Five Tips for Young Coin Dealers

By Charles Morgan for CoinWeek …..

The coin industry is changing in dramatic ways. With a wave of retirements from big-name dealers forthcoming and the arrival of a new generation of tech-savvy coin dealers on the horizon, the contours of the 21st-century coin market are now taking shape. I lived through the third-party grading revolution as a young collector, and I’ve covered the past 15 years of developments as a professional. At no point in my career have I anticipated a period of so much change. I am excited by the potential that emerging dealers–many in their early 20s–have for molding the industry and bringing excitement and innovation – two things the coin hobby truly needs.

In this article, I’d like to offer these future leaders five tips to help them establish their brand identity and avoid mistakes that could cost them years to recover from.

If any prove helpful, please drop me a line.

Over-Reliance on Grades and Pop Reports Is a Bad Idea

Unfortunately, understanding the rare coin market is not as simple as looking at a pop report, skimming over recent auction results, and arriving at a conclusion. This data is helpful, of course, but it paints an incomplete picture. It’s better to view this information as a snapshot of a point in time and to compare the current pop and market data to historical data.

Major auction sites with sales archives can be particularly useful when trying to piece together a more complete picture of the market. Questions I seek to answer include: How have the pops changed over time? Are there auction appearances of the top-pop coins in other holders or other grades? Are these coins typically sold in “named” auctions or do they kick around from time to time, having multiple auction appearances within a short span of time? How do specific coins at the top end compare to other known top-end coins? Is it possible to rank the condition-census coins from best to worst based on eye appeal and market data

Another question that can’t be answered directly by looking at grades and pop reports is how popular that date and series is at any given time. This is judgment that must be developed for you to compete in the marketplace – not just for coins, but for customers.

Start as a Generalist With a Strong Customer Focus

Most successful dealers specialize but determining which specialty to pursue requires time, experience, capital reserves, and a customer list. Dealers just starting may be lacking in one or more of these areas and need time to develop not only the knowledge necessary to specialize but also the connections necessary to emerge as a market leader in a given area. For this reason, it is better to be a generalist when you are starting out, dealing in areas where your knowledge is developing and where you can make safe plays as you build up your brand and reputation.

One young coin dealer that I have had several excellent interactions with (a current ANA Board member, if you want to figure out who) impressed me with his strong customer focus, and I think you can benefit from knowing what it is he does and the impact it has on a customer.

I purchased a small number of older numismatic books and catalogs from this dealer on eBay. When the books arrived, they were smartly packaged, in the stated condition, and delivered promptly. It’s the little bit extra that impressed me, however. Inside the package, this dealer bundled a wooden nickel, a business card, a card promoting membership in the American Numismatic Association, and a brief message to let me know that he will happily work with me to help me find what I’m looking for. This approach may not yield immediate results, but it makes a firm impression and speaks highly of the individual and the brand that they are building.

That’s not to say that you should pester your customers or over offer, but building a two-way street allows traffic to flow both ways – your customers will sell you deals and look to you to find them coins.

Another aspect of being customer-focused is knowing when to give your customers a win. I define a “win” as a transaction where the customer feels like they’ve gotten a fair deal. Notice I said fair deal, not a good deal. Dealers do not have to give away coins for the sake of good customer service; collectors understand this. But what collectors don’t like is when a dealer prices the coin so aggressively that there are no leaves left on the tree. This is why so many collectors are skeptical of dealers who are known to frequently crack out coins and upgrade them.

Don’t Give Away Coins You Believe In

Nice coins tend to disappear in cold markets and reappear when the time is right to yield a maximum return. Dealers starting out might not have the luxury of saving nice material for the right opportunity and may see the sale of these coins as a way to make up for bad purchases or to maintain sufficient operating capital.

In a business where turning over inventory multiple times a year is necessary to operate, the transactional nature of the business may put you in the mindset that everything must go and go quickly. This is the right attitude to take with most coins you buy, but some require skill and patience to properly market, and too often, young dealers give these coins away to skilled dealers, who then net a tidy profit.

For these pieces, it is better to take your time, develop a marketing plan, and establish the price you want and the price you’re willing to take. Whatever you do, don’t give the coins you believe in away – at least not until you’ve exhausted every avenue to move the coin at the price you want for it.

Keep Your Secret Sauce to Yourself

The dealer community is a fraternity, and lifelong friendships are forged in the fire of competition. One cannot succeed in this industry without developing a network of trusted dealers. This is why communities like the Professional Numismatists Guild (PNG), the International Association of Professional Numismatists (IAPN), and the Round Table Group are so important. As a young dealer, you will find many mentors amongst the members of these organizations – just as you will build lasting working relationships with many dealers in your peer group.

If you are successful, you will find that some in the community will become very interested in what you are doing to achieve success. It’s one thing to be courteous and helpful; it’s another thing altogether to give away your secret sauce. Small industries like collectibles are rife with copycats. Some recent examples: CAC spawned numerous stickering services. Multiple companies offer “blind pack” coin products. Dozens of novelty labels are produced each year for various marketers.

This next generation of dealers is increasingly online and increasingly literate in videography, sound and stage design, and storytelling. Expect imitators and don’t be discouraged by them… but at the same time, don’t tell them how to do a better job. Let them figure that out on their own.

Avoid High-Risk Deals (at First)

When you are starting out and operating capital is dear, avoid high-risk deals. A high-risk deal is one that, on the surface, looks like it might net a big payout, but if it doesn’t work out will leave you with serious negative consequences. At a superficial level, this advice seems obvious, but believe me, when you’re in the thick of doing business, emotions sometimes get in the way. Even when you think you know what you’re doing, it’s wise to assume that the person you’re doing business with might know more than you and use the opportunity to score a win at your expense.

Let me tell you about a situation that happened early in my career. A close friend of mine was an experienced collector of Eisenhower Dollars and had managed to leverage his interest in numismatics into a tidy six-figure side gig selling the dollars he didn’t want for his set, plus bulk lots of sorted copper pennies.

Over many weeks of discussion, he decided that he wanted to expand his dealing operations to include Peace Dollars and asked me to reach out to my contacts within the industry to see if we could put together a deal where he could purchase a quantity of Gem or better Peace Dollars for resale.

I reached out to a dealer who was a known specialist in the area and explained what we were looking for. Within a day or two, the dealer sent me a list of MS66 Peace Dollars of various dates and his ask for the lot. He wanted a substantial amount, but my buyer was prepared to do the deal. Nevertheless, I had second thoughts, and after reviewing the coins was convinced that the deal was a loser. These weren’t premium coins for the grade. Instead, what we were being offered was a dump deal, and even though the ask was a few points back of bid, I felt that we wouldn’t recover our capital investment. We walked away.

As a dealer, you will never be able to eliminate risk, but you will have to factor in the possibility that you might take an “L” every now and then. High-risk deals will not always be obvious when presented, and everyone’s tolerance for risk is different. Do not be afraid of taking risks, as this is part of the entrepreneurial ethos, but only take risks that you can afford and learn from the losses you take along the way. These experiences will help you grow as a dealer, and they are the tuition all dealers pay on the road to success.

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