[Rockhounds] So ya wanna be a mineral dealer, eh? - Part 1

[Tom Corson]

As promised, here is the first installment on what being a mineral dealer is
all about - at least through my eyes. This first post will give you some
basic info so you can view what I say later in the proper context.

1) I am not an "established" dealer yet, nor am I a high end dealer. While I
have been into mineralogy since I was about 10 (50 years ago) and an active
collector on an off during those years, I just started this about 2.5 years
ago. So, as a dealer I am a rookie, and painfully aware of my status as
such.

2) I am semi-retired. My goal when I started this, in addition to having fun
and having a business related to mineralogy, was to make enough from mineral
sales to pay for my "boondoggles" plus hopefully a little more to supplement
my retirement income. What boondoggles? Last spring, for example, I went
back to NJ (where I began collecting as a boy) and collected at New Street
and Franklin and Sterling Hill for the first time since I was about 16. Then
I went to Maine and did the Maine Pegmatite Workshop for 10 days. I had a
blast! These were things on my personal "bucket list". I would like to get
my business to the point to where it would fund one or two of those kind of
things per year, but adding the ability to got to places like China and S.
America to buy as well. I'm not trying to be the next Rob Lavinsky. If that
happens great, but that has never been my primary goal.

3) What I sell I buy from 3 sources - wholesalers, other dealers, and
specimen miners. I do not typically sell what I self collect. Why? I'm just
not blessed with that field collector's luck that some of you have that
allows me to bring much back that is marketable. The only exceptions have
been some specimens from Tiger which I was fortunate enough to be allowed in
to collect this past fall. So I put some of the Creaseyite I collected along
with some decent Wulfenites on my web site (how could I not? It's the type
locality for Creaseyite). I also have some nice native coppers and
chrysocolla from Ray that I collected that I will eventually put online, but
that's about it. 

Don't get me wrong. I *love* field collecting. I jokingly tell people I've
never met a field trip I didn't like. I do as many of them as I can fit in,
and I do a lot of them. Living here where I do, in "mineralogical heaven",
I've been fortunate enough to become friends and collect with some of what
we call "real diggers" (serious specimen miners) and I will share what I
learned from that in a separate thread. It's very relevant to this whole
subject of specimen cost and price.

4) I went into this knowing there would be a steep learning curve and what I
call a period of "dues paying" - learning what works, developing contacts
both on the buy and sell side, learning from other dealers, becoming
established and known, etc. The reality of that "dues paying" turned out to
be at least an order of magnitude greater than what I expected. I thought I
could just learn what I needed to know, be patient until I got somewhat
known, offer good quality at a fair price, treat people well, and I could
probably start at least turning a profit in a year or so. Not! I hadn't even
a glimmer of the voyage I had just undertaken.

5) Since I have to buy to sell, the first thing you need to realize is there
is a significant upfront cash investment I've had to make. I currently have
between 2000 and 3000 specimens in stock. There is some serious money tied
up in my inventory. Since I like to put forth a professional image, I had to
buy display stands and bases, nice cabinets, lights, and all sorts of other
related stuff too. I decided since I had to buy stands, I would just buy
more of them so I could offer them as a convenience to my customers. I've
got over a $1000 tied up in just plastic! They've become pretty expensive
and I make next to nothing on them.

6) I also like to offer specimens at a variety of price points. So I have
what I call "club show" specimens which range anywhere from $6 to say $75 (I
also refer to them as "staples" - native coppers from UP, native sulfurs,
Navajun pyrite, amethysts, stuff like that people like them, they sell),
then my higher end pieces which range from $75 to maybe $250 or more. Earl
Verbeek just did a great post on the tradeoffs of this approach which you'll
get a much better picture of the nitty gritty details of in my next
installment, so stay tuned.

7) I do not high grade, hoard, or otherwise hold back the best pieces for
myself. When I first got into this I thought this would be one of my biggest
problems - "this one is too nice, I've just gotta keep it". Surprisingly, I
quickly got over that. Every piece in my inventory is for sale. When this
topic comes up at shows, I'll laughingly tell the customer "Hell, I'll sell
ya me!" (God forbid that anyone would be crazy enough to buy me! :-) There
are, however, out of the whole stock, less than a dozen specimens which
really are my special favorites. How I handle that is I set the price based
on a good but fair margin and on those pieces I don't budge. Someone wants
one of those, it will sell at the price marked and not a penny less. It's
not demand priced or jacked up through the roof, but the price is firm. If
those few pieces stay with me forever, that's just fine with me.

8) I do not mark up shipping like a lot of EBay dealer do, so I don't get
any extra hidden profit margin off of that. I *hate* having to pay high
shipping for a specimen. It's a personal pet peeve, so I go out of my way to
make sure my online customers are offered an array of shipping options (I
offer 6). A lot of people still think UPS ground is the cheapest way to ship
something, but for mineral specimens, it is not. The cheapest way is usually
USPS Priority Mail. If a customer places an order (90+% of which are paid
via Paypal) and they specify UPS Ground, I will email them and tell them
I'll ship it that way if they really want that but I can save them $10 or
$15 (or whatever it really is) and get it to them faster to boot via
Priority Mail. Most usually opt for that and I refund them the difference
when I ship.

9) I've been selling my specimens 2 ways - through my web site and through
shows, both club shows and to a limited extent the larger shows (I've done
Denver once and the TGMS main event now twice). I currently do not do EBay
or any other auctions. One needs to stay focused and not try to attempt too
many different marketing strategies at once or I've found you end up doing a
mediocre job at best on all of them.

10) I am not large enough or generating enough revenue yet to be able to
afford to hire people, other than temporary helpers on occasion for a show.
So I don't get to do a show by showing up in a nice big new panel truck with
a bunch of people to do the "heavy lifting" and other prep like the "big
dogs" do. I get to do it all myself, mostly the hard way.

So, that's my business model. Where I am today is I can buy and thus sell at
a fair price and still get a decent margin. Remember this is what is known
as gross margin or contribution margin - i.e., simply price minus cost of
the specimen. It is not yet profit until the sum of it covers all your other
costs, which are substantial. I have a decent web site that is completely
automated, so I have what in the business world is called operating
leverage. What I lack is the volume to generate a net profitable business
yet. In other words, I've got the foundation in place, but few people know
who I am. I am not yet what people in the biz call a "destination". So, the
missing ingredient is the volume.

This post has gotten long enough. My next installment will give you the
actual details of what has to be done to get a typical specimen that I have
purchased to market. I will follow that with one on some of my show
experiences (and associated foibles which should at least provide for a good
laugh), then I'll finish with my thoughts on why the skyrocketing specimen
price situation exists.

Also, several of you have posted responses and/or questions already that I
do want to address and will, but I'll wait until I get all the dimensions of
this on the table first.

TC
________________________________

Thomas W. Corson	 	 OBG International	 
corson at infodyn.com	 Green Valley, AZ 85614	 

http://www.obgrocks.com	 
World-Class Minerals For World-Class Collectors	
________________________________