by Lloyd A. de Vries
Vol. 24 - Online & Bottom Line
Another cachetmaker that's someone who makes special envelopes or cards for use as first day covers asked me recently why I bothered to use the online billing services.
"Don't you find it 'way too expensive for small sales or have they changed their program?" he asked.
I've often felt that stamp dealers (all collectibles dealers, really) are among the most ill-informed merchants in the country. Most have no training in retailing, accounting or business practices, have no idea how much they're spending in order to sell their merchandise, and are mostly underwritten by other sources of income.
So I sheepishly admit that I hadn't paid too much attention recently to how much PayPal, the major online payment service, was costing me. The other cachetmaker's question caused me to reexamine those costs, and the other fees involved in selling online.
My average FDC sells for about $2.50-3.00. eBay charges me 30 cents just to list the cover, and another 5% if it sells anywhere below $25. (I should be so lucky that one sells above $25!) So, if it sells at $3, I pay eBay 30 cents plus another 15 cents, for a subtotal of 45 cents. (If I listed it at a fixed price, the listing fee is 35 cents, plus the "final value fee" of 15 cents.)
If the person pays me with PayPal, it's either 36.6 or 38.7 cents (2.2% or 2.9% depending on whether I have merchant status).
I don't pay fees for depositing checks, although some banks do charge both business and personal accounts for deposits.
So my overhead for the sale is 80 to 85 cents if the item sells, 30 cents if it doesn't. That's more than 25% of the selling price if it sells, and 10% if it doesn't. And not all my items sell.
Professional retailers often mark up items 100%, or twice the wholesale cost of the item. Following that rule, that would still leave about 70% of the selling price for the cost of producing the FDC and mailing it, plus my profit.
You don't have to pay any of those fees if you sell at a stamp show or use newspaper ads, right?
No, but you have other fees. It costs money to rent the show table, drive to the show, eat lunch at the show, not to mention spend time at the show that you could have spent at home cleaning the gutters instead of paying someone to do it. Divide those costs by the number of stamps or covers you sell, and how is your "fee" per item now?
Merchants pay transaction fees for sales that use credit cards, often as much as six or seven percent. The fees are higher the smaller the business, and when I had a merchant credit card account in the late 1980s, I was forced to use a "business" checking account that had a $10 monthly fee, too.
It costs money to place newspaper and magazine ads, too.
Neither shows nor print ads are guarantees of sales, either. A year or so ago, I placed a $100 advertisement in one publication, and sold one $4 first day cover from it (nor did it generate any leads for future sales). And I remember one show in Buffalo around 1990 where I sold two $3 first day ceremony programs. Period. All weekend. Some dealers talk about covering the table; I didn't cover lunch!
The bottom line is that there is a bottom line, a cost of doing business, no matter how you try to sell stamps and covers.
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