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Sunday 3 March 2013

Auctions or Stamp Shows? One Dealer's Perspective

Here in the UK, the tax year ends 31 March or 5 April (you can choose a bit - to me 5 April is dumb though it goes back a long way). So as we enter March my mind concentrates on putting my accounts in order - and gently approaches the question, Have I actually made any money this year?

At the same time, I am looking at my results from the Corinphila auction just closed. It looks like I sold 19 of the 35 Lots they accepted - 54% -  which is in the Could Do Better class. But the 19 Lots which did sell sold for 57% over their combined Start prices. That is in the Good or more likely Quite Good class since the Start prices are meant to be attractively low.

The gap between what an auction buyer pays and the seller gets probably averages about a third: buyers pay 20 - 25% in commissions and VAT on premiums and so on and sellers pay 10% in their own commissions (maybe 7% on very big consignments). Some inefficient auction houses create a difference of 40% or even more between buyer price and seller payment, but the average seems to be 30 - 33%

That's still a big gap. However, if a small dealer like me takes a Stand at a big stamp show, the cost of the Stand, travel, hotels, food ... will easily eat up a third of the gross turnover. Big dealers aim to work on a smaller ratio of costs to turnover and some may achieve 10% - 15%. In the past, more dealers than now probably achieved lower figures like that - today, fewer collectors attend stamp shows and there is less money being spent.

However, there are two big difference from a dealer's perspective between Auctions and Shows.

At Auctions, prices can go UP and quite often do; at Shows they can only go DOWN and quite often do because every one wants a DISCOUNT. I have even been asked the question, What is your Discount? before the inevitable question, Do you have Tierra del Fuego?

In addition, an auction can  reach a world wide audience through catalogues and online catalogues. Provided these are precise ("450 covers" not "hundreds of covers") and profusely illustrated, the cost to the buyer of participating in an auction can be almost non-existent  - it's not necessary to travel to view - whereas the costs of attending a  stamp show a long way from home are considerable.

As a result, dealers now tend to shift better material to Auction since they can avoid the tiresome debates which selling at stamp shows involves and they can reach a wider market. But moving material away from stamp shows creates a vicious circle - collectors start complaining they can't find anything to buy and so spend less, pushing up the share which expenses take for the dealers who have taken selling stands.

Of course, shows provide an outlet for material which sells for prices below those a serious Auction house will accept for Start prices. So shows remain outlets for items under, say, 100 (£, $, € )

There is also a low cost alternative to auctions and stamp shows. This is supplying clients by post, where expenses drop virtually to the cost of postage and keeping the office warm. For this reason, I try to treasure my regular postal clients. They always see new stock first, they are offered it at a competitive price, and usually (except for small transactions) they will get some kind of discount without having to ask. Of course, they have to put up with my way of doing business - my handwriting, my efforts to sell them a bag full when they only want one ... and so on - but over time I hope they get used to me. And additionally, their own costs are virtually zero - no travelling to stamp shows or auction viewings.

1 comment:

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