
Well, I left academia to start a biomedical engineering business. Took a bit more than $1M just to buy enough small equipment items to set up basic electronics and biochemistry labs. No income for the first year either. We're doing fine now, but I strongly suspect that the value of used equipment and supplies is a lot less than what one could get for a coin inventory (purchased wholesale), on a cost percentage basis.
Starting any business (other than basic consulting) takes capital. Still, I don't have the temperament to be a coin dealer---I don't like to haggle, put lipstick on a pig, constantly worry about theft, and I hate hot dogs.
RMR: 'Wer, wenn ich schriee, hörte mich denn aus der Engel Ordnungen?'
CJ: 'No one!' [Ain't no angels in the coin biz]
I am a small (to medium) sized specialty dealer.
I have been working very hard to build my inventory. I carry no Debt. I do not sell consignment coins. I have a cash reserve. I own my inventory outright.
I keep adding to my inventory almost every week. Currently, my inventory is the biggest it has been and is growing nicely.
@ErrorsOnCoins
Are you a full time dealer?
"Got a flaming heart, can't get my fill"
Yes
Still working on building the business and inventory.
I used to be (and still am???) a full-time professional nature photographer.
I guess I find coin dealering so easy because professional nature photography (only) is close to impossible .....
Looking for Ebay buck deals this morning, I saw a coin that a large and diverse Ebay seller bought from me over a year ago. Margin after fees is 10%-15% (if he moves it) It has been listed continuously.
One wonders how long dead inventory can be carried, particularly if supported by debt.
Sometimes the "debt" is unpaid previous "deals."
Back in the wild days of silver, those were pretty common.