How to Succeed as a Stamp Dealer
Advantages of Being a Stamp Dealer
If you are a long-time stamp collector, you probably already have some ideas about becoming a stamp dealer. The first thing you need to understand about being a stamp dealer is that there is no guarantee that you will get rich overnight. It just doesn’t happen. In fact, the average person that gets into stamp dealing never makes a real success of it. And there are many reasons for their failure to succeed. Hopefully this little article will give you some ideas on how to succeed, and have a lot of fun while doing so, because you will be dealing in a product that you really love.
As a stamp dealer you will have the opportunity to see stamps that you would probably never see as a collector. The object is to forget that you are a stamp collector and buy material that your customers will be willing to buy from you. Every stamp has a potential buyer. It is up to you to reach as many buyers as possible, and offer your material at prices that are attractive. There is a section later to show you how to find customers. Your customer list will be the most important asset that your business has. And to keep customers coming back, you must offer them the service that they want.
Although there is no guarantee that you will become rich overnight, you can make a decent profit. But keep in mind that you are a one-person business (probably), and one person can only do so much. If you can get your spouse interested you increase the chances of making a good profit from your labors.
First Step to Becoming a Stamp Dealer
The first step to becoming a stamp dealer is just making the decision that you want to go further in your chosen hobby. And quite frankly, to succeed as a stamp dealer you must have a great love for the hobby. Otherwise the long hours you will spend may seem fruitless as you try to make that first profit. Once you decide that you really want to become a stamp dealer, the hard work begins. Some investment will be necessary to purchase enough stamps and supplies to get you started. There will be a lot to do, and a lot of decisions to make. But, it is possible to start selling stamps from the very beginning.
Should You Specialize In Any Particular Area of Stamp Collecting?
If you specialize as a collector, you might want to specialize as a dealer because of the background and knowledge you already have. You still have the option of offering philatelic material outside your specialty. But keep in mind that if you are a one person operation, time is important, especially if you have a full-time job. The more you try to take on the less you can do for your customers. The customer must come first. This also means that you might have to put your own collection aside for a while. In my own career as a stamp dealer I have seen quite a few dealers who considered their own collection before their customer’s needs. Needless to say, they were not always successful dealers. It is possible to maintain a large collection of your own and still provide what your customers want. But there will be a greater need for investment. Think of the customer first, and you are more likely to be successful.
During my 40+ years as a stamp dealer I have specialized in different areas at different times. At the current time we specialize in the British Commonwealth, and we also offer stamps from all areas of the world. But the bulk of our business is in the British Commonwealth. And most of the sales that we make from non-British Commonwealth material is to the customers who collect worldwide in addition to the British Commonwealth.
One area in which some dealers specialize is Topics, or Themes. If you don’t collect topicals you might be lost in this area. If your collection is primarily pre-1960, topicals will be a bit foreign to you. Most topical collectors will collect mostly Mint Never Hinged complete sets. And the majority of topicals are in the period after 1950 or so. There are some topicals before 1950, but most are more modern. Popular topics are Birds, Cats, Butterflies Trains, Airplanes, and Space, to name a few. There is no end to topics on stamps that can be collected. If you would like to have an art collection of all the great paintings you can do so by way of a stamp collection.
If you decide to specialize as a Topical dealer, most of your stock will be from the last fifty years, and to cater to all the needs of the topical collector, your stock will get quite large. And consider joining the American Topical Society. Their link is at the end of this article.
Organization of the Business
What type of business organization should you have? Part-time dealers will generally operate as a simple “proprietorship”. This is a one-person owned business. This form of business may have employees, but are usually very small. The proprietor files Schedule C with their personal tax return to report the revenues and expenses of their stamp business.
A type of business formation which I think is unsuitable to a stamp dealer is the “partnership”. A partnership is two or more owners. Stamp dealing is a very personal business and a partnership just doesn’t work very well. The “partnership” files a partnership tax return, but the net profit (or loss) of the business is allocated to each partner on some pre-determined basis, and then each partner reports their share of the income or loss on their personal tax return. So there are no tax advantages to this type of business. The only advantage I see is the additional capital that a partner can bring to the business.
A very popular business form today for small businesses is the LLC (Limited Liability Corporation). This is nothing more than a proprietorship organized to receive some of the benefits of a corporation. The owner of an LLC still reports their net income or loss on their personal tax return. The “limited liability” aspect has very little application to a stamp dealer.
If you are planning for a larger business and hope to attract non-participating investors, the best business form is the “C” corporation. This type of business formation is considered the same as a “person” under the law. The corporation has its own federal ID number, files its own tax return, and pays its own income taxes. Owners who participate in the business are employees of the corporation. They are on a salary just like an employee who is not an owner. Ownership of a corporation is in the form of shares. Owners of shares of stock who do not participate in the daily operation are not employees. Any income they receive from their investment will be in the form of a dividend. The biggest advantage to the corporation is the ability to raise capital by selling shares of stock. If you are a small corporation, this is not really an advantage, because anyone who might be willing to invest money in the business would also want to have some controlling interest in the daily affairs of the business.
If you have questions about what form of business to use, and think that you might become large, I suggest you speak with an attorney or an accountant before making any decision. If you don’t expect to get large, just be a simple “proprietorship”. I will not try to advise you on this matter.
No matter what form of business you choose, there are a few things you must do:
You must obtain a business license. This is usually issued by the city, town, or county. Fees for a business license are generally very reasonable and are usually based on the amount of revenues you report. If your revenues are fairly small you may not be required to pay a fee in many localities.
You must file an application with your state tax department to get permission to collect sales tax. As a general rule, you must only collect sales tax on sales made within the state in which you operate. Sales made outside your state will generally be tax exempt. Check on the requirements of your state. Filing can be done on-line in most states. Collecting sales tax requires accurate recordkeeping. This will be covered in the section on accounting.
Since you will need some assets to conduct your business, you will probably be required to file a personal property tax return in your locality. Tax will be based on the purchase price of the asset as adjusted for the age of the asset. You may already pay personal property tax on your automobile. Businesses are required to pay a personal property tax on the assets that are used to conduct the business, with the exception of real property which has a separate tax.
NOTE: Business organization will be different in different countries. Since I live in the U.S. I am familiar with the requirements here. If you live outside the U.S. you should check your local and national requirements for establishing a business.
Setting Up an Accounting System
Every business, no matter how small, should have an accounting system. The system can be very simple, or it can be very elaborate, or somewhere in between. In some form you must maintain a record of money received by the business, and money spent by the business. I spent my business career in accounting, starting as a bookkeeper in the days when all accounting was done manually, and progressing up to a CPA. I also taught college accounting for many years at the community college level. But despite my background, I am not going to try to tell you what type of accounting system you need. You will have to determine that. I will, however, discuss a few things that you can do to make the job easier.
I am sure that you have heard of Quicken. It is a simple check-writing program that will keep a good record of your activities. It will also give you a reliable report of your operations. But remember, what you get from your accounting system is only as good as what you enter into it.
A step up from Quicken is QuickBooks. You have probably heard of that program also. There are several levels of QuickBooks. If you go that route, you will only need the simplest version which will probably cost less than $200. This program has tremendous capabilities. QuickBooks also has an on-line version that is easy to use, and can be accessed from anywhere you have an internet connection. If you decide to work stamp shows (more on this later) this could be a benefit.
I have mentioned these products only because they are what I have used for many years. I am also a Certified QuickBooks Pro Advisor. I can advise you on the use of QuickBooks products. But there are certainly other programs out there that will do a good job.
For the novice at accounting, I will go over a few terms that you have probably heard mentioned, but had no idea what they mean.
An asset is anything that you own. Your business assets will be Cash in the Bank, Inventory, Accounts Receivable (if you offer credit), furniture used for the business, and equipment such as a computer.
A liability is anything that you owe to someone else. Typical liabilities that your business might have are Accounts Payable (if you are able to buy things on credit for the business), and sales tax that has been collected but not yet paid. If you are a proprietor you probably won’t have any other liabilities.
Capital is the amount of funds that you invested in the business. This can be in the form of Cash or inventory that was given to the business for resale. It might also be the value of a computer which you gave to the business.
Retained Earnings is a term found mostly in corporation accounting. It represents the difference between revenues and expenses since the inception of the business that has not been distributed to the owner(s). In other words, it is profits that have been retained by the business to help the business grow. A proprietorship would also have undistributed profits that have been reinvested in the business. These undistributed earnings are used to increase inventory, purchase additional equipment, offer more credit sales, etc. Assets are purchased with Capital, undistributed earnings, or by incurring a liability.
Owner’s Equity is the total of invested capital and undistributed earnings.
The first thing I always taught my beginning accounting students was the Accounting Equation:
A = L + OE
Which simply means that if you add liabilities to owner’s equity, the total must equal total assets. That means that all assets were provided by the liabilities and owner’s equity.
Now that you are confused, let’s continue.
Revenues are those monies received from the sale of a product or service.
Expenses are those monies that are expended in order to earn revenues. Expenses include the cost of the goods that were sold, salaries paid to employees (for a corporation that would include salaries to owners), and office supplies. Technically speaking, an expense is the purchase of anything that has a useful life of less than one year. So the purchase of a computer would not be an expense because a computer is an asset. The cost of the computer is expensed over a period of years. This is called depreciation.
A Balance Sheet is a listing of Assets, Liabilities, and Owner’s Equity. If Assets are equal to the total of Liabilities and Owner’s Equity, then the books are in balance. With a computer accounting system they should never be out of balance. The Balance Sheet is as of a specific point in time, usually the end of the year. Items on the Balance Sheet are considered Permanent Accounts, because the balance is carried forward from one year to the next.
Income Statement (also called Profit and Loss Statement) is a listing of all revenues and expenses for a specific period of time. If revenues are greater than expenses you have a profit for the time period. If the opposite is true, you have a loss. Items on the Income Statement are considered Temporary Accounts because the balance in the account at the end of the year is brought to zero. This is accomplished by transferring the profit or loss to the Owner’s Equity section as undistributed earnings. So in effect, the Temporary Accounts are an extension of the Owner’s Equity and serve to explain the change in Owner’s Equity over a period of time.
I hope this impromptu lesson in accounting is helpful. It has been many years since I taught accounting, and I hope I haven’t lost my touch.
But we are wandering away from our subject of dealing in stamps.
How Should I Sell My Stamps?
This is another decision that you should make early. The way that you plan to sell your stamps will determine how you prepare your stock, how you advertise, etc.
There are several ways you can sell your stamps. And each way requires some differences in preparation of your stock for presentation to your customers.
Going back a few years, the most popular way for the part-time dealer to sell their stamps was by mail-order. This required some form of advertising to let people know that you had stamps to offer. The most popular method of advertising was through publications that went to stamp collectors. But as a general rule beginning collectors do not subscribe to the philatelic publications. So if you want to reach beginning collectors you have to advertise outside the philatelic publications. There are small publications that carry advertising for all types of collectibles. I got my first stamp customers in the 1970s through Grit Newspaper and Cappers Weekly. Both were long running publications and were mostly rural in nature. Incidentally, Grit is still around as a bi-monthly magazine, and Grit and Cappers Weekly are now owned by the same corporation. I found this information by googling the names. Computers have made many things much simpler.
If you are going to reach out to beginning collectors you must have material that would be suitable for beginners. Packets of stamps are still popular for beginners. A source for prepared packets is harder to find than they were when I started. The best way to obtain packets is by dismantling collections, and making packets of all the less expensive stamps. Packets can be by country, topic, or as a worldwide packet. With country packets, the larger the packet the higher the price for each stamp.
One good source of material for beginning collectors is the Lichtman Company of Los Angeles, CA. You can look them up on the internet (link furnished at end of this article). I have been dealing with Mr. Lichtman since I started in the business, and can highly recommend his company.
Another method of selling to beginners is by sending Approval selections. This is not as popular now as it was when I began collecting in the 1950s. You must be careful with this selling method. Quite frankly, people are not as scrupulous now as they were when I was a beginner. The way approval selections work is this: You advertise that you will send approvals. When you get a request make up a small selection of less expensive stamps as individual stamps or as complete sets. The customer probably stipulated whether they preferred mint or used. Make up an invoice pricing each item or set (whichever way you wish to sell). The customer has the option of purchasing some or all items, or none. They send you payment for the stamps they want to buy, along with the stamps they did not purchase. If you can get enough honest customers you can build a decent business with approvals, but it will require a lot of work. I still see approval dealers advertising in the American Philatelist, and in Linn’s Stamp Weekly. I would recommend that you send approvals only to APS members at first. If they keep your material without sending payment you can get the APS to put a little pressure on them.
Places to Advertise
Selling to More Advanced Collectors
If you plan to sell by mail to more advanced collectors your best advertising outlets are the APS magazine, The American Philatelist, or in Linn’s Stamp News. The American Philatelist is a monthly publication, and Linn’s is a weekly. Both have economical classified advertising. Keep an ad running constantly to keep your name before the collectors.
When you receive a request from these ads the customer will be expecting a Price List that is understandable and easy to read. Most U.S customers can use lists that identify stamps by using Scott catalog numbers. And some collectors outside the U.S. also use the Scott catalog. But for the most part, customers outside the U.S. will need lists with identifications from some other catalog, such as Stanley Gibbons, or Michel.
I maintain all my lists in Excel. See photos below: in the first photo you will see how I set up my Price Lists. This list serves as an inventory also. The first six columns are used to create a .pdf file that is uploaded to the web site. It can be viewed and/or downloaded by customers. (See second photo.) The second and fourth columns are used to create a list that can be mailed to our mail order customers. (See third photo). Columns seven and eight are used to calculate the price. That saves me the trouble of having to calculate each individual item. My pricing is simple: Never Hinged items are 50% of catalog value, hinged and used items are 40% of catalog (or less depending on condition). Column seven contains a formula based on whether the item is Never Hinged or Hinged (which is shown in column eight).
The QTY column is the quantity we have on hand for each item. When I add an item, I increase this number; when I sell an item, I decrease the quantity. If the item only has a quantity of 1, and it is sold, I delete the line. The “Tot Cat” and “Tot Price” are totals for each item, calculated by multiplying the quantity by either column 3 or column 4. The column after “Tot Price” tells how the item is stored. We use three sizes of glassines, and three sizes of books. “102a” indicates that it is in a red box which holds #2 and #3 glassines. The “Date” column is the last date there was an addition to the line. I do not change the date when a sale is made.
Seems rather complicated, but it really isn’t. By summing the dollar columns I know what the total of my inventory is in catalog value and in selling price. I will talk about cost later.
Look at the third photo. This shows how my printed price list looks. In a minimum of space I have given the collector everything they need to know about an item. I have not given a condition, but our policy is if they don’t like a stamp they can return it for credit or refund, no questions asked. (More about customer service later.) The printed page contains approximately 50 lines, so using four columns you can list as many as 200 different items on a sheet. Printing on both sides of the sheet gives you as many as 400 different items. When I mail a Price List, it is 13 pages of stamps (printed front and back), so each price list will have about 5,000 different items. The fourteenth page is used to give conditions of the sale, discount schedule, and advertise other things that we are offering. It takes me four mailings to cover my entire British Commonwealth list. With the latest postal rate increase, it costs 69 cents to mail a list to a customer. That’s if I used metered mail. If I use stamps it will cost a penny more.
If you are going to sell primarily to more advanced collectors, then you will need the type of stock they are looking for. This will require carrying more inventory and that requires more investment.
Excel Price Lists
Operating a Web Site
An up-to-date web site can be an excellent customer generator. One of the links at the end of this article is a link to our web site. It is not the best in the world, but it is effective. I designed and built our site in the late 1990s. It hasn’t changed much over the years, although I keep promising myself I am going to update it. It is time-consuming, but paying someone else to design and build it for you may not fit into your budget.
I use Adobe Dreamweaver CS5 and Webplus X7 to maintain our web sites. They are both fairly easy programs to learn. If you are new at building a web site there are some very good How-To books that will teach you everything you need to know about Dreamweaver. There are other programs, so don’t think that Dreamweaver is the only one. Dreamweaver has a lot of features that I have not taken advantage of, and probably never will. But maybe you can if you have more knowledge about web site construction than I do. I just recently started using Webplus 7 by Serif. So I am still learning how to use it, but so far I have found it has a lot of nice features that are easy to incorporate.
My only out-of-pocket cost for our site is about $100 per year for a host site. Our store site costs a little more because it has a Shopping Cart system. I use IPowerweb for both sites. I have used them since I created my first web site. There are others that are cheaper, but I have always received first-class service from these people, and their downtime is less than 1%. As a matter of fact, I have never had a complaint from any of my customers that they couldn’t access our site. That is a good record for the internet. I have given a link for Ipowerweb at the end of this article.
To see how I have presented my list on the web, take a look at the site, especially the Price Lists.
If you have a web site and advertise in a publication, be sure to show your web site address in the ad. It is also good to give your email address in the ad. The reason is that if you advertise in the APS magazine or in Linn’s, your ad will also appear in their web version.
Working the Stamp Shows
There aren’t that many stamp shows these days. Most stamp clubs have found it too expensive to put on a big show every year. And there are not that many dealer bourses. One of the biggest reasons for the decline in shows is, of course, the internet. The big stamp shows still get good attendance, but table fees are much too expensive for the average part-time dealer. Most of the material offered at the big shows is very high-powered.
In the 1980s when I was active in working shows, I was doing a show almost every weekend. From Philadelphia to Atlanta, and all the stops in between. I would leave work around noon on Friday, drive to wherever the show was that weekend, work a two-day show, and leave around 5 PM on Sunday. The worst drive on Sunday night was from Atlanta to Richmond, which is an eight hour drive. You can figure out when I got home Monday morning. Just in time to go to work.
Even if I wanted to do shows now, I would only be able to find maybe six shows a year that are within my driving distance. Hardly worth the effort.
It may be that where you live the show circuit is more active. You can still make a few dollars at shows, but it is very hard.
Working shows creates another problem. That is preparing your stock to present at shows. Each item that you wish to sell should be in a separate container, either a glassine or on a page. And each container should have all the information about the item: catalog number, catalog value, condition, and your price. Customers will come to shows armed with a Want List. They are looking only for the items on that list. So you need to have everything organized, or they will not spend very much time at your table.
If you try to maintain any kind of inventory records by item, it will be in disarray after a show. Of course, you can try to keep a record of each item sold, but all I can say is “Good luck.” If you find enough time to keep records at a show, then you aren’t selling very many stamps. Unless you sell only the high-power material.
Taking payments at shows can be a headache. Most collectors like to pay by check. But at a show you cannot put a hold on the check. You must trust them or lose a sale. Thankfully, I never took a bad check at a show from a collector. I did have a bad check one time from another dealer. Also a lot of collectors now like to make payment with a credit card. It is possible to be able to take credit cards at shows (assuming you are authorized to do so), but it is a hassle. If you use the Online version of QuickBooks, and you are an authorized credit card merchant through Intuit, then you could accept credit cards from anywhere.
The last show I worked was VAPEX in Virginia Beach, VA in 2005. It was a three-day show, and attendance was exceptionally low. To make matters worse I had a customer at my table who was careless, and knocked one of my red boxes off the table, scattering glassines all over the floor. A red box for #3 glassines holds several hundred glassines. The customer never stopped looking through another box, and never apologized. As I said, that was my last show.
If you want to do shows, I hope you can find enough to make it worthwhile. One of the advantages of working shows over any other type of selling is getting to meet the collectors in person. And being able to meet other dealers and exchange ideas is also a tremendous advantage. Having dinner with some of the other dealers after a hard day of selling stamps (or not selling if there is low attendance) is very rewarding. In my early years of dealing I learned a lot by being around other more experienced dealers at shows. After thirty years I still know several of them.
Finding a Good Source of Stamps and Supplies
Finding a good source of quality material is not an easy chore. Auction houses are good sources, but you will find some that have policies that are not all that good. Internet auctions (Ebay, Bidstart, etc.) are good sources if you can locate a really good wholesale dealer. There are a few on the internet. Be cautious in dealing with a new source. Get a small lot first, and make sure it fits the description that was given. Learn what the policies of the seller are, and if they do indeed follow their own policies. One of the most important policies you should learn about is the seller’s return policy. Everyone makes mistakes. If you find that the material you received is not what was described, then request a refund and see what the response from the seller is. If they offer you a complete refund, then you are dealing with a good seller. If the seller informs you that they do not make refunds, but will only send more materials, then I think you should seek a new supplier. Make sure that the supplier is giving you real wholesale prices. Some will say they are giving wholesale prices, but really aren’t. A wholesale dealer should be able to give you a good estimate of the catalog value of a lot. So please be careful is choosing dealers.
I suggest that you join the Stamp Auction Network. They have auction listings for many different auctions and you can sign up with as many auctions as you desire. This works better than sending your bids by mail to an auction house. If you are outbid before the end of the auction you are notified, so you have the option of increasing your bid. It is almost like attending a live auction. Each of the auction dealers selling on this site are reputable. Three auctions I highly recommend on the Stamp Auction Network are Apfelbaum, Alan Blair, and The Stamp Center. Links for the three of them are at the end of the article.
You will see mention of the Internet Philatelic Dealers Association elsewhere in this article. If you can find a wholesale dealer who is a member, then you can buy with the assurance that you are dealing with an ethical dealer. I urge you to join the IPDA if you are going to sell on the internet.
Organizing Your Stock for Easy Access
The way you organize your stock will depend on the method of sales you choose. If you stay strictly with selling by mail or internet, then your organization should fit your needs, making it easy for you to find something very quickly. We have devoted two full rooms to our stamp business. We use four methods of organizing our stock to make an item easy to find. For most items we use the #2 and #3 glassines. They both fit the same red box. We currently have about 80 of these red boxes. For slightly larger items such as small souvenir sheets we use the #4 glassine or #107 cards. There is a red box that fits these sizes also. Then for most souvenir sheets we use the Style 04 sheet which fits a 7” x 9” 3-ring binder. For larger souvenir sheets we use the size 5 sheets which fit an 8” x 10” 3-ring binder. And then for more expensive items (except souvenir sheets), we use the Style 6 sheet. They are small 6-ring sheets and require a special binder. Most of the sheets we buy are HECOs. I will give you the name of a good supplier later.
As I mentioned before I maintain all of our lists in Excel. When an order comes in, I make sure that I update the Excel list before filling the order. I indicate on the customer's order where the item can be found. The order is then given to my wife who pulls the material and then I prepare the invoice. We have worked out a good system, and are able to get orders out very quickly.
If you decide that you want to be a show dealer, then your stock should be organized to fit the collector’s needs. A single table at a show is generally six feet long, and you will be furnished a front table and a backup table. For a show dealer I recommend that all material that is priced more than a few dollars be stored in books that can be kept on the back table. Customers then have to ask for a book to look through. Less expensive material can be in red boxes on the front table for customers to look through without too much supervision.
If you have ever attended a stamp show you probably observed many different ways that dealers arrange their material in the space assigned to them. You want your "little store" should be attractive and inviting to the stamp collectors who will be wandering around looking for bargains. Study how some of the other dealers setup their space and then decide how you will do it. One of the most important elements is organization. If your space looks disorganized, you will probably not attract as many customers.
Advertising Your Wares
Where you advertise will be determined by your desired market. If you hope to reach people who are not yet stamp collectors, or may be just beginning in collecting, then you will probably be better off staying away from the standard philatelic publications. There are lots of magazines around that have a classified ad section. Most are fairly expensive. When I first started back in the 1970s, Popular Mechanics Magazine was a great place to advertise for beginning collectors.
If you plan to sell to more advanced collectors then you need to advertise in one of the philatelic publications. The two most popular are the American Philatelist (published by the APS), and Linn’s Stamp News. When you run an ad in these publications, run it for a period of at least six months. Let your name be seen a lot. It will pay off in the long run.
There are also some web sites that you can get listed on free of charge. They do like you to publicize their site on your web site. Links to these sites are given in the Links Section of our web site.
Always keep a record of how a customer located you. You need to know which advertising is effective, and which isn’t. If you are fully computerized, your accounting program should have a provision for keeping this type of information. As I have mentioned before, I use Quickbooks, and when I set up a new customer, one of the fields I have is “Source”. Anytime I want, I can view/print a report of activities from a particular “source”.
First and foremost, be professional. Have a system that will print invoices. I use and prefer QuickBooks. It can do a lot of different things which makes life a lot easier. I just mentioned one advantage in the previous section. Your packaging should also be attractive. The way a customer receives the material from you is very important. It can determine whether they deal with you again. My policy is to mail all small orders (10 items or less) in a 5” x 7” brown envelope. I use sufficient padding to prevent the envelope being folded easily. On larger orders (and with more expensive items) I used an appropriately sized padded envelope. The padded envelope is only used for U.S. shipments. Using a padded envelope for foreign shipments is very expensive. Check the postal rates first.
Many dealers will use a lot of older stamps on shipments. This does make the envelope look more attractive, but I believe it also identifies the item as being from a stamp dealer to a collector. I try to avoid that tipoff. My return address is nothing more than my name and mailing address. No indication that I am a stamp dealer. For all domestic shipments I use the Stamps.com service. Since starting that practice, I have not had a single shipment lost in the mail. And with the current increase in U.S. postage, using a service like Stamps.com can save you a few pennies on each shipment. I can also insure higher value shipments through Stamps.com at a slightly lower rate than USPS.
Complete and mail orders as soon as possible. If you are delayed for some reason, let the customer know either by email or by phone. We still have a lot of customers who do not use the internet, but they all have telephones. Getting to know customers personally is very important to a new dealer. This is a little difficult when dealing by mail, but it can be done just by making a telephone call. We have some customers who like to call in their orders. And I enjoy talking to all of them.
Costing Your Inventory
One thing you must realize: unless you take a lot of time to do so, you will never know what an individual stamp in your inventory cost. Obviously if you are buying and selling very expensive items, this statement will not be true. I am assuming that, like most stamp dealers, you will be buying collections or accumulations. Auctions will generally give the catalog value of collections and accumulations, but not always. I try to pay no more than 20-25% of catalog value for large purchases. Not everything in the lot you buy will be sellable for one reason or another. I use the assumption that my cost is 50% of my selling price. My assumption is that I am paying approximately 25% of catalog value for never hinged material, and I sell it at 50% of catalog value. So my cost is half of my selling price.
Finding the true cost of your entire inventory would be very time-consuming, and leave you no time to sell stamps. So it is necessary to make some assumptions. If your selling price policy is different than mine, you can easily figure out how to cost your sales.
Should You Try to be a One-Stop Shop for Your Customers?
Most stamp dealers deal only in stamps. They prefer to leave the accessories and supplies to specialist dealers. Some dealers also offer accessories and supplies to their customers. The way you handle this situation is a personal preference. We do both. We added supplies and accessories to our offerings many years ago, and I personally think it helps in maintaining a good customer relationship. I believe most collectors would rather deal with just one dealer for all facets of their philatelic needs.
We do not, however, stock any supplies or accessories. That would require a large capital outlay, a slow inventory turnover, and lots of space for storage. We offer anything in the line of supplies and accessories and then send the orders received to a distributor who dropships the order in our name. Our distributor sells only to dealers and is not our competitor. For many years we have used Harry Edelman as our distributor. They handle most philatelic and numismatic supplies and accessories, and they are easy to deal with. Obviously, they are not the only distributors out there, but after many years of pleasant dealings, they are the only ones we deal with.
We do stock a good quantity of hinges. Quite often a customer will request a couple packages of hinges when they order stamps. If the stamp order is large we will usually send the hinges at no cost. It is good customer service to give them a little extra. And I know customers appreciate it.
The accessories that we advertise to our customers are the Prinz brand. Prinz offers a good product line and offers the dealer a better discount than most other brands. That way we can offer our customers a good discount on mounts. We also have a separate web site that has a shopping cart for the purpose of offering Prinz mounts. We get a lot of repeat business from the site, and it also generates some stamp buyers.
Some stamp dealers will also deal in coins. This is great if you have some expertise in coins as well as stamps. The coin market is much more volatile than the stamp market, and requires that the dealer be aware of market changes immediately. Also a coin inventory can tie up a lot of capital. But again, it is a personal preference.
Should I Join a Lot of Organizations?
I think all stamp dealers should at least belong to their local stamp club, and attend meetings and get involved. Most stamp clubs will have auctions at least a few times each year. So it is a good place to move some material that might not be moving otherwise. It is also a good opportunity to meet and get to know the local collectors. Especially if there are no stamps shows in your area. It is important to know other people with the same interests. And one of the advantages of knowing people locally is that one of them might refer someone who is trying to sell a collection.
And I think all stamp dealers in the U.S. should be a member of the American Philatelic Society (APS). The APS has a dealer division that is worthwhile. You will be listed on the APS web site with the areas of your specialization. We get quite a few calls from this listing. So it is worth being a member. If you are not currently a member and want to join, please use me as a sponsor. My APS number is 144718. Furnish the number when applying. And once you become a member, get a bunch of material from the APS to send to your customers encouraging them to join.
Another organization that is worthwhile is the American Topical Association (ATA). Dealing in topicals is a specialized area, and can be done along with your main specialization (assuming it is not topicals). The ATA also has a very nice publication which accepts classified ads.
The United States Stamp Society (USSS) is an excellent organization if you will be selling any U.S. stamps, or if you collect U.S. stamps.
Most major dealers belong to the American Stamp Dealers Association (ASDA). If you don’t plan to work any of the major shows, I don’t think the ASDA would be of much value to you. It is also much more expensive than other organizations.
If you plan to do any selling on the internet, you should join the Internet Philatelic Dealers Association (IPDA). Dues are more than reasonable and you get listed on the web site, which can also bring you some potential customers. IPDA is currently having a Membership Drive. Sign up now and be sure to put my name (Jim Holbrook) in the block where you are asked how you heard of the IPDA. Benefits of membership is much greater than the nominal annual dues.
Links to all these organizations can be found at the end of this article.
Useful Comments from Some Customers and Other Dealers
While I was preparing this article I sent a request to my customer list, as well as to some dealer organizations, to provide me some feedback as to the qualities they thought a good stamp dealer should have. I am pleased with the response I received and would like to share a few of them:
“A stamp dealer is a business person.” Bill Lehr, Secretary, Internet Philatelic Dealers Association
This is a good concept to think about. A question that a lot of part-time dealers try to avoid is whether they can be a collector and dealer at the same time. It is difficult to be both. For example, if you collect, you will look through new material for items that you need in your collection. And I don’t think that is being fair to your customers. That is just my personal opinion. If you collect U.S. but plan to deal only in British Commonwealth, then there is no conflict.
“What I look for in a stamp dealer is someone who has a regular turnover of new items, a friendly manner and a person who describes condition accurately.” Antoine Magliano, one of our customers.
This is an interesting comment and points out something important for a potential dealer. If you send the same list to your mail customers, or have the same items listed on the internet, you will see sales start to drop with your regular customers. I stress variety on all our lists. There is a lot of material that is always on the list, because we have multiples. But when you breakdown a collection, you will generally have only one of each item, especially in the older issues. So each time I issue a list for the British Commonwealth (which is our specialty), there will be a lot of items that were not on the previous lists. Customers are looking for the new items.
Proper description of your stamps is important. That doesn’t mean that you never make a mistake, because you will make mistakes. Identifying many of the early British Commonwealth issues requires a sharp eye, because there are a lot of watermark and perforation varieties. So be careful when identifying stamps. If you purchase a collection or accumulation that is already identified, recheck each item. Sounds like a lot of work, but you will find that it is worth the effort. And it will eliminate a lot of customer returns.
Always maintain a friendly attitude towards customers and suppliers. Remember the old saying, “The customer is always right.” Even if the customer is wrong in your mind, he is still the one who is paying you the money, so he is right.
Our web site:
An excellent web site host:
For supplies and accessories:
Harry Edelman Inc
11137 Lefferts Boulevard
Jamaica, NY 11420
Phone: (718) 641-2710
I have dealt with the Edelman firm since the early 80s, and have found them to be totally reliable. I highly recommend them.
Some other philatelic sites of interest:
Mystampworld is a membership site, and membership is free. Lots of options for dealers on this site.
The American Topical Association is a membership organization for topical collectors. If you plan to deal in topicals, you should join the ATS.
The United States Stamp Society is a membership organization for U.S. collectors. Well worth the membership dues.
Bidstart has merged with Hip Stamps and you will be redirected to that site.
Alan Blair is another dealer in Richmond, VA. I have known him since the early 1980s. Another good auction house to buy from.
The name Apfelbaum is a byword among stamp collectors. The firm is over 100 years old, and still going strong.
This is the site I mentioned earlier. Here you can register to bid in a large number of stamp auctions.