This is probably a stupid question, but I've wondered about it for a while. Given eBay's 10% fees and the fact that eBay probably has the lowest prices on coins, how do large sellers make money on eBay? Where are they buying cheap enough coins that they can even make a profit? Coin shows/shops and private coin dealers generally have much higher prices than eBay, so that leaves what, pawn shops? Or do they do all their buying directly from collectors/heirs?
I try to cherrypick attractive coins from other auction sites and use good photography to sell them at retail prices on E-Bay. I am thrilled when I can make a 10% profit on a coin. Then again, I am not a large seller.
I assume .... Large bulk purchases from dealers (outside of ebay) at shows and coin shops. The dealers with B&M's stores make good profit on all the collections they buy from walk-ins.
Large sellers have profit built into their BIN pricing (or, if auction format, minimum bid and/or reserve price). They don't lose money, but they may keep profits to a minimum to insure cash flow. I did a little experiment about a year ago... I stopped at the LCS and purchased $90.00 worth of assorted low grade older coins (six coins all together). I took good photos and listed them on eBay at $5 opening bid, no reserve and free shipping. My final sales total was $132.00. After expenses, my net profit was $20.55. Also, remember, power sellers get discounts on their final value fees (plus other perks), so the fees are less than 10%.
I've been trying to make it as an eBay dealer for 18 months. I sell 150-250 coins a month now. Most coins I get are from coin shows like ANA and Whitman, Orlando FUN shows, etc. then I resell them on eBay. The other good source for me is eBay. My profit margin last year was 25% after all my expenses (the coin itself, fees, traveling, shipping, etc.). It's fun but still stressful because my income ebbs and flows.
May I ask how you came to this conclusion? In my opinion Ebay is one of the better places to get the most for your coins which to me means one of the most expensive places to buy coins.
I agree with you that eBay is one of the best places for collectors to sell their coins, as you would get less selling to a dealer or shop. But for dealers, I think eBay is probably on the lower range of retail price compared to what they could get either in a brick-and-mortar shop, on another auction site like Heritage, or on their own website. I gotta say I'm pretty jealous of you, becoming a full-time dealer is one of my dream jobs. 25% is a pretty solid profit margin too. I created a website of my own this year just so I could avoid eBay fees. The obvious downside is lack of traffic. If I could guarantee a healthy profit margin like yours I'd probably switch back to eBay.
Well you can really cherry pick on Ebay, in a day you could potentially look at thousands of coins. You can certainly find a deal here and there looking through that volume. Hard to search that type of volume of coins elsewhere.
I think it also does depend on the coin. Most coins I buy from a brick and mortar are at grey sheet bid prices. There's some coins on ebay that go for around grey sheet but it seems most go for a decent percentage over. So in my mind I see ebay being expensive. Though it is nice seeing basically everything you want on a screen in front of you and being able to buy without leaving the house which is why I don't mind the ebay premium sometimes.
