Whaddayagot?
The Trading Post Is Open
Interesting discussion recently on the ins and outs of trading with dealers at shows. Turns out that a sizable percentage of collectors think that trading with a dealer is either impossible or always a rip-off. I think it is a lot more nuanced than that.
Given the finances involved, it is naïve to think that a dealer can afford to trade with a customer straight up as though they were two collectors trading cards over dinner. I gave a quick primer on what a dealer faces in overhead and inventory costs in my Day 2 column from Anaheim last September, so I won’t run it here again. Suffice it to say that if my gross margin is 30% or better, I am doing very, very well. I’ve found that 20% is more the average. That means that the overriding factor as a trading partner with a dealer that you must remember is that you are always going to have to give some advantage to the dealer. If not, there will be no show for you to attend because the dealers will all be out of business. The question then is whether a dealer and a customer can trade to mutual advantage, end up with a Win-Win. I think they can, provided that both parties have some understanding and some awareness of the counterparty’s needs.
On the customer side, it starts with being aware of what you paid for the cards you are offering. One friend of mine loves to trade with dealers at shows. He brings what he calls his “bag of crap” to shows to use as trade bait. “Crap” is a misnomer: the items are fine, but they are culls from lots he purchased, items he picked on the cheap, etc. In other words, he understands his cost basis for the items he has and doesn’t mind giving the dealer an advantage based on market prices because his stuff cost him so little in the first place. That’s the first piece of the puzzle: understand what you have into your trade items. That’s the floor on your trades, and if you don’t have a grasp of that, you are trading from a position of ignorance, which will cause you to act defensively and perhaps turn down a deal that you should have made.
On the dealer side, the biggest trading mistake that walk-ups make is to throw comps at me. The comparison shoppers, or as I call them, the comp bandits...you know them, the guys who search their phones and announce that an example the card you have ticketed at $50 sold a month ago for $40. I run into this all the time and my answer is usually "that's very interesting, thanks for the information. I think you should buy it on eBay." Gets some real head-scratching in response, so let me dig into it.
With rare exceptions, a comp bandit is deluding himself if he thinks he is educating me on price. I already know what my items are worth, which is how I priced them—and I price everything I put on my table. For a dealer, value has two components, and the comp bandits typically do not consider both. They usually fixate on the retail (book) value but neglect desirability. A high demand card is worth more to me than a low demand one, even if the retail value is the same on the two, so I will give the walk-up more value in trade than I might otherwise. The buzzword for a well-run card business is “turnover.” Turnover, turnover, turnover! I want my cash out and moving on to the next deal, or available to buy my kid the GI Joe with the Kung Fu Grip for Christmas, as fast as possible. The longer an item sits in my case, the greater my motivation to sell (unless it is appreciating rapidly or I am invested in it based on other events and don’t care to move it except at a premium, but that is another column), and I will not trade it for something less liquid. A few examples:
The retail value on a 1976 Topps common may be $2 but it is a low demand card that will take a long time to sell at retail if it sells at all. The retail value of a PSA 7 1976 Topps Hank Aaron is about $80, but it is a high demand card that will sell readily, especially if I shave a bit off the price at a show. Given that reality, there is no way that I will trade you the Aaron for 40 of your commons, even if the retail values are similar. I might trade you the Aaron for 400 of your commons on the thought that it is worth the time and effort to price, list and carry $800 of retail value. I still must sell it all but I can risk grinding out a profit over time. The way it usually works is that there is an initial burst of activity (which I hope pays back the cost of the deal) and then a few sales a week trickle in as people build their sets. After I get my cash out with a decent profit, I will likely blow out the balance to finish the cash flow and create space for more inventory.
At one show, I had a valuable but low demand regional card in my showcase. I’d had it for a while and had not been able to sell it. I was motivated to move it out. A customer wanted it and asked if I could trade. Sure, whaddayagot? He pulled out a handful of mainstream Topps and Bowman cards of bigger names that were worth about what I had priced the regional card at. I made the deal for straight-up retail value. Why? Because the regional was dead inventory, a niche item that I’d carried through multiple shows. I needed to cash it out, and the mainstream Topps and Bowman cards were readily sold, especially if I could negotiate, which I could with the margins I was working with. I flipped the cards I picked up in the trade at that same show for a modest profit, and he got to fill in a piece of a tough set. Win-Win.
Another dealer value calculation factor is cost basis: what did I pay for the card? If I found the card on a pick and paid 10% of retail for it, my calculation is very different than if I paid 75% of retail for it at auction. I have way more flexibility with an item I got on the cheap, especially if it is a tougher sell and I am looking at popular stuff in trade.
Every comp has to be adjusted for context. The comp bandits don't think about what an eBay comp represents. A sale online and in person are not the same, especially in lower priced cards. The financial reality is that most buyers at a show are already enjoying a substantial discount over the online cost to them simply by taking shipping out of the equation and having sales tax folded into the price, so the online comp is more of an apples to oranges comparison. When I price cards for sale, I check comps on eBay and I factor in the shipping cost and taxes as a component of sale. A $1 card with a $4 shipping cost is really a $5 card, not a $1 card, that I will typically price at $4, so coming at me with a $1 comp and demanding the card for a buck is not a fair or honest comparison. I prefer to think it happens because a substantial majority of collectors simply forget the shipping costs and sales taxes when looking at an online price, especially if the data scraping app they are using doesn’t add shipping to the costs, but that’s just me, the optimistic lover of humanity (insert roll-eyes emoji here).
Interesting side notes on shipping. I’ve previously noted that one of the reasons why the auction houses use a hammer plus buyer’s premium formula rather than just a simpler hammer price is that a small but significant group of bidders forget about the vig when they are bidding and tend to overbid as a result. The same is true of shipping costs. I can put out two examples of the same card for sale on eBay, one priced at a buck with $4 shipping and one priced at five bucks with free shipping and the $1 + $4 will sell faster than the one I list with the fin and free shipping just about every time. eBay pushes free shipping as a sales driver but for cards the opposite seems to be true.
I have some ideas on how to help make a trade with a dealer into a Win-Win scenario, in addition to knowing your costs and value and not being a jackass with the Card Ladder comps:
Know and ask for the retail price of your card and in return offer to accept that amount in trade at the dealer’s listed prices (dealers: price your friggin’ cards. It might just land you a big trade). I do that every time I try to trade with a dealer, and it works really, really well. A typical inventory for a show dealer is a mixture of items he overpaid for, got great deals on, has been carrying forever, and has newly acquired. While that gives the dealer a baked in profit, there is a wide variation in percentage of profit, and that means you can get more bang for your trade. If I am trading a dealer a slabbed, reasonably sellable card and he is trading a bunch of stuff from his picker boxes in return, he might give me 120% of the retail stickers on his cards for my card because it doesn’t cost him very much to do it.
Look for a dealer’s blow-out inventory. We all have it. If you can find underpriced items in junk boxes, for example, it multiplies the impact of your trade. I once traded a dealer a slabbed card for a stack of underpriced stuff from his picker boxes. I ‘made’ 2x right off the bat.
Look at the dealer’s inventory before you try to trade. If you see items that are consistent with what you are offering to trade, that is a big piece of the puzzle. I sell 99% vintage baseball cards; bring me a Nolan Ryan and we are in business, but I don’t know about or want your 2023 Panini Cherry Crinkle Sparkle Randy Arozarena variation card (no offense to Randy; just the first name that came to me). If I am going to make an offer on it, the offer will be very low because I have to cover my downside risks. I will trade into or buy anything if the price is far enough to my advantage, but when it gets to that point, it may not be to your advantage to make the deal with me instead of a specialist in those cards.
Look for a dealer who has certain types of cards but little apparent knowledge of them. Typically, that means that the dealer has a wide variety of stuff, probably some of which he picked up somewhere on the cheap and will trade them readily at a discount. The best way to find out whether that is the case is a truly revolutionary piece of advice: talk to the guy. Have a conversation. Most people are happy to talk about themselves and many dealers will tell you when they want to move something they are not comfortable with having in inventory. I’ve done it myself. I snagged a giant lot of Pokemon cards—which I know nothing about and do not want to carry—because the price was great and I made a point of telling anyone who was flipping through them that I was interested in making a deal for the whole lot.
Work to your niche interests. One of my niche areas is printing freaks. I love the damn things. Grotesque miscuts, horrible printing, blank backs, I cannot get enough. I even have a section in my show inventory for them. That is not the norm: many dealers look at cards only through the prism of third party grading. If I find a batch of cards with some really radical miscuts and misprints and the dealer doesn’t care and priced them as junk, I can do great on a trade.
Above all else, don’t be afraid to ask and don’t be offended. It isn’t blood sport, it’s just a card trade.
Damnit, Jim, it’s just a card trade…