Coin dealer casualty of market slowdown.

[truthteller]

Well, I attended the San Jose show today and talked to many dealers. Some had a decent FUN show, others did not. While talking to one particularly credible dealer, he stated that a midlevel old time dealer in the Los Angeles area went belly up recently. Apparently, the market has slowed down enough to make his wholesale and retail sales crash his cash flow. He deals exclusively slabs in the $5K to $100K range. A sign of things to come?

 

 

TRUTH

[gmarguli]

Name of the dealer?

[WoodenJefferson]

There are out and out bad business people in any business...one or two failures do not mean much in the overall scheme of things. Now, on the other hand if it was a major dealer who has been around for many, many years, it might be worth looking at to find out the reason for the loss. After all, it does have to start somewhere.

[DC Dawg]

There is an article in Coinage how the Mint is taking money away from dealers because of their business practices. The article claims that the Mint is no longer giving dealer discounts and not providing pre-sale access to dealers causing problems. Without the discounts, the dealers cannot sell sets for the same price as the Mint in order to bring customers into the shops.

 

I had a two feelings about this article. One was "the blasted money grubing Mint..." thinking about the small businesses that may be losing because of the Mint's business practices. Then I think about it and compare it with stuff I see in the computer industry: if you cannot adapt to the business climate, maybe you should not be in business. I am conflicted on this.

 

Scott

[Zoins]

There is an article in Coinage how the Mint is taking money away from dealers because of their business practices. The article claims that the Mint is no longer giving dealer discounts and not providing pre-sale access to dealers causing problems. Without the discounts, the dealers cannot sell sets for the same price as the Mint in order to bring customers into the shops.

 

I had a two feelings about this article. One was "the blasted money grubing Mint..." thinking about the small businesses that may be losing because of the Mint's business practices. Then I think about it and compare it with stuff I see in the computer industry: if you cannot adapt to the business climate, maybe you should not be in business. I am conflicted on this.

I think TPGs have dramatically changed the market. Many dealers will cherry pick the coins themselves first, sending coins in for First Strikes/Early Releases and to get 70s. The other thing dealers can do is hoard coins and simply wait until the FS/ER cut off passes and then after the issue is sold out at which time they can sell unopened boxes for a 100% profit. There's no reason for dealers to offer First Strike/Early Releases/70 candidates to end customers at US Mint prices. The fact the US Mint doesn't agree with the FS program (and the profits it generates for dealers) doesn't help. I get the feeling the only way for end collectors to get a decent deal on modern Mint products in the age of TPGs is to go direct because the dealers now have other incentives that may not be aligned with collector interests. If the Mint has had to change their policies towards dealers, part of the reason may be because the dealers' own practices have changed.

[gmarguli]

The Mint still gives dealers discounts. I don't know if the amount of the discount has changed over time, but I know for a fact they still discount. I took advantage of this discount recently.

 

There is no reason for the Mint to offer items to dealers before the general public. The Mint isn't there to help ensure a profit margin for dealers by allowing them to get product before others.

 

I seriously doubt that there are more than a handful of dealers looking thru modern Mint product to submit for the 70s. Most dealers that submit moderns use the bulk service. The way the grading services have the bulk service set up allows dealers not to have to do this. All they have to do is buy a large quantity from the Mint and send it off to the grading service with a minimum grade and that's the end of it. No need to waste time looking them over when the services will do that for you.

[Zoins]

If a dealer is submitting coins to the TPGs for bulk service, I imagine they have less interest in providing US Mint products to their customers at US Mint prices.

 

How many dealers stock US Mint products to offer to customers at US Mint prices (Scott's premise)? I imagine it wouldn't be a lot but I could be wrong. The dealers I've looked up local to me seem to be by appointment only (found via TPG websites) which doesn't seem to be the type of dealer to offer US Mint products at Mint prices.

[MikeKing]

honestly, I don't know how dealers make enough money to live on, except for people like Legend and these multimillion dollar deals, unless the other well known dealers are wheeling and dealing behind the scenes in stuff I don't know of or understand. I'm sure if I had a lot of money, I'd find out. But from what I see in inventories and how slowly a lot of it seems to move, I wonder...where are they getting their income on?

[cpm9ball]

There is an article in Coinage how the Mint is taking money away from dealers because of their business practices. The article claims that the Mint is no longer giving dealer discounts and not providing pre-sale access to dealers causing problems. Without the discounts, the dealers cannot sell sets for the same price as the Mint in order to bring customers into the shops.

 

I had a two feelings about this article. One was "the blasted money grubing Mint..." thinking about the small businesses that may be losing because of the Mint's business practices. Then I think about it and compare it with stuff I see in the computer industry: if you cannot adapt to the business climate, maybe you should not be in business. I am conflicted on this.

 

Scott

 

Unfortunately, there is no caveat in business that protects you from competition whether it is a government agency or not. It is up to the entrpreneur to adjust to the trends with an infusion of new ideas and/or promotions. If this particular dealer handled mostly high-end coins, then it would seem to me the Mint's practices had no bearing on his business. It may very well have been the result of one of the older generation being unable or no longer wanting to keep up with the youngsters competing with him.

 

Chris

[DC Dawg]

There is an article in Coinage how the Mint is taking money away from dealers because of their business practices. The article claims that the Mint is no longer giving dealer discounts and not providing pre-sale access to dealers causing problems. Without the discounts, the dealers cannot sell sets for the same price as the Mint in order to bring customers into the shops.

 

I had a two feelings about this article. One was "the blasted money grubing Mint..." thinking about the small businesses that may be losing because of the Mint's business practices. Then I think about it and compare it with stuff I see in the computer industry: if you cannot adapt to the business climate, maybe you should not be in business. I am conflicted on this.

 

Scott

 

Unfortunately, there is no caveat in business that protects you from competition whether it is a government agency or not. It is up to the entrpreneur to adjust to the trends with an infusion of new ideas and/or promotions. If this particular dealer handled mostly high-end coins, then it would seem to me the Mint's practices had no bearing on his business. It may very well have been the result of one of the older generation being unable or no longer wanting to keep up with the youngsters competing with him.

I am inclinded to agree with you since I believe that competition makes for a better market and a better buying environment for we collectors.

 

Scott

[cressjl-migration]

honestly, I don't know how dealers make enough money to live on, except for people like Legend and these multimillion dollar deals, unless the other well known dealers are wheeling and dealing behind the scenes in stuff I don't know of or understand. I'm sure if I had a lot of money, I'd find out. But from what I see in inventories and how slowly a lot of it seems to move, I wonder...where are they getting their income on?

 

I have wondered this as well. In one sense, I would love to handle coins for a living, but with the growing competition from Internet sales in addition to all that you've mentioned, how would one stand a chance, especially if he wants to be an honest and reputable dealer?

 

Joel

[World Colonial]

The coin business (which is exactly what it is) is becoming "corporatized' as the amount of money invested and traded continues to increase. I first saw this trend with the telemarketing firms which I noticed around the time of the 79/80 metals boom though they may have already existed earlier.

 

The reason why this is happening with the US Mint and others is because they finally have what I would describe as professional business managers. Or at the least in the US, they have become much better marketers since the modern commemorative series and particularly the State Quarters. Since they are the creator of the product, they will always have an advantage over the dealer and are also in a position to capture some (or all) of any potential secondary market profits by raising prices as they first did with proof sets back in the 1960's.

 

With the internet, firms like Heritage and eBay as a secondary market are squeezing out the traditional dealer. There will always be a place for some local dealers and smaller auction firms as a niche provider (I finally found one that apparently can find some of the world coins I collect) but the run-of-the-mill generalist who only provides the common material is on their way to extinction. From what I have seen, they do not offer or provide access to "product" which gives most serious collectors any reason to deal with them. This leaves them catering to "walk-in" traffic and the non-collecting public which does not exactly appear to be a recipe for financial success.

[CTcollector1]

I think you will see more and more commercial dealers get squeezed out of the industry via consolidation and bankruptcy as the market continues to cool. There is only so far you can push maxed out and over graded plastic.

 

Conversely, those dealers who know how to offer a legitimate product will continue to do well. The demand for legitimate coins is still alive, while the demand for processed junk has started to wane.

[WoodenJefferson]

I recently talked to a long time coin dealer who was planning on getting out of the biz. Although he specialized in Busts, his inventory ran the gamut from A to Z and had been a dealer of coins for more than 40 years. We’ll just call him Bob for now, so…Bob confided in me just why he was quitting the coin business and the reason to him was very simple. "The reason I'm getting out now is the fact that I can no longer buy collections from people who do not know what they have...the internet has created some savvy and wary sellers out there."

 

Bob conferred that just about every Saturday, he could count on someone to walk in and offer to sell coins/currency that was handed down or acquired by relatives and associates. They would walk in, plunk a box down and ask him, "How much will you give me for this stuff?" Bob would take the time and sort through the offerings, do some quick calculations and then make an offer. Bob said 9 chances out of 10 they’d take the offer, smile and leave happy, a win, win situation for everybody.

 

In this day and age that scenario rarely happens much anymore, Bob went on to say. People coming in now are armed with enough mis-information to turn any reasonable offers down. For some reason they think they are being taken advantage of simply because I’m a coin dealer. Bob relayed to me that he was sick of being labeled a cheater simply from what others have cited or have been through. Bob told me that he never cheated anyone and always paid a fair price for anything worthy.

 

Bob lamented that he was always offered tons of junk and that he really didn't want to buy the lot, but did end up buying because it contained a few good coins that he knew he could eventually sell. Bob told me that it was hard as hell to get rid of the dregs from all those afternoons and accumulations were stored everywhere. Bob went on to say that the stigmatism myth that every coin dealer is out to get you whether your buying or selling has some relatively new roots. How this all started he was not quite sure about, but knew that it existed.

 

This old time dealer tried to instill in me that there is a difference between those in front of the counter and the one standing behind it. The one behind it is doing it for food, clothing and shelter, whereas the one standing in front is more or less doing it as a hobby...a world of difference he said, think about that one for a minute.

 

He grinned and with the wave of the hand, told me without hesitation, "There's no room for honest guys like me anymore...they can have it!"

 

I could have talked to this sage for hours, but after 20 minutes of his time, we parted...probably for the last time.

 

Sign of the times…perhaps.

[MarkFeld]

"The reason I'm getting out now is the fact that I can no longer buy collections from people who do not know what they have...the internet has created some savvy and wary sellers out there."

I'm having a bit of trouble reconciling that statement with the rest of the information about the supposed good-guy dealer in question. A fair/honest dealer should still be able to do business with (at least some) sellers even if they are "informed and wary". In fact, certain dealers can use that to their advantage over other dealers who try to rip off informed sellers.

[WoodenJefferson]

"The reason I'm getting out now is the fact that I can no longer buy collections from people who do not know what they have...the internet has created some savvy and wary sellers out there."

I'm having a bit of trouble reconciling that statement with the rest of the information about the supposed good-guy dealer in question. A fair/honest dealer should still be able to do business with (at least some) sellers even if they are "informed and wary". In fact, certain dealers can use that to their advantage over other dealers who try to rip off informed sellers.

 

 

I've been trying to think about how to respond, but cannot since this philosophy was coming from the dealer, not me...I was telling you basically how he felt about current situations in the coin business, but that he did use the term "mis-information" and that he thought it came from the internet. (new roots as he put it)

 

I did not agree nor disagree to any of his comments, but listened intently to his words of wisdom. I never imagined persons who bring coins into a dealer to sell as being customers, that's why he impressed upon me about being on one side of the counter as the other.

 

I'm sure a dealer as such has seen and experienced just about every facet of the hobby, just dismayed that he's leaving under these kind of circumstances...he seemed to be successful in both life and in business. Age or health might have been a factor but that never came up...just what I related in the post.

 

Perhaps there is a cycle that this industry goes through, I know I have seen alot in the way people collect/react to different situations...I do not ever try to out guess the next step, the changes have been too dynamic as of late.

 

Thanks for reading Mark

[truthteller]

"The reason I'm getting out now is the fact that I can no longer buy collections from people who do not know what they have...the internet has created some savvy and wary sellers out there."

I'm having a bit of trouble reconciling that statement with the rest of the information about the supposed good-guy dealer in question. A fair/honest dealer should still be able to do business with (at least some) sellers even if they are "informed and wary". In fact, certain dealers can use that to their advantage over other dealers who try to rip off informed sellers.

 

 

I used to buy estates back in the late 1990's. Many people would have tons of junk mixed in with a few good items. I bought pocketwatches, old silver antiques, books, jewelry, etc. Most folks loved to be educated, and I would spend many, many hours telling folks about their treasures. In most cases, I bought the deals. Today, most people turn to ebay, which is OK by me. However, when I see folks come into the coin stores with tons of junk, they want ebay prices from the dealer. The store dealer often looses the deal because the owner feels he/she MUST have retail prices for their coins. Information is good, however, it can make people feel a bit arrogant as to selling. Since the inception of the internet, I have seen many, many store dealers turn to vest pocket status. In addition, the coin show and auction has replaced the store, where coin collectors now buy quickly where they used to spend hours getting educated and enjoying a day at the "shop". I, for one, would never own a store again. I can make the same money not worrying about overhead, costs, or getting shot/killed. I'll let someone else be labeled a ripoff.

 

 

 

TRUTH

[Dcoin]

honestly, I don't know how dealers make enough money to live on, except for people like Legend and these multimillion dollar deals, unless the other well known dealers are wheeling and dealing behind the scenes in stuff I don't know of or understand. I'm sure if I had a lot of money, I'd find out. But from what I see in inventories and how slowly a lot of it seems to move, I wonder...where are they getting their income on?

 

Most of the dealers (at local shows) I've run into are all weekend warriors who sell to make a little money on the side. Its becoming a rarity to find full-time dealers with an actual storefronts. Especially in big cities where rents are through he roof.

 

Sign on the times.

 

 

Dcoin

[Zoins]

One great thing about eBay is that it's now easy to get rid of the dregs. If they are things that someone would theoretically want by themselves, you can sell them raw or put them in Coin World slabs. I think there are even third-world TPG slabbed Franklin Mint medals now. If they are things that people wouldn't go for individually, put them together in a group with a blurry picture and someone will go for the grab bag. If you want, you can also put a teaser in the group that shows up in the photo to make someone interested in taking a chance though that's not always necessary.

 

It's unfortunate if owners think dealers should pay them retail. For the most part, the dealer can't pay what they would get on eBay and still make a profit. For those that request eBay level prices, it would be good for the dealer to arm themselves with information from those eBay consignment shops which typically take a very large percentage. Just say, sure, I'll give you those eBay prices, minus the consignment fees and commission that you'd pay. For example, GreatToning will take 15-25% of the gross if they run the eBay ad for you and that's low compared to what some of the general eBay consigners charge (some things require a lot more storage space than coins).

 

The Internet has armed people with more information which has put pressure on margins. Some dealers will make it and others won't. There's nothing wrong with eBay if you make sure you have eBay information as well.

[cpm9ball]

"The reason I'm getting out now is the fact that I can no longer buy collections from people who do not know what they have...the internet has created some savvy and wary sellers out there."

I'm having a bit of trouble reconciling that statement with the rest of the information about the supposed good-guy dealer in question. A fair/honest dealer should still be able to do business with (at least some) sellers even if they are "informed and wary". In fact, certain dealers can use that to their advantage over other dealers who try to rip off informed sellers.

 

I have to go along with Mark on this one. How often do we read here of the "red flags" that arise on eBay listings? To me, it would be the same if a dealer should say, "....I can no longer buy collections from people who do not know what they have....". It sounds to me like he is the type of dealer who wants to buy at 50% under Greysheet and sell at 50-100% over Greysheet. Is that how you develop a clientele? I don't think so! Granted, I may never see that particular person in my shop again, but I would hope that they would be happy enough with the transaction that they would refer new potential customers to me.

 

Furthermore, he continued by saying, "....the internet has created some savvy and wary sellers out there." Here, it sounds to me like he is counting on taking advantage of the uninformed seller. If it were me, I would rather deal with someone who has some knowledge of the business because it would be easier to reason with them. I keep thinking of the adage, "You can't reason with someone who refuses to listen."

 

I've always enjoyed spending time with dealers who take the time to talk with you and tell you about areas where your knowledge is lacking. It shows that, in spite of the fact that they have a business to manage, they still have a love for coin collecting. To me, it would be great if I had a local dealer with an attitude like James (Early_US), and there should be more like him!

 

Chris

[cressjl-migration]

It sounds to me like he is the type of dealer who wants to buy at 50% under Greysheet and sell at 50-100% over Greysheet...

 

Knowing some antique and collectible dealers, I can say that margins run high. They have to. Storefront costs are phenomenal, and a typical dealer is just not going to turn over enough low-margin, low-priced merchandise to pay the bills. He is either going to have to deal shrewdly, or have a well-established clientelle that deals in very high-dollar, rare coinage; here the margins can be lower while still making a good profit for the dealer.

 

It is the loss of this small market of high-dollar hobbyists that will shut most dealers down. As these clients become more likely to trade over the Internet, dealers are in increasing trouble.

[michael]

it is most easy to buy/sell to/from advanced collectors/other dealers--whom you know and have an established realtionship with as they know what they got and what it is worth and understand a dealer has to buy and then sell for more to make a living

[LuvToCollect]

I have gone to a limited number of shows and talked to a few dealers. I may not be that knowledgeable, but I am a consumer. I own a business and I try to make my customer feel like he/she is the most important, whether their order is 500.00 or 5000.00. Sadly enough, there is an element of elitism in our hobby. I do not begrudge them, if that is their stance, but I do not believe it is good business.

[cressjl-migration]

...Sadly enough, there is an element of elitism in our hobby. I do not begrudge them, if that is their stance, but I do not believe it is good business.

 

I hope that you did not infer this from my statement on profit margins. Treating customers fairly is an entirely different issue. In fact, I have found that some companies with whom I prefer to do business have higher profit margins, and they are worth it!

[James_OldeTowne]

On the other hand, I know of a dealer who has decided to take his operation up to the next level (the national level). I think the market, like most others, has its ups and downs.