Inventory is overflowing the safe deposit boxes here at ToughCOINS, which is a good problem to have in this business, but not one I want to fix by getting yet another box - I’d rather have fewer. Not only is it expensive having multiple boxes (already the largest size), but it’s hard to remember what’s in each, and it’s logistically complicated visiting more than one box at a time when I go to the bank, especially if there’s little time to do so. For those who would suggest I secure the inventory outside the bank, that is not the right answer to my situation. Also, the safe deposit boxes are already 10 x 10, so changing banks to get larger boxes doesn’t seem the likely solution either. Consequently, I’m trying to figure out the best way to consolidate inventory without depriving customers of a good selection of desirable coins. I’ve listed the options I can think of below. Sell off the least expensive coins and put the money into fewer, pricier items. This solution might even get me into just a single box, but it would also make my inventory top heavy and affordable to fewer collectors. I don’t want to shut off beginners or seasoned collectors on a modest budget. Sell more raw coins and fewer certified coins to make room enough for all to fit without getting another box, perhaps even permitting me to drop one of the existing boxes, although the weight of the box may become more of an issue after doing so. Sell raw coins below a certain price point, and certified coins above(as a general rule). If I did this, I’d want to know how sensitive buyer’s are to the risk of coins being uncertified raw up to the value at which such a transition would take place . . . what’s your “threshold of pain”? Do any of you have other ideas worth considering? I’m sure every respondent will have a different opinion, but all input is welcome. - Mike
I'm new to coins, but seasoned in running a business so I'm just going to talk from that perspective. I assume all inventory on hand was purchased with a profitable spread determined by your personal businesses needs. If that's the case I think you have to do what you can to accommodate the increased inventory. The part about "being hard to remember what's in each" is an easy fix...just have a better tracking system. The increased cost of an extra box and the increased time spent at the bank with multiple boxes should be offset by increased profits from increased inventory. You could also spend the near future only bringing in the higher spread items while you dwindle down existing inventory. A coin you may offer someone $500 for in typical times you may have a ceiling of $400 now, you can afford to have people pass more often than normal times due to your inventory surplus. If they accept then you can certainly make room for the new higher than normal spread coin. Now if income isn't your top concern and at this point in your career and you'd rather focus on convenience and value time over profit then of course that's a different story.
At the risk of being Captain Obvious (and praying no offense is given): Study your customers, not your coins. Is there any pattern to what you're selling, either from the website or in-person transactions at shows? Anything you can glean from what currently turns over more quickly? I've seen your stuff in person; you don't stock "crap" and everything appeals to an interested party who knows what they're looking at, so you don't have to worry about "dogs" fogging the results. Few dealers have instant national recognition; it's still a hobby where people develop followings which spread fairly slowly via word-of-mouth unless you strictly specialize, which ain't for the faint of heart. It's difficult, in the absence of such general appeal, for me to imagine that reducing inventory could be of assistance despite the logistical problems it creates. One thing that sticks in the back of my mind, if ever I travel your path as a dealer, is that everything will be imaged in quality sufficient that even if I don't bring it to a show, I'll have nice images on the laptop to show a customer who asks for something I don't have on-hand. You're backed up by a good website, so it would expand your appeal to have the ability to hook someone at a show - the demographic is those who are seeking specific coins, with a bit of patience - and then when you get home, place the coin on the website by previous arrangement for purchase. I'd lean towards your third option, if only to protect your investment. Personally, as long as I can look at a coin in-hand my upper limit for raw coin value is whatever the maximum is I can afford that day. Most are more risk-averse, though, so unless you're going to specialize it's probably not good business to tie up a bunch of capital in high-end raw stuff. The answer to every numismatic dealer's inventory problems is more inventory, as long as you can tolerate the investment. Understanding we can't really do that, though, maybe it's an avenue worth exploring to consider how you could carry and sell a bunch more than you physically bring to shows. Yes, I've completely ignored your most pressing question, because the answer to that one is simple and unilateral. The only way you grow your business without occupying more physical volume is to go upmarket, either via individual coin value or strict specialization. There just ain't no other answer.
Some coin types are less collectable than they used to be. (e.g. 1909 S-VDB cents, which everyone used to want and now every dealer has.) The value of some of your inventory is going down, not up. (I know we all love coins and are biased to think coin prices go up, but face facts.) Consider looking at how desirable the coins are, given modern collector's interests, and take a large amount of the less interesting stuff and decrease its prices so dramatically it will go out the door. You will not be losing money by selling it now a low prices, because prices will be even lower later.
Do you have a B&M, or are you just online? Have you considered a home safe large enough for everything? There is more risk with this, of course. I'm assuming you have some sort of inventory tracking system - rather than remembering which box something is in, just list that in your tracking system. As for inventory - it takes money to make money. If you wish to have a larger volume of sales, it only makes sense that you'll have to have a larger volume of inventory. That takes space, and space costs money. How much turnover do you have? When you buy things, do they tend to sit in inventory for a long time? You can run with smaller inventory if you have a higher turnover. The pricing will affect this, of course. Whether you want to go with higher value (and less quantity) or lower value raw will largely depend on your customer base. Which do you tend to sell more of?
From what I can see most of your questions have been answered Mike, with one possible exception - raw coins. Dave kind of touched on it here - The problem is very few actually "know what they're looking at". This is why, and I'm sure you already know this, the TPGs are so successful. Now me, personally, I never had a problem buying a raw coin even if it was several thousand dollars. But that is only because of two things: 1 - I had confidence in my own ability to grade the coin correctly, as well as authenticate it in most cases; and 2 - because if I was buying a raw coin I would only buy it from a source I personally trusted. And that's same problem as what I started with. There aren't a whole lot of people like that out there. So in my eyes anyway that kind of quantifies how you need to handle raw coins, at least partially. The other kind of person who buys raw coins is the one who just doesn't like slabbed coins. And yeah, there are people like that, just not a whole lot of them anymore. And a certain percentage of those still won't buy their coins raw, they'll buy them slabbed and then crack them out for inclusion in their collection. Now you know your market base better than any of us, but those two things tell me that only a small or at least a low percentage of your inventory should be raw coins. Especially when you couple that with the fact there we are and have been been for long time in a bear market. So whatever your inventory is the last thing you want is it just sitting around. If I were a dealer my primary strategy would be dropping prices to move things out the door. And being very careful with what I buy.
I don't really mind the cost all THAT much . . . the boxes are $200 anually . . . a drop in the bucket, really. I'm more concerned with the time it takes to retrieve individual coins if I sign into the wrong SDB. When I make a sale, I enter it in the books and prepare the packaging the night of the sale. During my lunch hour the next day I drive to the bank, retrieve the item from the SDB, seal it in the package, mail it, and drive back to work, eating my lunch along the way. Trust me . . . that's a tight squeeze. Thanks Dave, I asked the question the way I did because the slabs occupy so much more volume than 2x2s do, unfairly dominating the space in a SDB. Increasing the value of uncertified coins I carry in stock would reduce the volume of slabs, making room for far more raw coins, allowing me to grow inventory dollars without increasing the number of boxes I currently use. I do have an inventory tracking system, starting with lowest denoms in the first and ending with highest denoms and errors in the last. but a significant shift in inventory between dollars and quarter eagles, for one example, often moves the dividing line between what fits in one box and What ends up in the next, and sometimes causes me to forget which box a coin I need happens to be in. My goal is to grow the business while trading only in quality coins of uncommon dates which, in my mind, can be either high grade or low grade, but they must be good examples. That means their value can run the gamut. For that reason, I'd rather not focus on either high priced or low priced coins, but offer quality coins in whatever price range I manage to buy them. It's an unfortunate development that, as the TPG's run out of slab-worthy coins to grade, they are now holdering almost anything they can get a few bucks for, just to keep the bills paid. I think that most of the lower value coins that are so commonly being certified now don't really need to be validated by the TPG's for those who don't know what they are looking at . . . many of those holders are costing buyers more money than they stand to lose buying and reselling a coin raw instead. Worse yet, they are reinforcing the belief that, just because a coin is gradable, it should be submitted. I hate to think what this world will someday look like when terra firma is littered with common coins surrounded by non-biodegradable TPG holders.
Good point. The compromise might have you looking to older stuff, copper and Classic gold as subcategories which have a higher proportion of fans who operate without slabs.
Well you could set up at Gettysburg September 15-16 and sell off a good bit of inventory . You know Mike those of us whom been to that show are going to bug you about doing it.
Is there a value threshold where you would be comfortable storing some of your inventory at the house? I'm in the same boat - I compare the cost of getting a nice safe at the house to the ongoing cost of maintaining the SDB - which is becoming overloaded as my collection grows.
One other item that I will add....and this is something in my line of business that drives me nuts....I personally would rather make a dollar then not....I see this all the time in the food business of mark ups of 40 to 50 % margins. I am a firm believer in volume no matter what you're selling. I'm not suggesting giving away your profits....but under selling others especially on items that don't hold a premium . Buying and selling fast moving inventory so you're not storing it your moving it from point A to point B . I love deals when you have no worries about storage.....remember I work in the perishable food business , not quite the same but the clock is always ticking and ya got to move it in a timely manner .
Your point is well taken Paddy, but please remember that I try do deal only in tougher date material which is not easily replaced once sold. It's difficult to make that a high volume business. If I dealt in widely traded material, high volume, high turnover and underselling competition on a routine basis would not be out of the question.
True but I have a lot of dealer buddies and flipping inventory when buying estate purchases of the lower end helps solve the storage issues. Yet still making some profit in doing so. And I do see that you do try and unload the lower end as fast as possible.
Sounds to me like you don't value your time enough. I'm not sure why you feel a need to keep paying for expensive SDB fees, but I guess that's something you'll just have to decide for yourself. There's no way I'd tolerate a drive, the check-in nonsense, and game of hide-and-go-seek at the SDB every day. I'd get a reasonably good safe and pay up for enough insurance to make it a non-issue if something catastrophic happened. This type of insurance would cover your inventory in transit to and from customers too. Bad things can happen to stuff in SDBs too. Also, people notice those who make routine scheduled daily visits to a bank. It doesn't take a genius to figure out you've got to be carrying something valuable.
I do value my time, but I also consider it an investment in the future of this business. I don't make trips to the SDB every day. Some days I sell 4 or 5 coins and the next I might sell none at all. I do carry dealer insurance, and get soaked a couple of grand a year for that. As I indicated already, securing the inventory outside the bank is not the right answer to my situation.
My suggestion was already mentioned... lower prices (and profit) a bit, and things will move faster. It's something I need to look at doing too, as my collection has been getting bigger than I want.
