A Comparison of eBay® , APS StampStore and Mayo Postal History (Traditional and Lite) Sales Models

(Revised 9/14/06)

(3/08 Note.  In 2/08 eBay made substantial changes to its fees.  Notably, the auction listing fees were reduced somewhat, and the commission was increased.  I have not revised the tables below.  The basic picture remains unchanged: their listing fees are very high relative to the alternatives, while their commissions are very low.  Basically, their overall deal will be good or bad for the seller depending on the sales rate, and on the value of the items sold.)

These remarks will focus especially on the fees and labor issues of the various consignment selling models. (I’m sure that there are other sites actively soliciting consignment sales, but I haven’t found any among the many postal history sites that I’ve visited. If you know of other sites, please direct me to them. I’m always curious.) When I passed the first drafts of this analysis by my wife and by one of my collector friends, both of them felt that I was omitting a very big point: I sell covers. The APS StampStore sells mainly stamps (the name is sort of a giveaway) and some covers and books. eBay sells all sorts of stuff. ("Psst, Hey buddy, you wanna buy a used Soviet nuclear submarine?") My friend’s eBay experience was in the same direction, but more dramatic than my own. I occasionally still go to eBay to look for material, only partly daunted by the masses of un-useful stuff that I have to wade through (even in a tight search such as POW or censored under Stamps only), and by the fact that I usually end up as the underbidder (which is not unreasonable given that I’m buying for resale). He, as a collector willing to pay what it takes (within a broadly defined reason) to get what he wants, has stopped going altogether because the sheer volume of stuff not of interest to him makes it not worth the time it takes him to find the occasional item that he’d like. He’s concluded, over the years, that good postal history material is most likely to found from postal history dealers, and that’s where he spends his time looking. The fact, for better or worse, is that I’ve built a clientele over the years for postal history (especially with a war/military flavor). As a postal history dealer, I’m likely to be found by people who want to buy postal history, even without being a cultural phenomenon. There’s a lot to be said for that.

Another negative is the fact that auctions by their nature happen on a date certain after a relatively short promotional period. An auction without the right bidders (or with the right bidders temporarily financially distressed) is a disappointing event. In my own auction days I’ve had the experience of second-run material selling at a higher percentage rate than the first-run material in the same auction. On eBay I’ve had material sell on the second time around as well, with no changes in anything but the lot number and the day of the sale. So, timing is important, and you control only part of that. On the plus side, if you are not in a hurry, unsold eBay items can be recycled on eBay at reduced financial cost (sometimes even for free) and at a reduced time cost (you’ve already described and scanned them, so all you have to do is upload) on a reduced-listing-fee day.

(I am not saying that eBay auctions are not a worthwhile place to sell. I have sold in them material that I had not sold for years on my site – though at lowered prices and with lots of unsold items to go with those that sold, plus fees and commissions – and I will use them again. Do I see them as a place where I might want to sell quickly if I’m unconcerned about price? Yes. Will they have lots of visitors to their site who look at my material? Yes. Will there be lots of bids per item vs. just lookers? Not in my experience of anyone’s material that I’ve seen there. Do I see them as a place where I would expect to sell a significant percentage of what I offered at retail or close to it? No. They do serve a useful purpose. It’s just that this purpose is not getting remarkably high prices for much of the material offered. That is not their fault. It’s just a fact.)

I have no personal experience of eBay Store sales, but I think that here the deal is in fact better in terms of the insertion fees. (9/14/06 note.  This is definitely no longer the case.)  You have the same pricing options as in an eBay auction, but it costs you no more to list a cover at $50 than it does at $5.  (9/14/06 note.  This is definitely no longer the case.)  And the commission on sale is, as with the auction, minimal; you get to keep almost all of the extra profit from the higher listing price. So putting something in your store at retail before running it at a reduced start-price in an auction is a good strategy.

(9/14/06 note, I have retained my original analysis here, based on 2004 fees, since it shows at length the thought process leading to my hypothetical bottom line.  But see a revised analysis below based on the 8/22/06 fee structure, as that bottom line is now radically changed, for the worse.)  An exact calculation of an eBay Store listing fee is impossible because it depends on how many covers are listed and how fast they sell, if at all.. Working up even 100 covers a month and processing the sales from them is not a small undertaking, but it could be handled easily enough by someone with spare time. My guess is that for the average collector, putting up and maintaining even a 1000-cover inventory would prove difficult. (This is especially true of an inventory of 1000 covers worth fooling with. Given the time it takes to work up the material and process a sale, I am continually amazed that many people do in fact take the time to offer covers priced as low as a dollar to a few dollars each – and then pay listing and store fees on top of that. Obviously we’re not all doing this for the same reasons.). However, let’s assume that a collector can do this. In my experience, a sale rate of 50% in 2 years is not unreasonably low, unless you're giving the material away. (In my auction days, I’d have cut my wrists over a sale rate this low. But there the start prices were sub-retail. Lower prices, higher sales rate; higher prices, lower sales rate. Simple. Someone could have gotten a Nobel Prize for discovering that, except his timing was off, probably by a few thousand years.)  It would be reasonable to assume that 25% of these would sell within the listing month; and that the other 25% would sell over the next 23 months with an average stay before sale of 12 months. The resulting fees for 24 months would be would be $543.80 figured as follows: monthly store fee, $238.80 ($9.95 x 24); monthly listing fees for the 250 quick sales, $5.00 (.02 x 250 x 1); monthly listing fees for the 250 slow sellers $60 (.02 x 250 x 12); monthly listing fees for the 500 unsold covers $240 (.02 x 500 x .24).  (9/14/06 note.  This is definitely no longer the case.  See below for effect of revised fees.)

You can allocate the totality of these fees in any of several ways (e.g., all to the unsolds, or part to the unsolds and the rest added to the commission to get the true cost of selling the covers that did sell). But the bottom line will come out the same: you will have paid those fees however you allocate them. I find it easier, for the sake of comparing the eBay Stores, APS StampStore and MPH models to think of the fees as being loaded on average all across all of the covers, regardless of whether or when they sold. Thus, $543.80/1000 = an average "insertion fee" of $.53 for eBay Stores vs. $.25 for APS vs. $.75 for MPH-T vs. $.50 for MPH-L. This allows the eBay Stores commission + additional costs of payment collection to be stated more definitely as something on the order of about 8%, clearly the best of the lot. (9/14/06 note.  This is definitely no longer the case.) The issue then comes back to one of time (and to some extent comfort in using a computer, a scanner and the Internet) vs. money. Do the extra work that eBay Stores selling requires and you can pay yourself the saved marginal commissions that other consignees charge for doing some or all of it for you..

Revised analysis based on 8/22/06 fees.  Assume 1000 covers, half $25 and under, half over $25, with a sales pattern as stated above over a 24 month period.  Monthly store fee is now $382.80 ($15.95 x 24).  Monthly listing fees for the 250  quick sales is now $18.75 ([.05 x 125 x 1] + [.10 x 125 x 1]).  Monthly listing fees for the 250 slow sellers $225 ([.05 x 125 x 12] + [.10 x 125 x 12]).  Monthly listing fees for the 500 unsold covers, $900 ([.05 x 250 x 24] + .[10 x 250 x 24]) .  So, now the eBay Stores  total is $1526.55 for 1000 covers yielding an "insertion fee" of $1.53 per cover -- making it easily the worst of the retail options in terms of listing fees.  This is not to say that the total eBay Store option is necessarily a bad deal, assuming you are willing to do all of the work mentioned above.  Their higher insertion fee is offset by a much lower commission (10% on items up to $25, 7% on $25.01-$100 items, 5% on $100.01-$1000 items) on sales.  It's just that they are a remarkably less good deal than before. If you have items that you are confident sell relatively completely and quickly it's a great option.  But if your sales are low ands low, the insertion fees will eat up the commission savings -- or more.

The APS StampStore

This clearly has the best of it with regard to the insertion fee; their $.25 insertion fee just can’t be beaten. They are also doing a good bit of the labor (the scanning, uploading and site maintenance, and the not inconsiderable back-end work of processing the orders) for their flat 20% commission. And they are absorbing the cost associated with collecting some of the money, which brings their net commission down to about 18%. In my opinion it’s a good deal for the seller who is willing to do some of the work and who can bring himself to actually put a price on his material. (This is easier with stamps than with covers, but is still a psychological hurdle for some people.)

MPH – Traditional

The traditional MPH "insertion fee" of $.75 per cover (computed from a $1.50 per unsold item fee and the assumption of a 50% sale rate over 2 years) is clearly the worst of the lot. It was adopted somewhat defensively: you can price your covers however you want, but since I’m doing all of the work, I need for you know that you will have to pay (more) if you get greedy and, as a result, kill sales. (And if you’re not pricing your covers, you can see that extra fee as paying for my best efforts in doing that correctly for you. Sometimes an extra $.50 for what I know can be remarkably valuable; and sometimes I can completely blow it; but on average I think there’s value there for the money.) However, it was also a reflection of the fact that there was much more time being spent on the covers (typing descriptions, often pricing, which in more than a few cases led me into research) than is the case in the APS and MPH-L models.

The nominal 35% MPH-T commission is also higher than the APS StampStore’s and much higher than either of the eBay venues. However, the actual commission after factoring in quantity discounts not available at the other venues and the absorption of credit card fees brings this nominal 35% down to an average net commission of about 25% of the marked prices. (And even this figure is slipping downward as more US buyers switch from check to credit card or PayPal payments.)

In the world of simple numbers the MPH-T model, with its higher insertion cost and commission rate, looks pretty bad. But when you consider the amount of avoided work and the knowledge provided (including the occasional seat-of-the-pants guess based on gut instinct that is a part of every postal history dealer’s arsenal) that it represents, it’s still a bargain.

MPH – Lite

MPH - Lite is specifically designed to emulate the APS StampStore model: you do more work, you get a lower listing fee (though not as low as APS’s) and a lower commission rate (in fact, on average lower than APS’s). I’m still somewhat wedded to the idea that I’d rather reward people for helping me to sell their covers than for not selling them. The distribution of labor has been brought into line with that of the APS StampStore (the only significant difference being that they want their data on paper and I want it submitted on disk or via e-mail). While the effective average commission rate of 15% is actually lower than the APS StampStore’s, the payout to consignor is also lower – 75% of the marked price vs. 80%. The difference is to be found mainly in MPH quantity discounts not offered by APS (and to a lesser degree in higher credit card processing fees for MPH resulting from lower volume relative to APS). The importance of discounts in selling covers is a debate that will never end. It will probably not come as a shock to most of you that many sellers faced with a demand for discounts have discovered that you can offset the discount by pricing the item higher in the first place. In a world of dollars rather percents on the bottom line, discounts can be worked out of the equation.

The other significant change that I have made in the Lite version of the MPH consignment terms is to lower the minimum consignment amount from $1000 to $250. I do this with some trepidation, not because this opens up the possibility of lots of small consignments each with its own trail of correspondence and accounting lasting at least 2 years, which it does. Rather, I worry that small, highly concentrated consignments will produce feast-or-famine sales results; and I don’t like famine. Simply put, the more covers, the more likely the mix is to be varied, and the better the chances of some of them finding buyers who want them. But, I’ve finally learned that every wedge has a thin edge that works better in opening things than the thick end. So I’m lowering that bar to people consigning, with hopes of it working out all round.

I used to run a society auction. I still get auction lists in the journals of half a dozen societies to which I belong. My sense is that they are buyer-friendly (especially if they are run honestly, which I think you’ll find to be almost universally the case). Granted, many of the national specialists (and some of the foreign ones) interested in the society’s area are members. But many other collectors in the home country, and many more overseas, are not members. Restriction of the society auction to society members cuts down the bidder pool, perhaps to an extreme degree. The person who sets the price in any honest auction is not the top bidder, but the underbidder. Lose the second-best bidder because he is not a member, and you lose money. There is a reason why big-name collections of society members almost always go to commercial auction houses (if not directly to another big name member): the prices are better there. For smaller items in smaller quantities, society auctions do provide a good outlet; if not always top dollar. The balance can be (and I suspect often is) made up by the knowledge that the seller is helping the society when he sells through their auction. (The notable exception, with which I am familiar, to this critique is the Canal Zone Study Group’s annual auction. They are an amazing group.)

MPH – either Traditional or Lite – will not be for everyone wanting to sell individual items at retail prices (much less for those wanting to sell in bulk – for whom dealers and auction houses are still the way to go). For someone selling stamps, I wouldn’t think twice about it: your choices are the APS Sore, eBay, or your own site. For the person who wants to pack up a box of good covers, then fire and forget until the checks come in, MPH-T is the way to go. For the person with some quality covers, a little time to spare, a computer and the courage of his convictions when it comes to pricing MPH-L would be a good idea., For the person with lots of time, comfort in dealing with his computer, scanner and the Internet (plus the postal service and his bank on a regular basis), the eBay store has a lot to recommend it (9/14/06 note: though  much less than it had in 2004). And for the person with all of that plus a very large number of covers, setting up is own web site, as I have done, might be the best idea of all.

For Some (Additional) Thoughts on Selling Covers, click here.

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