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

Authored: 2/18/2009

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 dealers 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.

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

http://www.obgrocks.com
World-Class Minerals For World-Class Collectors
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Comment by Tom Corson on April 19, 2009 at 12:20pm
Don't know the material or what size slab. Is $6700 high or low?
Comment by Thomas Clark on April 19, 2009 at 8:54am
very well said!
Thomas the slabmeister Clark. I offered a fire obsidian slab to my best friend last night for $6700. does that qualify as nuts?

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