As most of you know, I spend much time considering the pricing of collectibles. I am constantly amazed at the radical, differences in prices I record. Still, beneath those unpredictable prices is an underlying simplicity.
First, collecting is emotional, unpredictable and highly individualistic. Second, the majority of sales information is secret. There is no mechanism to share and disseminate information about pricing. While buyers are hampered in researching prices, sellers operate in a near-vacuum. Third, there are many isolated markets with limited interaction between them.
Finally, is the size of the collecting community. Pricing variability increases as the number of participants in a collecting hobby decreases. That is the situation our hobby is facing. Wide price ranges reflect a down cycle of participation in our hobby. The good thing about the current situation (for collectors, at least) is that scarcities and rarities are affordable. Dealers, I’m afraid, are suffering the brunt of the downturn. At the risk of sounding like Pollyanna, I stress that the situation could be much, much worse.
Let me give an example from a related hobby.
For the last nine years, I have tracked the occurrences and sales of steel-plate engravings produced by Herbert Bourne. He was magnificent British engraver who worked from about 1851 through 1890. Bourne’s most famous works are huge recreations of eight Biblical paintings by Gustave Doré. Many of Bourne’s remaining 75 works appeared in the Art Journal, but he also produced many engravings for stamps used throughout the British Empire.
Roughly 125 Bourne engravings are offered for sale on eBay(US/UK) every day. Offer prices range from $4.99 to $1,999. Unfortunately, only six (!!!) of Bourne’s prints sold within the last year. Why so few? It certainly is not the lack of engraving skill. While sell prices are higher than offer prices, we have adequate proof that there is simply no measureable demand.
It appears I am one of only two or three people who collect Bourne engravings. The specialty is terribly thin. Can we legitimately call Bourne prints “collectible?” I view the pricing of Bourne prints on eBay as an informative analog for our hobby of historical certificates.
One of Bourne’s prints is an average-rarity portrait called “Purity.” Only ten have sold since June, 2007 at an average price of $18.84. The highest recorded price was only $27.99.
One example of “Purity” is currently listed for sale on eBay(US) for $150. That same item was previously listed at $199 and $350. It appears the seller has no idea of competitive prices. While EBay allows users to research three months of past sales, there have been no comparative sales of “Purity” within that period. Nonetheless, the seller’s previous $199 listing took place at the same time another seller had offered “Purity” for $4.99. One wonders whether our current seller saw that the $4.99 offering or noticed it did not sell. One also must wonder whether the current seller has noticed another example of “Purity” is currently offered for sale in the UK at £11.95 ($16.59US).
It seems that eBay sellers operate with limited knowledge of past sales. While three months of sales intelligence is inadequate for sensible pricing of scarce and rare collectibles, that is still more market intelligence than is available to sellers who don’t participate in eBay.
Granted, eBay is the marketplace for common and average rarity collectibles. However, I am recording more and more scarce items for sale on eBay all the time. Non-eBay sellers can keep their prices higher than eBay only for as long as they remain sole providers of rarer material. One of the problems, of course, is that the supply of rare collectibles is limited. Average dealers need to sell substantial numbers of moderate-rarity items to survive. It is that “meat and potatoes” part of the market that is at risk whenever their established buyers choose to shop eBay.
My analysis of Bourne print sales suggests that eBay buyers almost always choose the cheapest print at the time of purchase. That is not always the case with certificate buyers, but, in general, it appears that collectors tend to be price conscious when shopping on eBay. Curiously, competitive or better certificate prices are often acquirable off eBay, so I must question how much overlap there really is. Because sales information from off-eBay sellers is completely inaccessible, I cannot estimate how many eBay collectors participate in other markets.
That question should concern dealers. Evidence suggests sellers frequently work with little information when it comes to sales results. Professional dealers certainly know what items sold for in the past, but are they fully aware of today’s prices? Can dealers price properly if they cannot discover current sales prices?
One might question whether collectors are operating at the same disadvantage? I doubt it.
In fact, I suggest buyers have an upper hand. As long as they are looking for common to intermediate-rarity collectibles, buyers can always find alternative shopping opportunities on the web. Those kinds of instant-gratification buyers probably won’t bother with sellers who lack web presences. Research on web buying shows that typical buyers are not nearly as price-conscious as they seem. If websites are hard to navigate, average buyers give up easily, even if they ultimately pay more elsewhere.
Convenience and ease seem to trump price elsewhere in the online marketplace. Taken together, convenience and ease of purchase may actually explain much of the odd pricing behavior I record. Collectors can save money by shopping several markets, but is it easy to shop far and wide? Is it convenient to buy from all dealers?
Let’s leave that discussion for next time. I will merely suggest that certificate dealers with web presences might view improvements in shopping convenience to be one of their greatest sales opportunities in years.