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Are things a little bumpy for the average dealer?
DHeath
Posts: 8,472 ✭✭✭
I usually take Tuesday off, so today I got to visit a local dealer. Nice folks, husband and wife who also sell jewelry. I talked to him for some time, and he's a fellow collector at heart. I picked through the proof sets and found a few I liked, and chatted about the coin business. He was of the opinion business was off. I've read lots of posts about the market being hot for high-end stuff, but I was wondering what it's like for the average dealer. He just got back from one of the annual shows (local), and said it was soft. In fact, he said for years he'd done $100k+, and last year he did $38k, and this year he did $10k. To make things worse, a grand of that was a bad check.
BTW - he was nice enough to open 4 sealed boxes for me to look, and when I tried to pay for my purchases with a credit card, he said just pay me the next time your in. Man, I wish all business could be like that.
While I'm at it, I'll put up a pic of a truly frustrating coin. It is an off-center strike, with lint struck in the obverse, and lots of tiny milk spots that might dip off. Worst of all, there is a chunk out of the eagle's beak. It is straight out of a sealed box.
Why did I buy it? It has contrast, and it'll remind me of what I'm still searching for. If I squint, it looks like what I'm hunting.
BTW - he was nice enough to open 4 sealed boxes for me to look, and when I tried to pay for my purchases with a credit card, he said just pay me the next time your in. Man, I wish all business could be like that.
While I'm at it, I'll put up a pic of a truly frustrating coin. It is an off-center strike, with lint struck in the obverse, and lots of tiny milk spots that might dip off. Worst of all, there is a chunk out of the eagle's beak. It is straight out of a sealed box.
Why did I buy it? It has contrast, and it'll remind me of what I'm still searching for. If I squint, it looks like what I'm hunting. Developing theory is what we are meant to do as academic researchers
and it sets us apart from practitioners and consultants. Gregor
and it sets us apart from practitioners and consultants. Gregor
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Comments
The low end of the business is a whore's business where people slug it out every day on ebay. Tiny to no margins with lots of work.
The high end needs capital and an established distribution network.
If you are in the middle it does not look good either.
So who's making all the money?
<< <i>He just got back from one of the annual shows (local), and said it was soft. >>
I hit the show at the Tacoma Dome this past Saturday. It's a three day show and actually one of the larger in my area. It was like visiting the morgue. Every dealer I talked to was crying the blues, except one - and he always lies. They said it had been dead Friday also.
Russ, NCNE
my experience tells me if you're hoping for the milk-spots to dip off, well, you're hoping for too much. they are actually a part of the coins surface and not a stain on it. they may lessen but they can't be removed.
about local shops, my guy has been in the business for about 25 years and he specializes in bringing it in the front door and out the back. not much high end stuff, a lot of "collector material" that fills holes. from that perspective i would take umbrage with ohbaby's whore comment. the misconception is that we constitute the norm when in fact what goes on here at the forum and in our collecting circles is more of the exception. i tout this place to anyone who will listen and not many, if any, have taken heed of my advice to drop in. i consider myself priveledged to be able to get what is given here. the advantage it gives me over the average "hole filler" can be staggering.
small scale dealers who miss the boat might be trying to be more than they really are, not doing what they're good at. while the hobby is changing there is still a need for dealers who cater to much more than high-grade-pop-top-slabbed-key-date-rare whateveryouwanttocallit. even at the last ANA there were dealers like the "whores" who had steady business and one was me. they often have the things i'm looking for and i make no qualms about that, in fact, they can often be cherrypicked and don't seem to care as long as they "make 5 bucks" and get on to the next deal.
al h.
Jon, I think you're off by an order of magnitude.
disagree with. But it's not only the high end coins and the mega rarities which
are hot, it's also the very low end and the starter coins that are sizzling. Sure
the sizzle isn't as loud but for those who deal in these markets it is important.
Coins like good condition indian cents are going for nearly double what they were
a year ago. Culls, v-nickels, barber coins in AG/G, are all up sharply. Clad singles
and sets in unc are higher and very easily sold. BU rolls of 1934 to date coins
are also very strong on the wholesale market.
These coins are hot because they are the kind of things that new collectors will
find interesting. and there are an awful lot of new collectors. This doesn't help
the little coin shop owner a lot because they don't stock a lot of good indians. There's
never been a big demand for things like mint sets and cull shield nickels so they will
only have a small assortment of them.
As time goes on the newbies will probably feel more confident spending more money
and will develop a taste for things like XF indians. Dealers who are able to change
with the times and adapt to market changes will see much better days than the current
times. Those who won't change will sell off their stocks at a good profit which will be
used to pay the rent and lights. Little ever really changes.
grammar
1. Internet: obviously a huge force in the coin business. With ebay, anyone and everyone can be a coin dealer. Even me!
2. Set Registry phenomenon: how does a local dealer keep the right stock in his store for folks participating in it?
3. Time crunch: I do not know about others, but I have zero time to stroll into a coin store and browse and chat. (I am only here now because my daughter is napping in the other room!). People work more hours than in previous generations.
4. Specialization: While I do not think the message boards here represent the coin collecting populace at large, I think the boards are probably representative of the collectors that spend the most money. And we are specialized! I want to buy original surface Dahlonega half eagles. Don't bother trying to sell me Monster Morgans, Full Bell Frankies, Charlotte half eagles, or even dipped Dahlonega $5's in a PCGS holder! How many traditional local dealers have one of those in stock?
Robert
things aren't as focused in my area as they may be in yours. here's how the local guy survises your four points:
1. Internet: HE really doesn't have the time for it.
2. Set Registry phenomenon: It doesn't even figure into anything he does. He may not even be aware of it, wouldn't know what you were talking about if you mentioned it to him.
3. Time crunch: Evidentally there are enough other collectors who do have time to go to shops and shows, at least enough around here to keep him and his helper busy.
4. Specialization: The members who frequent the forum may on average spend more than collectors as a whole, but we are outnumbered by the reast of the hobby by such a degree that it doesn't even factor in. The local shop owner does indeed specialize. He caters to the needs of his customers as any good business man in any business should. Many a time I have been sitting with him and a customer will walk in only to be greeted by Rich who has already wheeled around in his chair to reach for whatever that person might be coming in for.
My take on this whole discussion is that Coin Dealers are business men/women who are successful based on how they operate their businesses. The ones currently struggling would probably fail in whatever other venture they might choose. My local dealer has been successful in several other businesses. Another local guy has a successful roofing company. He does shows almost every weekend is considering retirement from that soon. I have no doubt that he will be a success if he turns his energy to coins on a full time basis and that he will squeeze someone else out. He won't affect Rich much, they'll probably team up. Number two is keenly aware of the Internet, Registry and overall the segments that Rich avoids.
Al H.
I appreciate your perspective, and I believe you are correct. Someone who is intelligent, hard-working, and customer-focused will probably succeed in whatever he/she takes on, including a local coin shop.
In my mind, I have the vision of the "the old coin shoppe" that I grew up patronizing in the 1970's. The dinosaur that owned it is probably extinct by now. Fast forward to 2003 in St. Louis, MO. The two coin shops that are in my area are hybrid coin/jewelery/bullion shops. The odds of my finding I coin that would interest me are about the the same as the Cincinnati Bengals winning the Super Bowl this year!
Thank you for the thoughtful response.
Robert
the shop i grew up in is also no longer operating. i bummed out several years ago when i went to it after some abscence to find it was shut down. about a year ago i found out the owner had died.
maybe you missed the thread about a year ago, but cacheman went across several states to a family reunion and he stopped at whatever shops he could find. one was your "dinosaur" and operated by a gentleman that Scott said looked as though he were living in 1950!!!!!!!!!!!!! the guy didn't even have a phone. he had talked of going back there, don't know if he ever has. sounds to me like it could be heaven or hell.
al h.
I think these dealers could exploit the Internet, the time crunch and the specialization issues by moving towards a buy-to-order model. They should find a way to get collectors to come to them for the coins they want without the expectation that the coin will be sitting there in stock, similar to a "want list". Show collectors why they would benefit from having a dealer who knows what they want and what they like, and let the collectors use the dealer to find the coins they are looking for. The collectors would acquire coins they want easier and quicker than they can by looking through the same tired inventory at the local shows. The dealer uses his knowledge of the Internet and other dealer sites and dealer contacts to find the coins.
I'm not talking about super-rarities or five-figure coins. Just the bread-and-butter pieces that a dealer wouldn't have to worry about being stuck with. No smaller dealer can afford to stock every coin that someone might want, but he should be able to use his business contacts and computer knowledge to quickly find what a collector wants and make a buck on it. If a collector wants a Unc 3CN for a type set, the dealer should be able to get five of them from a larger outfit (of course, these arrangements would be set up in advance). Call the collector to come in and pick one. The collector isn't obligated, but you have a much better chance of selling one if you give someone five to choose from. The dealer returns the rest with his payment, and should be able to make a profit on the deal. The collector is getting "personal banker" treatment and is filling out his collection much faster.
I could go on, but you get the idea. Find quickly what someone's looking for instead of hoping they buy what you happen to have in stock.
New collectors, please educate yourself before spending money on coins; there are people who believe that using numismatic knowledge to rip the naïve is what this hobby is all about.
if you ever win the lottery and stay in Pittsburgh, the small local dealers are in trouble!!
al h.
<< <i>I think it would be very difficult for the local small dealer to survive in this environemt >>
With all due respect to Laura, (and she has earned that), this is why I think the assertion that the overall market is "hot" is complete crap. In an overall hot market everybody does well, not just a select few at the top of the pyramid.
An analogy from my own experience would be the computer business. From the mid '90's through early 2000 anybody and everybody was making money. Any old sh!t one threw at the wall stuck. Hell, I literally couldn't keep up with the business and was subcontracting out tons of work.
The IT industry tanked and most of the smaller shops are gone, (a fact that actually works in my favor). If one decided the state of the industry looking at a company like Dell, though, one could easily conclude that PC sales are "hot".
A truly hot market in any type of business buoys all participants, not just a handful.
Russ, NCNE
Having just done Keets' coin club show last weekend in NE ohio, one dayer, advertised and promoted.
The crowd was good considering other events occuring the same day, most transactions were dealer to dealer and i was asked more than a half dozen times if i had the same coins in a lower grade(less expensive).
The market may be ON FIRE for the top end RARE COIN market but for the average collector i have observed that discretionary money is getting TIGHT and other WANNABEES'(such as myself) and some fulltimers have echoed the same comments to me!
Over the past couple of years i have gained a HUGE RESPECT for the store owners and fulltime dealers.
They truely EARN their money!
Dave
When we are planning for posterity, we ought to remember that virtue is not hereditary.
Thomas Paine
i'd agree with that to a point. at our show last weekend most of the dealers did well. it was our first show and almost to a person, everyone who commented was positive. the interest seemed to be in how soon we'd be doing another show and if we had ever given thought to a two day show.
the difference with what we're talking about is that at it's heart, this is a hobby or diversion, entertainment if you will. we went head to head with the opening of the NFL season and the Brown's at home 40 miles away and on TV. some who came left early to watch, dealers included. there was an auction two buildings away, the replica of the Amistad was a half hour drive and well publiciced. all-in-all there was a lot going on and we managed to hold our own on a beautiful Sunday afternoon.
about all that i saw suffer were Darksider's, but those aren't really coins, are they??
al h.
NEVER LET HIPPO MOUTH OVERLOAD HUMMINGBIRD BUTT!!!
WORK HARDER!!!!
Millions on WELFARE depend on you!
Shop - Get new material in all the time - Our customers want to see new material all the time to keep them coming back, so we work to rotate our inventory as much as possible so when the customer does come in there is all kinds of new stuff to see. If it sits for over a month it's time to get rid of it and get something else.
Ebay - When something sits in stock too long this is where it goes, even if we lose money on it. We also search out certain material for Ebay that is always in demand there.
Website - Our website caters to people just trying to complete sets. For example on Cents we list from 1909-1958 all in circulated grades. Inventory doesn't change too much here but it's for the one stop shopper who wants to complete his/her set.
Teletrade - We get a fair amount of material slabbed looking for Pop Top stuff & just getting better material graded. Much of this material goes here if it's sat in the shop for over 30 days.
Shows - We do most of the large shows as well as smaller local shows (we'll see you in Long Beach next week). We always have want list for our shop customers that we shop for at the shows as well as specializing in many things at the show including errors. The show market is good, but there are many factors to that. A poorly advertized show is sometimes bad. If the weather is too nice outside or if there are other things going on in the area to to take the customers away can make the show poor. There are some areas in the country where the market is just bad and I won't do a show there right now until the economy pearks back up.
Wholesale - We know of dealers that are always looking for certain material and when we can pick it up at the shop or at shows or even here on the BST message board I get it and ship it to them.
For us, the coin market is good but we have learned to be diverse and do everything we can to make sales. If we don't get enough material coming into the store we have learned to advertise (on the Radio) to increase the flow of material into the shop. It takes work, but it can also pay off. And to anybody who thinks coin dealers make the big bucks - you are wrong!
J&J Coins
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The big O
It's still a mystery to me how coin shops remain profitable, but he appears to be doing all the right things.
I skipped the Tacoma show. It would have taken 2 hours on the road, admission and the time spent there to see the same sorry stuff. In half the time and at no cost, I could see maybe 500 nice IHC's on the internet.
Coin shows and small coin shops are going the way of small antique stores - they are folding up the tent and heading home or for the internet. Is that all bad?? Probably not. The consumer is better served in the long run.