Buying White Elephants – May 2006
Buying White Elephants – Business of Doing Business – The Journal of Antiques and Collectibles – May 2006
By Ed Welch
White Elephant: The origin of this expression comes from the former country of Siam, now part of Thailand. A white elephant, albino, was considered sacred and could be kept only by the king. The white elephant could not be worked, slaughtered for meat, or put on public display for profit.
The king would sometimes give a white elephant to a political opponent or a noble with whom he was displeased. The honor of being given a white elephant was so great that the recipient could not refuse the gift. The expense of caring for a white elephant often financially ruined the owner. Which, of course, was the king’s intentions.
In the antique trade, a white elephant is any unwanted or useless item, even if that item has value. Common white elephants include sterling silver, especially ornate services of flatware. Barber chairs with oil-filled hydraulic bases that weigh hundreds of pounds are white elephants. Many common types of collectibles, especially those produced by the millions, are white elephants. Sometimes even desirable examples of rare furniture can be white elephants. This is true when the price of such items becomes extremely high. In an upward moving antiques marketplace some antiques escalate so rapidly in price that they become extremely difficult to resell.
In 1979, I bought an estate that included 590 pieces of Fiesta. The Fiesta was unsold merchandise from a closed store. Many of the packages were un-opened. I hate Fiesta, then and now. To save time, I did something that no professional dealer should ever do, I bought two price guide books on Fiesta. Using these books, I calculated the highest value possible for the entire lot. I then cut the value by 50 percent. My reasoning was that a dealer would pay 50 percent of retail for the entire lot.
I offered the lot for sale at Brimfield. No one was willing to pay my asking price. No one was willing to make an offer for the entire lot. I did get offers on all the covered serving dishes, the platters, salt, and peppershakers, nesting sets of bowls, candleholders, and a few other pieces, but I refused to break up the lot.
After three shows, I realize that I had approximately 122 sellable items and 468 white elephants. I removed the 122 sellable items from the lot and reduced the price of the remaining 468 items to 10 cents on the dollar. I tried to sell these items at several shows but, I could not find a willing buyer. I decided to remove the Fiesta from the market and place it in my warehouse.
Four years later, 1983, I again offered the Fiesta for sale. I priced the 122 sellable pieces for more money then I originally wanted for the entire lot. I sold it at Brimfield on the first day. I then placed the 468 remaining pieces in a local auction. After auction commission, I received about 10 percent of book value.
I recently attended an auction to buy items that I now carry in inventory. At this auction was a large selection of never sold Fiesta, some of it in original boxes. Although I cannot know for certain, I think this Fiesta is part of the lot that I sold at auction in 1983. It did bring more money than I received.
One dealer bought most of it. I struck up a conversation with the buyer. He specializes in Fiesta and has thousands of pieces in stock. He complained that someone had removed all the desirable items from the lot. He wished that he could have bought the collection before it had been picked over. He did say that the items he bought were cheap and because Fiesta is his specialty, he would do well on his purchases. Obviously, this dealer knows what he was doing. However, if the Fiesta was indeed part of my lot, he would have not been alive in 1983 to have had the chance of buying the collection before it had been picked over.
In the early 1970s, I visited a shop in Gray, Maine. I liked the owner and bought many antiques from her. On that day she was in the process of helping young dealers load many boxes into a pickup truck. The young woman was very pregnant and probably due within a few days. The couple was buying antiques so that the new mother could work from home. I helped load the truck.
As the couple drove away, the owner of the shop turned to me and said, “I love new dealers. They buy all the wrong things and they pay too much for what they buy.” She went on to say that new dealers buy from the heart not the head.
I thought that her statements were crude and cruel and was surprised that she uttered them. She died a few years later.
However, if she were alive today, I would tell her that she was 100 percent correct and that I now agreed with her.
Many new dealers enter the antique trade with their eyes closed and their minds shut. They have done little or no research on the antiques they intend to purchase and then resell for a profit. Not only do they have no idea of what they should buy, they know nothing about what they should not buy. Knowing what not to buy is as important as knowing what to buy.
I have bought many white elephants in my career. I have several hundred in my warehouse at this time. Most were acquired as part of an Estate purchase. However, I have bought and paid for my share of white elephants.
Just today, a dealer was in my warehouse. He spent several hundred dollars. He bought all the wrong things and paid too much money for what he purchased. What is my responsibility as a professional dealer in the antique trade to make a living? Should I advise this buyer not to buy the items he wanted? Is it my responsibility to advise him that the things he is buying are hard to sell and that the profit margin is slim? Am I responsible for the profitability of his business? If I do not sell my white elephants to him or to some other dealer, what am I to do with them?
For more than 20 years, I have had a profitable business relationship with a dealer from Fayetteville, North Carolina. He visits at least twice each year. He is a professional dealer. He buys the very best and he buys junk. He generally visits early in the morning and looks over my finest antiques. He usually buys two or three items. We then take a break to have lunch. I always pay for lunch.
We spend the afternoon arguing and haggling over the price of every piece of junk I have in my warehouse. If I want $10 for an item, he offers one dollar. If I make a counter offer of $8 dollars, he offers two dollars. At this point, he puts that item down and picks up another. We start the process all over again. After we have gone through this process 50 or more times, he will go back to the first item and pretend he forgot the price I quoted. “You said six dollars,” he will ask, holding up the first item. When I remind him that the price was $8, he will make some statement such as “You can do a little better than that, how about $7.” On each visit, this dealer buys more than a $1,000 worth of low-end stuff and junk.
In the corner of my warehouse, I have a box labeled “eBay Food.” In this box, I place any item that can be sold on eBay with a starting bid of 99 cents or less. I do not discount my eBay Food. Price is $1 per item and the buyer must buy everything in the box. My friend from North Carolina always buys my eBay Food. On his last visit, my supply of eBay Food was minimal. The box contained less than two-dozen items. He looked in the box and moved things around. He then looked directly at me and asked, “Ed, are you trying to starve eBay to death?” Obviously, he makes money selling my eBay Food.
Do not confuse low-end merchandise with white elephants. Many low-end antiques and collectibles have a ready market and sell quickly if the selling price is kept low. Collectible elephant figurines sell well. Collectible frogs sell fast. Collectible dog figurines are a good seller. Collectible deer figurines are white elephants. Most antique guns are white elephants. People think they are worth much more money than they generally sell for.
Do not confuse over-priced merchandise with white elephants. At a recent show, a diminutive Acadian cupboard caught my eye. It was a classic diamond point Canadian cupboard that originated in the Upper Saint John River valley. I have bought and sold more than a dozen such cupboards. This was the best Acadian cupboard that I have ever seen. I expected it to be priced between $3,000-$5,000.
The figure on the price tag read $23,500.00. In addition, the dealer insisted that the cupboard was made in Pennsylvania in Bucks County in the village of New Hope. I had a long conservation with the dealer who complained that business had been slow for the past three years.
The dealer actually referred to this remarkable Acadian cupboard as a white elephant. The cupboard is not a white elephant. It is priced at five times its value. The chances of finding a buyer willing to pay the asking price are slim.
I prefer to buy items that resell between 90 and 180 days. I will buy items that take a year to resell. My definition of a white elephant is an item that takes more than a year to resell.
Take a close look at your inventory. How many items have you had for more than a year? Two years? Three years? Ask yourself why. Are they over-priced or are they white elephants. A dealer cannot do much about white elephants in his or her inventory. On the other hand, a dealer can lower the price of over-priced merchandise to free up money that can be used to buy fresh inventory.
Buying White Elephants – May 2006