Professional Stamp Dealing

Please note that I'm not a professional stamp dealer myself - although I buy lots of stamps, I fail to meet the definition of being a professional stamp dealer not only because I rarely if ever sell any stamps (!) but also because I surely don't earn any sort of living at this!

Have you seen many new stamp dealers open up over the last decade?  Nope.  If anything, quite the opposite, with the neighborhood stamp dealer increasingly seeming to be an endangered species.

But at the same time, we've also seen the growth of new ways of buying and selling stamps, and none more prominent than the Internet - initially in the form of web sites and ads in newsgroups, and more recently in the form of stamp auctions, both on dedicated stamp auction sites and on eBay.

What this has done is that it has offered many people the tempting opportunity to become a part time stamp dealer.  Part of this is good - how wonderful to be able to conveniently sell off some of the piles of unwanted duplicates that one otherwise accumulates, and how wonderful to have such a rich variety of stamps for sale at all hours of the day and night!

But these part time stamp dealers need to realize that there are very few opportunities to actually profitably make money at their hobby.

Look at the hourly return you can hope to get by trading stamps.  How long does it take you to buy your average stamp purchase, how long does it take you to then catalog, classify, etc those stamps, and how long does it take you to then sell them again?  Add up all these minutes (and hours) and then work out the profit you actually made on the transaction.  Divide that profit by the hours it took to earn it, and what sort of an hourly rate are you looking at?  Yes - less than you'd make at McDonalds, and you don't have the same benefits (all the Big Macs you can eat for free) either!!!

Cost/Profit Analysis - Auction Selling

Just to put some numbers alongside these claims, let's say that the "typical" stamp sale that you might make on, eg, eBay, is $7.50, and that your eBay costs of sale are 75c (their 5% fee plus two times their listing fee on the basis that not all your auctions actually sell).  Lets say that it takes you fifteen minutes to scan the stamps, write the eBay advertisement, and get it on line, that it takes you another five minutes to correspond with the buyer, and another ten minutes to receive payment, pack and mail the stamps, and so on and so forth - a total time investment of 30 minutes.

I'm assuming that your shipping fee covers all your shipping costs.

Now lets say that the stamps you sold for $7.50 you somehow managed to buy for $3.75, and lets also assume that they were part of a larger bulk lot that you purchased for ten times this cost, meaning that you only need to allocate one tenth of the time you spent buying the stamps.  Say it took you an hour to buy and process the stamps, so we'll add another 6 minutes to the total time involved in this subsequent sale.

The bottom line is that it took you 36 minutes to make a $3 profit.  The hourly rate for this comes to $5/hour.  Hardly amazing, is it!  Even if you can be twice as fast in turning over the sales as I've calculated, that still brings your hourly rate only up to $10/hr.

And the other big variable here is the size of your profit.  With eBay, you can sometimes buy stamps very cheaply, and sometimes can sell stamps for very high prices, but this is a very unreliable and variable thing.  Sometimes you'll find that your listings close with no bids, and sometimes you'll find yourself having to sell product at your opening bid that you really didn't want to sell them at.  If you can average a 100% markup, then you are doing very well indeed with stamps, because the one thing that eBay has done is it has made everyone able to buy at the same prices, and also it has made everyone able to equally sell at the same prices, too, which by definition always have to be the lowest price out there rather than the highest price.  This is a key issue - eBay has vastly reduced the spread between buying and selling prices.

eBay and the other online auctions have severely squeezed the ability of stamp dealers to profitably buy and sell stamps on a better basis to what ordinary people can buy and sell stamps.  I laugh when I see eBay sellers hopefully bidding on the same stamps that I bid on - they hope to be able to buy these stamps on eBay for less than they then hope to be able to sell the very same stamps on eBay for!  Does that make sense to you?  It sure doesn't make sense to me!

About the only remaining opportunity dealers have is to buy some of the huge $5000+ collections that are sometimes sold on eBay in the hope that they can then break those up into smaller lots and resell those for a profit, but doing all of this takes a lot of time and still involves a fair measure of risk as to whether or not they'll ever be able to sell all of the stamps that were in the initial collection.

I've sometimes noticed a stamp company selling multiple sets of Russian stamp collections at a fairly low price (maybe through a magazine), followed by a rush of people who have bought them and now are selling them on eBay.  The one thing I haven't often noticed is these people successfully selling them for much more than they originally bought them for!

Cost/Profit Analysis - the 20c stamp bargain

To look at things from a different perspective, lets look at what is involved for a dealer to sell one single minimum value 20c stamp - perhaps at a stamp fair or through his store or something like that.

Okay, so we have a sale of 20c.  From that we need to subtract the original cost of the sale and the cost of the display card that the stamp was probably sold with - we'll assume that the stamp cost 1.5c and the display card cost 2.5c, making a total cost of sale of 4c.  We should also put aside an allowance for the cost of attending the stamp bourse, or for rent on the showroom, or whatever - I'll allow another 1c for these sorts of costs, and this gives us a total 5c, leaving 15c as profit.

How long did it take to process this stamp and sell it?  The dealer had to identify it, write up the display card, display it, then receive the payment for the stamp, and so on and so on.  The worst part of all this is the identifying of the stamp in a catalog - I'm going to say that this took 5 minutes, and that everything else took another 3 minutes, making for 8 minutes total.

What does this work out to as an hourly rate - 15c profit every 8 minutes?  Heck, that is $1.13 an hour!!!  Which is why I say that buying a stamp - any stamp at all - for only 20c really truly is a bargain!

The bottom line is in two parts, one good and one not so good.

First, the bottom line is that there isn't a bottom line for stamp dealers these days.  Well, okay, that is being a bit harsh, but I'd strongly urge anyone thinking of quitting their day job and becoming a full time stamp trader to think again!  Yes, there are still niches for specialty dealers in high value stamps, but if you were just thinking of buying and selling on an auction site, then forget it!

Second, as a hobbyist, stamp collecting gives us a rare opportunity to be able to fully indulge ourselves at minimal cost.  If we change from viewing our time as a 'cost' which we need to sell for a valuable rate to instead looking at it as the pleasurable time we spend enjoying our hobby, buying and selling stamps in your spare time is something that, while it won't make you money, can probably end up not actually costing you money either, and it surely can expand to fill every available bit of spare time!  But you probably already know this.  :)

This page last modified on May 15, 2010