A potential customer wrote to me and asked, ďWhy should I buy stamps from you? Your prices are high. I can get the same stamps cheaper at an auction.Ē Not so fast. There is a little bit of truth in his statement. But it takes some analysis to understand the real story. Letís look closer.
Suppose I have a stamp for sale for $100. You need that stamp. Can you buy it cheaper at an auction? Maybe. There is a hidden labor cost too.
Many auction houses wonít sell an item for less than about 50-60% of its expected retail value. The cheapest you could get this stamp at auction is around $50-$60. Donít forget the buyerís fee which is usually another 10-20% in many cases. That makes your purchase around $55-$72.
Just because you bid on a stamp at an auction doesnít mean youíre going to be successful. The lower your bid, the less likely youíll be successful. Why? Because other collectors and dealers are bidding on that item too. Another collector might bid $80-$90 on that item. If so, you lose.
Buying at auction takes time. You have to go over the auction catalog, find what you want, wait for the auction to close, and hope you win. If you donít win, you have to move on to another auction and place another bid. All of that bidding takes time and effort on your part. How much is your time worth to you?
By buying retail, you know the price up front. There is a single transaction and the stamp is yours. Youíre done and the stamp is in your collection.
Many collectors donít have much patience. They are looking to fill album spaces and they want to do so quickly. Buying that stamp at auction may take anywhere from two months or more until you successfully bid on one. Some collectors canít wait that long to fill that empty space. They want the stamp now. Retail sales are immediate. Buying through auctions takes more patience until youíre successful.
This isnít a put down about auctions. On the contrary, auctions are a very important part of the hobby. I buy some of my material through auction houses.
Auctions are a different form of buying than retail sales. Itís not a question of right or wrong, itís different by design.
The potential customer is right, sort of. With patience, you might be able to buy a stamp a little cheaper at an auction. Doing so requires work on your part. If you have the time and patience, you might be able to save a few dollars by buying through auctions. If you donít have the time to place bids and wait for the results, then retail sales are a better option.