I received this email recently:
I am a small stamp dealer and would like to know if you could help me, telling me where I can stock quality, good price and in small quantities.
I want to form a small stock of stamps MNH or “post office fresh,” only VF, XF and SUP, from the period 1840-1940 with sets valued up to $ 30.00 the following countries:
United States
Germany
France and colonies
Great Britain and the colonies
Italy and colonies
Spain
Portugal
Belgium
Could you help me?
This email poses the most common dilemma facing a stamp dealer. The question boils down to this-I know I can sell a certain kind of stamps easily and I would like to know where I can find that type of stamp, and only that type of stamp, to sell. The most active part of the stamp market is the moderate price mint set market and it is in this part of the market that most sellers wish to compete. And that presents the problem: In businesses of every type sellers have two choices (or these choices in some combination)- sell very popular goods (such as, in the real world, computers or TVs) or sell unpopular goods (in the real world, say, stamps). The seller of popular goods has nearly unlimited customers but he has intense competition from other retailers who know how easy it is to sell those products and want to be in that market too. And he is selling to customers with a large number of buying options who are used to price cutting and discounts. Sellers of unpopular items have less competition and so higher margins but far fewer customers.
There is a further complication in the stamp business and that is that the lines of supply from wholesalers to retailers is less pure than in other fields. Auction houses, where most wholesale sales take place, sell to the highest bidder so that dealers can find themselves competing with their retail customers for some items. Further, the letter writer above only wants mint stamps of a certain price range and lots like this are seldom offered. The trick to having a profitable stamp business is buying nice collections at reasonable prices, maximizing the yield for the best stamps and then being able to sell the balance quickly and for enough money to make the entire lot profitable. Many dealers do very well on a few items in a collection, but end up with large amounts of remainder material which they have overestimated the value of for their internal profit and loss purposes. This is why I tell budding dealers to start slowly, buying only a few lots, and selling them out completely so that they know where they stand and how to completely work out a lot before they begin buying in a big way.