Part 3 of a real-life test to see whether you can make decent money from selling vinyl. (Here’s part 1)
Perhaps only Sergio Aguero, as he scored with 93:20 on the clock to win Manchester City’s first league title for 44 years has ever experienced a high as euphoric as the feeling you get when you win an eBay auction for a rare record with just a second remaining.
But what’s the experience like for sellers? I had bought a dozen LPs from second hand record shops and planned to sell them on eBay.
Selling those records surely couldn’t be as enjoyable as buying them, even for cold hard cash. When it comes to records, I feel like those tribesmen of legend who believe having their photo taken takes away their soul. Every time I sold a record, would a little piece of me die?
Putting those feelings aside, and channeling my inner capitalist, I strategised.
I had three categories of records:
1. Records that I hadn’t picked up dirt cheap but I thought might attract decent bids
2. Vinyl released in the late eighties / nineties, when CDs were more popular, and which are therefore rarer.
3. Records I had picked up which looked like proper bargains.
There were some eBay techniques I wanted to test. The first was the riskiest, namely setting a low starting price to attract bidders and letting the market decide. This is what eBay recommends.
This took some faith. What if people didn’t know how much Discogs and the Rare Record Guide said a record was worth? What if the one person propping up the market for Talk Talk LPs is out seeing their Aunt Hilda for Sunday lunch that day? It all seemed a bit risky…
It didn’t start well either.
I began with a £2 Motown Chartbusters LP. A cheap album could hardly lose me money could it?
It sold for £1.80. A loss of 20p
This was not a good start.
I then looked up fees. eBay charges a percentage based on the price and the postage. So does PayPal. So the fees for the Motown album weren’t a percentage of £1.80, but of £1.80 plus £4.99 postage and packaging. 50p to PayPal and 68p to eBay, in this instance. Which meant I had actually lost £1.32 on a £2 record.
Conclusion: I was not a genius. But then neither was eBay’s algorithm.
Mind you, finding out how much the fees are for each item you sell on eBay is no easy task. I would speculate the reason Professor Stephen Hawking devoted his life to solving the mysteries of the universe is because he’d given up solving how to get an itemised bill from eBay’s website.
To eBay, charges appear to be a trivial affair it’d rather you didn’t worry about. It might be a 21st century FinTech company but it appears to have Victorian etiquette, one that thinks it is vulgar to talk about money, especially and specifically about how much it is charging you per item.
Moving on, my cynicism on the Talk Talk LP was not rewarded either. It fetched £14.50 but had cost £10, a 45% profit pre-fees, so not bad, but not the £20 I hoped for. Brian Eno made £11. The Motörhead Overkill LP sold for £12, again having cost £10.
So with £8.23 of charges from Paypal and eBay on the four albums, I had spent £32, and received back £29.95.
On to the nineties vinyl.
I had high hopes for U2’s 1991 album Achtung Baby, with a Discogs median of £29.
But Discogs Median values aren’t infallible as a guide to price.
Looking at the Discogs sales, a NM, copy fetched £40 and the cheapest copy – in VG+ condition – had sold for £18. Mine was in VG+ condition.
The median price is the mid point of the range. But the lowest value was for a record in the same condition as mine, and the highest was for a record in better condition than mine.
As an example of why this doesn’t work, here’s a question:
Take two classic Ferraris, both fifty years old, recently sold. One has never been driven and kept in a museum, and the other has 200,000 miles on the clock and was thrashed by Prince Phillip every day for fifty years. The first sold for £500,000 and the other for £70,000.
You have a Ferrari that also has 200,000 miles on the clock, and it wasn’t even driven by royalty.
However, the Median price of Ferraris is £285,000 – the mid price between those two extremes.
How much is your Ferrari – identical to Prince Phillip’s £70k one – worth?
The answer is not £285,000, even though that is the median price.
That still didn’t explain why my U2 album sold for a measly £16. Truly, it appeared, all the U2 fans were visiting their aunties that day. I’d only paid £5, so a 200%+ profit, but still underwhelming.
Another nineties album was Neil Young’s Ragged Glory. The Median Discogs Price was £35.83. Surely this would sell for over £30?
Alas not. It made £19. I looked at that Discogs price in more detail. Seven of the last ten sales had been for NM copies, so maybe £19 for my VG+/VG copy was fair.
Of the other records I bought at what I thought was a bargain price, On The Beach (median £26.88) only fetched £18.
Better was my copy of Ziggy Stardust. Spotting the lack of a Main Man credit on the back paid off, as the album I bought for £4 sold for £14.50. The median price was £24, but for the VG condition mine was in this was fair.
Slayer’s Reign In Blood was another win. It justly attracted a frenzy of last minute bidding and reached £32, only slightly below its Discogs Median valuation of £39.99, albeit Discogs lists a barely credible sale of £165 for a mint item which means either someone massively overpaid, or the site is being used as an elaborate money laundering operation.
The other strategy I wanted to try was a “Buy It Now” offer, visible to trigger-happy bidders on a Friday night after they’ve been down the pub and their inhibitions are lowered.
After all, who hasn’t received a mystery parcel in the post on a Wednesday as a result of some ill-advised Friday night drunken eBaying?
I thought one of the Slayer albums might work here, plus Pixies.
Finally, there was Ozzy’s Blizzard of Oz album, picked up for £10.
The poster was intriguing me. It was mint, as was the LP. This is what Discogs had to say about it:
A hugely varied selling price. A £27 Median price. But £100? Looking closely, my copy was probably better than the one that sold for £100. The difference between the copies that sold for £15 and those that sold for £30 was condition – VG versus VG+. That made sense.
The difference between those that sold for £30 and the £80 or £100 copies was the existence of a poster.
Instead of allowing the market to bid up this near mint copy of the LP, I decided to set the price at £80 on a Buy It Now, to see what would happen.
And lo and behold, it sold overnight, for £80.
eBay and PayPal took their 15%, but that was still £65-ish back from a £10 investment.
An amazing result, but perhaps lucky? On the other hand, I reckoned had I auctioned it without highlighting the poster and immaculate condition, I would never have got £80.
Slayer’s Hell Awaits was slower to sell. I tried a starting point suggested by eBay but at nearly £19 it was too high. Looking at eBay’s reasons for this, they took a sample of previous similar sales.
I looked at eBay’s data.
The data set consisted of one sale, which had reached £31.
Not only was this unreliable as a sample, it meant only one person previously had ever wanted to buy the record. Hardly an atmosphere to encourage frenzied bidding. I tried again at a starting price of £14.99 but again it didn’t sell.
With fewer potential bidders, Buy It Now had to be the answer.
Counterintuitively I tried a higher buy it now price, at £19.99, but with that instant gratification factor. This worked – I received an offer for £15. I counter offered and we reached £16.50, a fair price for both of us, and a profit of £6.50 pre-fees, or £5 after. So while “Buy It Now” wasn’t a miracle worker, it definitely had its place, and possibly won better prices.
However, the Pixies record still hasn’t sold, six weeks later.
So overall, my records had sold for £235.30, a great result from an initial investment of £101.
Mind you, the fees of £26.13 from eBay and £13.91 from Paypal – just over £40 in total or 17% of the selling price – reduced that profit to £195.26. A 93% profit.
Time to compare my returns with my other “expert” friends.
Chris came back from Cheltenham. He looked fairly chipper I must say. Dreadful grin on his face, that sort of thing.
“Go on, then. What were your winnings?”
I was pleased for him of course. I never understand people who laugh at others misfortunes. Surely there is room for all of us to have fun.
“Ah” he grinned. “It was looking a bit grim on Thursday, but the Friday was amazing…” he then launched into a description of some horse races where you would have thought he’d have bred and trained the things himself, instead of their being the means to his being a few quid better off than he was previously.
After five minutes of how a £5 stake on two horses trained by a person called Willie Mullins won him £150 I was starting to see why people do laugh at other’s misfortunes. It’s from relief that you don’t have to sit through a story of how well they did.
The upshot was he’d finished the week with £210 in his pocket, having started with £100. On Thursday, it transpired, he was behind, so I concluded that the world of the racing punter was fraught with stress.
Irritatingly, that meant he had beaten me by £15. But I still have that Pixies LP. I will only sell it for £17, and not a penny less, just to make sure I win.
It also means that – on this basis – you’d be just as well off betting on horses as you would be trying to get rich buying and selling records on eBay.
And what about my true expert? My money-broking friend Henry? A man who spent a career trading. How would my efforts compare to a true professional?
You don’t want to know.
He told me if he had put £100 at risk on January 1st 2019, and cashed in on December 2019 he would have made nearly £5k.He also said he makes just as much money in a downturn as he does in the good times, as he trades exchange rates rather than equities.
Which rather puts my efforts into the shade, and just goes to show that if there’s money to be made, you are probably better off leaving it to the professionals.