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Monday, February 29, 2016

February Ends On A Very Sweet Note Indeed And An Easy and Delicious Dessert Recipe

We have just completed our eighth month of operations with what is now the second highest monthly sales total. We sold just under $5,000 this month and I am just ecstatic! Most of the sales have come from a solid group of a few repeat customers, all of whom were completely new customers back when I went full time in July 2015. All of them started off small, and then bought more and more each time, and more often as they became more comfortable with my service and my stamps. Since July I have developed a healthy number of these steady customers. Usually only a few of them buy each week, but over the span of a month all of them will buy at least once. This is how the business is growing: the regular customers help to generate a sales level comparable to the prior month, while the new customers provide the growth. Hopefully, I can convert a percentage of the new customers today into tomorrow's repeat customers. I am trying to do this by hopefully exceeding their expectations, friendly communication and by writing and maintaining my blog, which will continue to provide lots of free and hopefully interesting information.

However, this is the reason why it takes businesses time to grow a steady client base. Even with me messaging my buyers each and every time I send them a stamp, and even with the blog posts, I would say that I'm lucky if 1 out of every 10 customers actually engages with me and responds to my messages. Most just want me to send them their stamp and leave them alone.  But it is those 10% that have a good chance of being repeat buyers. Sometimes I do get repeat customers who do not respond to my specific messages, but who come back anyway. By and large though, 80% of my buyers do not come back on a regular basis. I don't get the sense that it has anything to do with their satisfaction level, as I have very close to 5 star detailed seller ratings. No, I think it is simply because the buyers are very specific about what they are looking for and many of them are advanced collectors.

I can see the business picking up traction though, with each passing month and it makes me very happy to see the business model working. The $5 Jubilee that I bought last week sold in just one day to a repeat customer, and some E1's that I listed back in July, that had shown no movement since were all bought for my full asking price by a local collector on Saturday. All of this validates my business model, which basically is to price stamps at the high end of the market and wait for the right buyer to come along. They always do come eventually it seems.

Steph and I went for dinner at her parent's place yesterday and it was our job to bring dessert. I was in the mood for trifle and decided to wing it and make my own recipe. For those of you who have never had trifle, it is a layered dessert made of pound cake, or angel food cake, fruit, custard and whipped cream. Instead of using white sugar for the whipping cream Steph used about 3 tablespoons of Demerara brown sugar and about 1 teaspoon of pure vanilla extract. The result was a heavenly and delicious dessert. To make enough to fill a glass dish about 8 inches wide by 4 inches deep you will need:

1 plain pound cake about 12 inches by 4 inches, cut into cubes.
500 ml carton of whipping cream, chilled
3 tablespoons of brown sugar (Demerara works best here - that is the very dark brown sugar)
1 teaspoon pure vanilla extract
2 250 ml cans of Devon custard, or make custard using Bird's custard powder.
1 large container of fresh strawberries, sliced
2 pints of fresh raspberries
2 kiwifruits

Empty the chilled whipping cream to a large bowl. Add the sugar and vanilla. Beat using a mixer starting at low speed. Gradually increase the speed to high, and beat until the cream forms stiff peaks. This means that when you stop and remove the beaters, the peaks left behind on the cream should hold their shape. Once the peaks are stiff the cream is done.

Take an 8 or 9 inch glass serving dish that is about 4 inches deep and place a layer of pound cake cubes along the bottom. Top with a layer of custard and then a layer of fruit.Then on top of the fruit, place a layer of whipped cream. Repeat the layers until you have used all ingredients of the dish is full. Place in the refrigerator, covered for 2-3 hours to allow the cake to become infused with the juices from the fruit and the moisture of the custard.

Monday, February 22, 2016

Purchased Our First $5 Jubilee and How Not To Run A Stamp Business

Last week finished up with very pleasing $1,200 in sales. Nearly all of it was split between one very eager new customer who bought some low value Jubilees, and a number of repeat customers. Then, on Saturday morning, I managed to buy my first ever never hinged dollar value Jubilees - a $1, a $4 and a $5. They aren't perfect, but they are very pretty, and for the price I paid, I can think of at least a dozen customers I can now offer them to that I have built a relationship with. There is an excellent chance that they will be sold, either in this last week of February or the by the end of March. Also, I went to my local stamp dealer to pick up some more supplies and took with me complete sheets of the 1935 Silver Jubilee issue of Nigeria, which he said he has a customer for. I left them with instructions to sell them for $2,000. So if those sales are consummated then February or March will be a record breaking month, and all because of one thing: relationships.

Relationships are the lifeblood of a profitable business, not sales as most people believe. The internet is awash with articles about how important relationships are. It seems that while most business people agree on this, not all take the time and engage in the simple actions that build strong ones. The reason why they are so important is because it is the relationship that facilitates the best, most immediate and profitable sales. Initially I bought inventory not knowing who would ultimately sell it to and when it would sell. However as my relationships with my customers grow and I get to know their tastes and personalities while building trust, I am able to start buying stamps having a short list of customers that I will offer them to before they even reach my store. This would not be possible if I did not build good relationships with my customers. Businesses that form solid relationships with their customers develop the intangible asset known as goodwill. The value of goodwill can often be as much or more than the combined book value of a business's hard assets. Thus it makes sense, if you are going to commit your time and energy to building a business that you try to do it in such a way as to build goodwill as you go. The reason is that if you do it this way, it really doesn't take that much more time than not doing it.  This brings me to the topic of how not to run a stamp business.

One seller on E-bay that I have done a fair amount of business with over the past several years prides himself on being the cheapest on e-bay. He auctions most of his stamps starting at 10-15% of catalogue. If the stamps don't sell that week he then offers them as buy it nows at the same start price. I have obtained a lot of bargains by perusing his listings and have managed to sell many of these stamps for four to five times what I paid him - to happy customers I might add.

You would think that a dealer who does this would be wildly successful, and who knows maybe he is. But one thing I have noticed is that I win almost all of my bids with him when I bid on his listings. That is in sharp contrast with most other sellers where I'm lucky to succeed on more than 10% of my bids. To me this means that he does not get much bidder competition on his listings. Many of the other sellers that I bid with where I lose the auctions have the same basic stamps and they manage to sell them for more money. Why is this?

I suspect that his manner in dealing with customers may be one of the main reasons. When you go to his listings, his descriptions begin with the sweeping statements that he is they cheapest on e-bay, which might be true in the end, but given that many of those other sellers start their listings off at a penny, it does not appear, to the average person to be true. Then when you scroll further down there is a large blurb about how we all make mistakes and you can't really expect him to get it right 100% of the time. So he writes himself a pass for sloppiness right upfront.

And he does make mistakes as we all do. I just bought something two weeks ago for $21 USD when the US-CDN exchange rate stood at just around 1.5:1, so the items cost me $30. I suspect that what happened was he misplaced my item or sold it and forgot to update his item photos. What arrived in the mail was not at all what was described in the listing. No, the stamps I received were vastly inferior. I messaged him politely for the second time since I started dealing with him to explain the error. Now, the first time I did this three years ago, he blocked me as a buyer and I had to apologize profusely to him for hurting his feelings before he would agree to let me continue to buy from him.

This time he responded by telling me that he double checks everything before he sends it out but if I am unhappy I can return the item for CREDIT. So in other words I don't get a refund. This does two things:

1. It forces me to spend more money with him if I want to get what I spent back, and
2. I will only get all my credit if he keeps proper track of what I have already spent and what credit remains. Of course this does not usually happen and I wind up losing some money when my purchases come close to the full amount of the credit, but not equal to the full amount.

The other thing though is he is effectively refusing to admit to his mistake and suggesting that I am merely someone who cannot be pleased. This after I have spent $1,000's with him. Is this any way to treat a customer that spends that much? I think not.

But that isn't the end of it. I sent the stamps back as he instructed and didn't push the issue. I bought two more stamps during the week to use up my credit. The first stamp cost $8.50 CDN. I received a message from him after this auction closed advising me that I had $10 US worth of credit left (I started with $21US!). I replied that I thought I had $21 USD less $8.50 CDN because that was what my e-bay summary said, to which he replied that this must be impossible, since that would mean an exchange rate of 1.5. I knew I was right but decided to let it go since the difference was only a few $ - in the interests of the relationship and the ability to continue receiving relatively good deals from him.

Then later in the week I bought the second stamp, again for $7.50 CDN plus shipping. So I messaged him and said something to the effect of "just send me this stamp and we will call it even". He replied in the affirmative and then asked me why I had sent one of the stamps back when he had described it correctly. He just couldn't leave well enough alone. Even though I hadn't pushed it and just politely returned the stamps and even though I effectively only received $16 of value for my original $30 and waived the difference, he just had to push his luck.

And so something inside me just snapped. I replied with a detailed explanation of why his original descriptions were wrong and then I told him that I could not imagine treating my customers this way. I fully expect to be blocked for life after that exchange and I may never receive either stamp. But that is OK. The fact that I, as a business owner am OK with giving up a source of good deals in order to avoid being treated rudely illustrates the fundamental truth that value creation is not always about the money. Most of the time value is about the overall experience. We see this all the time with designer brands, fancy restaurants and the like.

Some businesses, like the big box retailers can succeed and be highly profitable by focusing only on price. However, the reason why they can do this is because they have vertically integrated their distribution channels to handle the immense volume cost-effectively and they have a near monopsony with their suppliers. What is a monopsony? Well it is a monopoly - on the customer's side of the equation. In other words, a monopsonist is either the largest or only customer of a particular business. So it means that the monopsonist is in a tremendous negotiating position with its suppliers. These businesses can simply carve out their profit at the lowest possible price by lowering their costs and forcing their suppliers to accept a lower price. They don't have to offer amazing service or worry about the customer's overall experience because they are the least expensive. To some buyers, who are only concerned with price, they are the business of choice. However, there are still plenty of consumers who avoid these businesses because they prefer more personalized service and are willing to pay for it. The other reason why these businesses can succeed with this model is the type of merchandise they are selling can be easily replenished, or it can be discontinued and replaced with something else. Since they are competing on price, consistency of quality or reliability of constant supply is not an issue for them.

However in the stamp business, the inventory is not easily replaced. It takes time, discipline, connections and focus to build and maintain a specialized inventory in a way that allows for a good profit margin. So it makes very little sense, in my opinion to compete only on price, unless you are a general worldwide dealer with no specialized focus. A business like this fellow's will only ever be worth what the sum value of his inventory is worth at any given time, nothing more. In contrast, my hope is to build a business that will be worth more than the inventory because I will have built a solid customer list of people who come to me because they value the overall experience they have when they deal with me. Every day now, I see these relationships grow and get stronger and I am seeing a steady increase in sales as a result.

Tuesday, February 16, 2016

Expanding Into Alternative Markets As Sales For February Pass $1,500

We have just passed the half way mark for February, and after a quiet week last week, we had sales of around $800. Then the weekend was relatively good, and today we sold a $1 Jubilee for just over $400, bringing the total to just over $1,500, so I'm happy.

I have been concerned for a few weeks now that the E-bay sales are not increasing by quite as much as I had hoped, given the amount of material that I am adding to my store on a daily basis. The store now stands at almost 3,500 items, in contrast to just over 900 when I started full time in July 2015. I anticipate that when all my inventory is listed there will be between 10,000 and 20,000 items listed. I started researching why the less than stellar sales growth might be happening and I found all kinds of possible explanations online, some of which I talked about in a previous post. However, there are some that are not the result of nefarious practices, and are actually quite plausible:

1. E-bay has too many listings, so the chances of my items being seen by a casual shopper is almost nil.

2. Very few of my items are coming up in best batch when a customer searches listings for "Canadian stamps".

3. Nearly all my sales are to customers doing specific searches and repeat clients.

4. Google hit e-bay hard by removing many items from organic searches in the past 2 years.

On any given day there are over 150,000 item listings for Canadian stamps. Not all of these are new listings of course. The actual number of pages though that represent new listings for just one day is generally in the neighbourhood of 100-150 pages, each containing 50 items. There is still no way in e-bay to filter by catalogue number, so someone who wants to do a general browse of all the listings for that day has to scroll through between 100 and 150 pages of listings. Easily 70% of these are post 1952 modern stamps. So a collector who is only interested in pre-1952 material has a daunting task ahead of him or her in searching the listings for the day. Consequently most don't search this way. Many will use the default best match for their searches. Those that do look at newly listed items will probably only scroll through 10-15 pages at most before giving up.

What that means for me is that it is highly unlikely that anyone casually searching through new listings is going to see my listings. Most of my traffic then will come from people organically searching either on Google, or on E-bay itself, or people visiting my store. If that is true, then all I am really on e-bay for now is an inventory management system rather than traffic generation. Most of my items are not coming up in best match because I don't offer free shipping and my prices are high relative to other sellers.

It became clear to me that it would be ill advised to continue to rely on e-bay as my sole source of traffic. So I began to research alternatives to e-bay. I wanted alternatives that would have:

  • Little to no monthly fee to operate a store or to list, and 
  • Would allow me to import all my listings from e-bay and keep them synchronized, so that as items sold on a site, they would automatically be removed from the others. 
Which brings me to another drawback of e-bay: it is really not geared to sellers of "long-tail" merchandise like me. What is meant by "long tail"? Basically it is hard to find items that are not priced competitively because they are hard to find. Most sellers on e-bay are selling stamps at below market prices in the hopes of selling them very quickly. Many do succeed at this and are very busy. Why am I not doing this? Well because businesses like that build very little goodwill and are only as good as their latest auction, since they do not build a reputation for having a stock that can supply a collector's needs. Their only point of differentiation is price, and competing purely on price is a race to the bottom in terms of long term profitability. Stamps are about as long-tail as merchandise gets - it takes time to sell them at the market prices. Sure, anybody can sell them quickly if they are willing to charge 30-50% of market. But where is the long term profit in that strategy? What I am trying to do is become known as the go-to place for Canadian and British West African stamps. To do that, I need a deep stock that can supply almost any collector of these countries with what they are looking for. To amass such a stock, I need to be able build it with purchases and keep enough items in stock until I have had time to build the stock to a level where it can be maintained and expanded continually. If I charge too little, it will cheapen the product and I won't ever be able to build that stock to the point that will enable me to establish that kind of reputation. 

E-bay heavily favours sellers who close lots of sales quickly because it means more fees for them. I question the long-term viability of this strategy though as a seller who has very marginal profits will eventually leave e-bay and not pay them any fees, but I digress. So they bump the cheaper listings to the top of the pile in best match and they also favour sellers who offer free shipping, which is absolute suicide in my opinion because it means lots of people will buy a single 99c item and then you have to pay between $0.85-$2,50 to send it to them. If you are having to eat that cost then you can pretty well count those sales as pure loss leaders because that is all they are at that point. I charge minimal shipping in the range I just mentioned. I find most serious buyers are not put off by this and what it actually does is encourage customers to buy more items so as to spread of the shipping cost amongst them. I think having a low shipping charge actually increases sales since a person will try to buy everything from one or just a few sellers to avoid high overall shipping costs. 

As it turns out I found a web-page listing 27 alternatives to e-bay! So I spent most of Friday last week investigating each one and signing up for two new venues. Based on my research, the following venues look highly suitable for what I am trying to do:

1. Bonanza 
2. Delcampe
3. E-crater
4. Etsy
5. Cqout
6. E-bid
7. Ioffer
8. Amazon Marketplace
9. Tias
10. Storeenvy
11. Webstore

Now I know that all the above have bulk import from e-bay features, with the possible exception of E-bid, which in 2015 did not have this feature but may have now. I still have to investigate all of them except for Bonanza, Delcampe and Etsy. Cqout has a large stamp category, so I know that there is traffic on it. The others have thin content for stamps, but may have some buyers. I will be checking them out over the coming weeks. 

Bonanza looks absolutely amazing! There folks have thought of everything, giving me a zillion marketing options, a webstore using my domain name, and being very well laid out. There is tons of technical support and I can even add Youtube videos to my store, which is fantastic because I was planning on beginning to produce them in the coming months and now I can link them to a store. They had many negative reviews online, but I suspect that is simply because they are new and their developes have yet to work out all the kinks. That's fine with me - if I can find a venue where I can communicate with people who have a clue and understand my objectives as a seller, I will stick with them. Why not? It only costs me $20 a month. The problem with e-bay is they have almost completely outsourced their customer support to the Phillippines and the person you talk to knows absolutely nothing that can help you as a seller. All they know are e-bay's policies and rules. In contrast, at Bonanza they can tell you which advertising campaign is best for you based on what type of merchandise you are trying to sell. 

Delcampe is a collectibles website that now apparently has 800,000 members. I have been buying on Delcampe for years, but never seriously considered opening a store there. One of the reasons was that prices there seemed lower than e-bay, so I didn't think I would get much traffic. Also, because there are no listing fees it is flooded with cheap material. However, I have recently read a number of reviews from former e-bay sellers who say that they now sell 10 times as many stamps on Delcampe than they ever did on e-bay. So based on that and the low fees, I decided to give it a try. The synchronized import is already in progress and should be finished tonight. So I look forward to seeing how it all looks. 

Etsy is expensive ($0.30) per 4 month listing and it is very artsy. But I think it will be an excellent place to list the modern artsy stamps that I have in very large quantities, where the price point is within what Etsy buyers are used to paying and the listing cost can be spread over a large number of listings. 

So all in all, I start the third week of February with some excitement and optimism. 

Friday, February 12, 2016

Over 400 Admirals Now Listed And The Difference A Supportive Partner Makes

I worked like a dog this last week. My goal has to try and list all my stamps of the 1911-1928 Admiral Issue by the end of the month. I have close to 1,000 stamps of this issue, so I knew it would be a difficult task. Yesterday, I got stuck on the 4c value, which was in use from 1922 onwards when the empire letter rate was increased from 3c to 4c. I was up until 2:30am last night trying to get through this stamp.

It is a very difficult stamp because it was printed in an olive bistre colour and this pigment is prone to many subtle shades. Some of these are quite scarce and worth a lot of money. My patience was rewarded though with some of the best items in my Admirals so far:

The bistre-yellow printing from 1925-1928. This is the palest of the shades and one of the scarcest. This one is yours for $170 USD.

The rare golden yellow shade from 1922. This stamp is priced at $420 USD

The deep bistre yellow from 1922-1925. This stamp can be had for $80 USD. 

I am hopeful that my customers will appreciate the work that I put into properly identifying all these and listing them.  We'll see what happens. 

Steph has been working very hard organizing the modern Canada and Fabio has been learning how to distinguish watermarks, dies, papers, perforations and printings on British Commonwealth. What has challenged him for most of this week is New Zealand. It's been a great exercise for him and while he has wanted to tear his hair out at times, I know he is enjoying himself. 

This brings me to a thought that hit me this morning and one that I want to share with all of you: the difference between a supportive and unsupportive partner. 

Oftentimes when we think of an unsupportive partner, we think of someone who outright forbids us to do something or who says "I want no part of it, but you do what you want." But I have come to realize through experience that it is much more subtle than that. 

I started this journey a long time ago - in 2000. Back then, I'd never heard of e-bay, but I wanted badly to become a stamp dealer and get out of public accounting. I came up with an idea to sell stamps at half catalogue price - that would be my value proposition. Whatever I could source profitably and sell at half catalogue I would. It is not a bad idea even still. I discussed this idea with my partner at the time, now my ex. She didn't outright say I couldn't do it, but indicated to me that it was "my thing", so I couldn't really talk to her about it, since she would not  understand what I was talking about, since she wasn't interested, and so I could only work on the idea in my spare time. I did buy a large amount of Canada stock spending about $5,000 at the time. She initially objected to me spending that money but later backed off. However, the thing never got off the ground, because I just couldn't find enough time to execute my idea. I realize now, given how labour intensive this whole venture has been that it was absolutely impossible back then to do what I wanted to do and still keep a full time job. 

Eventually, when I complained to my ex about how this idea wasn't getting off the ground and I really didn't want to stay in accounting she did suggest that I apply to the auction houses around the world for a job. So in that sense she was supportive of me wanting to make a change. But on the other hand her willingness to support me came with so many stipulations that had the effect of ensuring that she did not have to make any significant sacrifices of her own or very much risk. Eventually, I found a job which would require us to move to New Brunswick. Before she would agree to go we had to take a costly trip out there to "vet" the location to see if she could live there. So I sold the Canada stock to pay for the trip. It seemed like an ideal place when we went, and so we moved. 

It was during that move that the real tension in our marriage began. Even though she had agreed to support me and move there with me, she didn't completely treat it as her decision that she needed to take responsibility for. A supportive partner in that situation would approach it as a team effort and would look to do what they could to make the overall effort succeed. For people who have never been to or lived in a small rural town, I need to explain that the culture is very close knit and being able to fit in is critical to success. When we arrived there, within the first week, I was invited to go hunting with my male co-workers. They were trying to test my mettle - they wanted to see if I was one of the boys. I should have gone, but I caved in to pressure from my ex, who felt that I had dragged her to this strange place and that it was my responsibility to be there for her and to make her comfortable in this new place. Naturally, with attitude she managed to alienate virtually everyone we came into contact with as a couple. We would be invited somewhere once and then never again. Looking back, I know why - because she wasn't trying to make friends with the locals and she wasn't trying to see what she needed to do to make the locals comfortable with her, and by extension, my son and I. 

So, not surprisingly, we had no friends, or virtually no friends there and once we alienated my boss, we were done. I alienated him because I kept pressuring him to pay me more money, because my ex couldn't keep our spending to a level that we could afford and couldn't work consistently. So the whole effort failed and ended with my getting fired and suing my boss for wrongful dismissal. 

Another aspect to the story is that within two or three weeks of moving there, my ex started putting pressure on me to pursue the purchase of the house that would take almost a year to sell after we left New Brunswick. Every time I hesitated, I would be reminded of how I dragged the family out there and how this was the least I could do to show my appreciation. 

And therein lies the fundamental truth: a supportive partner looks for ways to support the overall effort that the two of you are engaged in and refrains from taking actions that could place the success of the venture in jeopardy. This applies not just to starting a business, but applies to all aspects of your shared life together, because that is what a real marriage is: a lifelong venture that you are both engaged in. 

So in the situation I described, that would have meant taking the attitude that the venture was building a successful and comfortable life in New Brunswick. My job was just one aspect of that venture, but there were many others. My ex, if she had been fully supportive, would have taken the responsibility on of contributing to the success of this an any way she could, and certainly would have meant avoiding taking on too many financial obligations or alienating the locals - both actions that proved to be our undoing. 

Steph on the other hand is a fully supportive partner and I am learning more and more every day about what that means. She has quit her job to come and work with me. Although it wasn't her ideal   job it gave her financial independence and meant that she didn't have to place her full trust in me. She has willfully chosen to give that up and instead come and work alongside me learning all the aspects of how this business is to function on a day to day basis. I may be the Captain of the ship, but she is my First Officer, and she is okay with that. She has already made some suggestions to improve the business, which we are going to try together. She asks me every day about the sales, gives me encouragement when I am worried, makes suggestions, and makes dinner if I am too busy working to make it. She has completely taken on the identity of a stamp dealer and has made it her life from 9-5. She is open to doing whatever it takes within reason to allow this business to succeed, even if that means making personal sacrifices of her own. 

I often find myself thinking about how different things would have been if it had been Steph that had moved to New Brunswick with me instead of my ex. For one thing, there would have been no requirement to go there first before accepting the job. She would have just gone and dealt with whatever came along once we were there. She would have been frugal so as to make sure our funds could cover all the expenses, which it would have, since it was double what everyone else in the office earned. We probably would have rented for the first couple of years until we were sure that New Brunswick was for us and then, and only then would we have bought. She would have tried to make friends with the locals, and I genuinely believe that she would have liked the people there. 

So if you are married or in a relationship and you are accepting a job or starting a business and you feel like your partner is not being supportive of your efforts, chances are they are not. By definition, marriage is a team effort, so unless the two of you have decided together that your job or your business is to be handled by you and you alone, if your partner is not involved enough to understand the challenges you are facing, they are not being supportive. If you are left to manage your career or your business on your own, and the fruits of your labour are going to support your family unit, then your partner MUST step up in other areas,without requiring your involvement. Otherwise they are behaving unfairly. 

Any thoughts?

Tuesday, February 9, 2016

Rumours About E-bay's Business Practices - Fact or Fiction?

Sales have been relatively good this first week of February. However I have noticed a pattern emerging over the past few months, where I will have a few very busy days and then nothing for 2-3 days, even though my volume of material has been continuously expanding almost daily. I certainly do not yet have the sales increase that I had hoped for after having nearly 3 times the volume of material listed than I had before back in 2012 when I had just topped 1,000 lots. Cause for concern? Hard to say for several reasons:

  • The material that I was listing back in 2012 was from the 1920-1940 period mostly and I have not yet gotten around to replenishing that material. I have been working on either Queen Victoria or Queen Elizabeth. 
  • The material that I have listed in depth has done relatively well after the listings have run a full month and buyers have had a chance to see them. 
  • My listings have focused on depth rather than breadth, so that while I may have over 3,000 items running, at the moment more than half those items are from just two issues, which only have a limited market. But the market that does exist for this material has responded well. 
  • My pricing strategy is not to be the cheapest and so the internal search engine on e-bay tends to rank my listings lower in "best match" search than other sellers.
  • There is a natural ebb and flow to traffic and it is not realistic to have the same volume of business every day.
My attitude so far has been to take the long view: I am looking to expand my inventory and get it all listed so that buyers can see a massive presence on e-bay and can choose from an absolutely unrivalled selection of stamps. Once I am dominant in most categories of Canadian stamps I can begin tinkering with pricing and marketing. What I haven't wanted to do to this point is get so hung up on making sales that I charge too little and stuff goes flying out of inventory faster than I can replace it. That is no good as it means that I would never get a firm presence established among my prospective customers, nor will I make much money. 

But it is getting hard to ignore the things that I am reading about online. If I google things like, "how does e-bay's search engine work", and "does e-bay limit your sales?". There are articles upon articles talking about various nefarious practices put in place by e-bay to keep small sellers paying large fees to e-bay while enjoying only enough success to pay the bills and not much more. These practices allegedly range from silent limits placed on sellers without their knowledge to deliberate manipulation of search results and hiding of sellers listings to prevent them from making sales. These articles are very compelling when you read them and very disturbing. If they are true, then e-bay is not a very good venue on which to base my business model. 

But are they true? It is so difficult to know. The online world is full of all kinds of people, including those who are quick to blame others for their problems. It is very difficult to tell who is just bitter because they couldn't adapt to e-bay's evolving standards, versus who has been genuinely wronged. From what I have read, e-bay has made no secret about the fact that they are trying to change their venue into a more retail oriented marketplace. There are many aspects to their vision, and one of them is buyers being able to get the most value, which often means the lowest price. So they have made a lot of changes to their search engine that put listings by sellers that offer free shipping and low prices to the top of the pile. Of course, one size does not ever fit all, so some sellers in some categories are going to be negatively affected, while others are not. 

But is that really a bad thing in the long run? I am operating in the collectibles market and a very large part of the customer's decision to purchase comes down not just to price, but selection and the degree to which they trust the seller. It seems to me that a seller who prices his or her stamps too cheap will simply run out of items to sell eventually and will be unable to consistently supply collectors at the lower prices eventually. So what will happen is that while they will enjoy a temporary advantage in best match" for a while, that will disappear once they run out of material to sell. Another thing is that even if I am lower in search, I'm not sure it matters that much because I think all serious collectors are going to look at ALL the listings for a particular stamp until they find one they want, in the condition they want, at the price they want to pay. Once the customer has been happy dealing with me several times, I expect that they are going to come to my store rather than come to me through a general search on e-bay. I will have to start looking at the traffic reports to see if this is true. 

As for the nefarious practices that these sellers are all alleging, it is hard to believe that a large organization like e-bay would go to the trouble to limit a seller's success on purpose. What is in it for them? There are charges that they spread the wealth among small sellers to keep them in the game paying fees. While that sounds somewhat plausible on the surface, I think it kind of falls apart when I look at e-bay's fee structure and note that the vast majority of my monthly bill comes from listing fees and final value fees. Limiting one seller's success to help another seller does not maximize listing fees for e-bay at all. It actually makes no difference to their revenue - at least none that I can see. The only way that it would make a difference is if the unsuccessful seller leaves e-bay and e-bay loses out on the monthly store fee, plus the listing fees they would have had from that seller. But the sales that that seller would have had are now picked up by the sellers that remain and they pay the fees to e-bay instead. Remember the buyers are going to buy whatever they want regardless of who is selling it. Besides, I cannot see how e-bay can actually limit your sales if buyers want your merchandise, since they can simply visit your store and buy as much as they want. As a buyer, I have never run into a situation where the amount I could spend with a seller was limited. 

I have seen some evidence that the internal search engine does temporarily hide listings as I have been searching the new Canada listings for material myself when I have tried to go back to a listing that I was just looking at and can't find it. But usually if I am persistent and go back within a few minutes, I can usually find it again. Now I am talking about "buy it now" listings. I don't know about auction listings as I run very few of those. But I do know that e-bay has quite openly admitted for several years now that they would like to see more sellers with stores offering buy-it-now items. So it would not surprise me if they are trying to make auctions less lucrative for sellers than they were before. This is entirely consistent with what is best for e-bay as I believe they will probably make more money from good-till-cancelled store listings than they will from placement fees for auctions. I think they also recognize that there is a significant segment of the shopping market that doesn't like buying at auction. If you look at the stamps category you will see that the buy-it-now listings vastly outnumber the auction listings, so it stands to reason that many auction listings are bound to get lost in the search shuffle anyway. 

All this fuss over the search engine seems to be to be a case of not looking at the bigger picture since it seems to me that the only customers you are likely to lose by your listing disappearing for a few minutes are the casual browsers, most of whom aren't going to buy anyway. I think serious collectors who are looking for my stamps are going to find at least most of my listings at any given time and if they are serious and like what I have to offer, they are going to visit my store where they can see everything I have for sale. That's what I do when I see a seller who has good material at decent prices. Why would my buyers be any different? I can see how this might be a problem with sellers of consumer goods where the customer is not a repeat buyer and each sale, by definition is a "one-off", since losing that customer means losing the sale for good. But that is not how it works with stamp collectors. Instead collectors are creatures of habit who tend to spend a certain amount on their hobby periodically. So even if you miss them this week, if you are consistently on e-bay over the long term, it seems to me that you will catch their attention eventually.  

So while these allegations are unsettling and somewhat disturbing, I am going to take them with a grain of salt until I can see more compelling evidence. All I know now is that I get far more sales - over 1000% more on e-bay than I do from competing platforms where my material is also listed - marketplaces which do not have these allegations against them, but who also seem to be wholly incapable of generating the traffic that I need to sell my stamps.  

If you happen to be curious about what I have to sell, you can view it by clicking the following link:

Friday, February 5, 2016

February Is Off To A Good Start With $450 In Sales And Admiral Listings Commence In Earnest

I've been hard at work this week listing the stamps of the 1911-1928 Admiral Issue. This attractive series of Canada was the first issued during the reign of King George V. It is so called because George appears dressed in an admiral's uniform. The basic set consisted of 8 stamps when the stamps were first issued. Then the colours were changed and additional denominations were added between 1922 and 1925 bringing the series to 12 stamps. The two colours of the 1c, the two colours of the 2c and the 3c brown are shown below:






Nice stamps aren't they? These were issued in the low billions. However despite these high printing numbers, most were not printed in a manner that enabled nice examples like the ones shown to survive, so in the above condition, they are quite scarce and highly collectible. 

This series was issued over a period of nearly 18 years from 1911 to 1928, so there were many, many printings. In fact, over 200 different plates were used to print the low value stamps. Additionally, the inks were mixed manually, and therefore, exact colour matches were not possible. Consequently, the stamps come in many lovely shade variations, as well as different papers. So some collectors like to specialize in this set and obtain as many different varieties as they can. 

I have spent the past three years accumulating material for my store and as of now I have well over 1,000 stamps of this series, almost all mint condition, with many in the above grades. I have spent the past month organizing them, painstakingly identifying the paper types and colour shades and otherwise getting ready to sell them. This week I started listing them as as of this morning, I have completed the listings of the above values, with the 3c carmine being worked on today. I am looking forward to seeing what the collector response will be over this month. 

Steph has been feverishly organizing the modern post 1952 commemorative material and is heading into the 1960's issues today. She has been learning all about grading and identifying shade and paper differences. She learns very quickly and has a sharp eye, but more importantly, we love working together! I am looking forward to seeing what she does with this material once she has it organized. 

The huge cover hoard from Finland that I bought last month has begun arriving this week - the first three parcels of 9 parcels containing what the owner has claimed are 30,000 commercial covers sent from Nigeria to Finland. Based on what I have seen, I don't think there are anywhere close to 30,000 covers, but more like 18,000. I haven't been wowed so far, but then these first few boxes are the pre-inflationary 1986-1989 period, which doesn't contain many good stamps anyway. It will be interesting to see what the 1990's look like. I am expecting to see some truly spectacular covers during the early inflation period, before the stamp denominations caught up to the new rates, and you see covers with 30+ stamps on them. 

Finally, Fabio has finished his first month with me. He has been working on organizing my British Commonwealth material, which has been a really good learning exercise for him. He has gained exposure to measuring perforations, checking die types, checking different watermarks and finally checking shades. He is learning the material well, and I am confident that soon, he will be able to start listing it for me. 

So all in all, I can see the business beginning to gather momentum. I can see now that I really did need help and realize that I likely will have to invest more personal funds in the business than I had originally thought to cover wages until the cash flow from sales can cover them. However, it will all be worth it, as the stamps cannot sell if they are not listed, and it is better to get them listed sooner rather than later, even if I have to pay for that to happen.  

Monday, February 1, 2016

January Ends With $1,700 in Sales, and the Game of Risk Has Much to Teach Us About Business Strategy

So January wound up being a much better month than Steph and I expected, with $200 in sales yesterday bringing our total to just under $1,700. What was even more encouraging though is that the sales have come primarily from material that was listed this month, which is continuing to uphold the turnover rate that I had forecast in my original projections.

I figured that it is time to go back and look at my original projections and compare where the business was forecasted to be at the end of the seven month mark versus how it has actually performed in this time:

Under my original limited sales growth projections scenario, my sales after seven months were forecast to be $26,777. Actual sales to date have been $17,078, or 63.7%. At first blush, this might seem discouraging, but it is actually not bad when I consider that my original projections were based on  my best guess on how a number of factors would play out, such as how much traffic increase I would get from social media. I had predicted a 2% monthly increase, which is now clearly not realistic, but maybe that will change after my post volume reaches a critical mass. I honestly don't know what the payback period is supposed to be with social media and unfortunately I don't think I can place much stock in the commentary about this online because my subject matter is so specialized and is not popular culture that will have lots and lots of views. What is good about our results so far is that the sales have been highly profitable and over 200 new customer relationships have been established. The amount of inventory listed has exceeded the projections, so sales should gather momentum, which brings be to my next topic.

Have you ever played Risk? You know that world domination game with the armies and cards?

Image result for risk board game

Now this is a game that has so much to teach us about life and building a business. 

A mathematician friend of mine who comments regularly on my blog used to play this game with me and my friends back in university and he always used to win. He would seem to be losing for most of the game as he would just get his minimum 3 armies, attack one country if he was feeling bold, and then  win and redistribute his armies. He didn't attack unless he had a massive number of armies, i.e over 3:1 in his favour. He did this while everyone else was taking over whole continents and holding all the countries between 2-3 other players. Then, about 20 turns into the game, he would turn in his cards for 100 armies, because that is what they would be worth by then, and then he would go on the attack. He would have a set of cards to trade in every turn and the game would over within 2-3 turns. 

What can we learn from this and apply to business?

Well, while all the other players were focused on the instant gratification that comes from making conquests and getting lots of armies while boasting about how many countries they have, Dale was quietly building his strength. He knew that in order to successfully win an attack that you need 3:1 on average. So in order for the other players to successfully attack him, they would have to deploy a massive amount of armies on the country next to his. The other players couldn't do this because they were spread too thin with all the countries they held. Dale knew that the important thing was getting cards he could trade in later. He let the other players trade their cards in early and bid up the value of the card sets for when it was time for him to cash in his cards. He also knew that the other players wouldn't bother attacking him because he wasn't much of a threat, with only a few countries on the board. He let the other players weaken each other and then moved in with a clearly defined strategy late in the game. 

So it is in business. I see so many sellers of stamps that have no clear focus in their business strategy. They will buy and sell whatever they can make a bit of profit on, especially if it is quick and doesn't involve a lot of work. As a result they are very busy and seemingly very successful. But what I notice in watching them is that their online presence is fleeting - it is only as good as their last auction. There is no "brand" per se. I liken them to the other players in the risk game. 

It seems to me that the best long term strategy for building a business is to choose a niche and focus exclusively on it. It may not pay enough to live on initially, but over time if you stick to it, and become a known expert, people will begin to trust you and flock to you. The best part of this strategy is that it will be very difficult for your competitors to compete directly with you. I have noticed this happening with my offerings of the 1954-1962 Wilding Issue. I listed over 1,500 items in this issue and then wrote an extensive number of blog posts about this issue. There is no other online source of detailed information on this issue for collectors to consult. I started working on that issue in November, and since I completed listings for it in December, I have sold approximately 300 of the 1,500 items, or 20% of my inventory. That is excellent for a modern issue that most dealers would tell you has little market demand.  

What I have done is build a stock of Canada that is good, but by no means complete or as strong as I would like it to ultimately be. But I have recognized that in order to gain credibility on e-bay, it is important to achieve relative dominance in whatever category I am listing. So rather than just listing random stamps from many issues, I will gather up all the material from one issue and spend a month working on it so that when I am done, I have more material listed from that issue than any other seller. This will help me on the Google search rankings, since ranking is all about the volume of relevant content, and the more material I have for sale, the more "content" I have. 

Like Dale in the risk game, I do not expect most of the existing stamp dealers to pay too much attention to me as they won't see me as much of a threat, since I don't have the customer base that they have, and in a sense, I am not even competing with them directly, since my product, in the form of my descriptions and customer service is different from theirs. But I predict that there will come a point soon after I have built up a presence in each of the major Canadian stamp issues, where it will be easier for me to gain new customers than it is now. Once this point is reached, I don't think the existing dealers will pose much of a competitive threat, whereas it would be very difficult if not impossible for me to try and compete with these dealers directly based on price or breadth of selection, if I started with that approach. 

Of course, I could be wrong about all this, but so far it seems to me that the only way this strategy can fail is if I cannot get the sales volume up to a level that can sustain Steph and I by the time my sources of financing run out. By my calculations we have at least a year to a year and a half before we reach this point, assuming no further sales at all. Of course sales will not be zero, so we will likely have even more time than that to get the business to the point where it is self-sustaining.