Custom knife dealers- what do you expect?

There is one other thing that I have begun to expect of online retailers now. I expect them to realize that the market isn't what it was even six months ago. I follow many online sites and notice that buyers are drying up. I now see more three figure knives selling and less of the four figure knives selling.

As a consequence, I have noticed several retailers who have a greater number of three figure knives for sale in their "new knives" listings. It alll points to fewer, more particular, cheaper shoppers. It's fast becoming a buyer's market rather than a seller's. But some retailers are acting as if nothing has changed. They are the ones whose sales appear, on the surface, to have suffered. And they don't seem keen to recognize a decent offer, given the economic environment we are now in.
 
Lorien,

Custom knives is a very small percentage of the knife market.

There are a few knife dealers who have store fronts, however their inventory is primarily factory/production.

The overhead for a bricks and mortar store would make it very very difficult for a dealer to make a go of it...unless they have very deep pockets.

Even now, I will normally sell more knives online then I will at a show (over the same weekend).

The Cost/Expense ratio of the Internet makes it a cost effective way to market and sell custom knives.
 
I totally see that too, Sir Betzner. And it's not just this market, I think the effects of the rapidly changing economy in North America are really starting to manifest.

As a buyer, a person generally is realizing and feeling that changes are starting to happen and are tightening the strings on their cash purse. There's simply less money and credit to throw around. Paring down to the essentials will start becoming the norm, as opposed to our culture of imposed and unabated consumption.

As a seller, a person is starting to realize that volume and/or high margin is going to be the only way to achieve a reasonable bottom line. The high ticket items which once put food in the larder are getting harder to move. Dealers are not going to want to be stuck with inventory that they have to turn at a loss just to keep the bills paid.

Fortunately for collectors, I think prices are going to come way down on many knives. Most higher end collectors are going to have more of a cash cushion, mainly because they are generally well off. Unfortunately for collectors, some of their favorite makers may disappear off the face of the planet in order to pursue other options in order to put food on the table, bringing with them their investment value.

Unfortunately for dealers, margins are always slim anyway, and having to liquidate inventory at cost or less might be a reality. Fortunately, dealers tend to be entrepreneurial and those who are savvy will always find a way.

Fortunately for makers, knife making is a trade at heart and there will always be demand for the variegated skill set a good knife maker possesses. Unfortunately for makers, it will become increasingly difficult to find buyers willing to pay the high prices we're seeing today. Many will have to reconsider their career.

I believe that an economic downturn of the magnitude that I foresee, (keep in mind I'm a sci fi lover who is a little apocalyptic by nature, and have virtually no formal training in economics) will cull the cutlery industry as it has in days gone by. Those who are 'real knife people', who have knives hard wired somehow into their pysche, will stick around. Those who are in it solely for the money, the fame, the 'community' or whatever, will find something else to gravitate towards.

Sorry, I don't know what happened. I just sat down to check things out and got to rambling. Sorry if I've derailed the thread. Thanks for your patience:)
 
Les, I had the same thought. It would be very difficult to maintain a store front on a 15-20% margin alone. The mark up and volume of productions would be a necessity. And even then, diversifying further would be required a lot of the time too.
I'd love to sell exotic, one off bicycles alone because I love the high end hoopla, but the reality is, I have to fix shitty department store bikes and sell t shirts in order to pay my rent.
 
Betzner,

July is generally the worst month to sell custom knives. People are spending money on Vacations, tuition, clothes and supplies for school, etc.

Custom knives, like every other commodity have cycles, generally seasonal. January, April and July are generally the slowest months.

I suspect what you are looking at is a very small percentage of the overall custom knife market. The majority of "Online" dealers are part timers who turned their collection and love for custom knives into a business. Nothing wrong with that....that is exactly how I got into being a custom knife dealer.

However, most are buying and selling:

A) What they like

B) Knives they can make either a quick buck on or a big hit...sometimes both simultaneously.

Many times the price you see on a site is in fact the "Trolling" price. You throw it out there and maybe you find a buyer. This sales technique has been around in custom knives for at least 25 years...nothing new here.

Will they take less for the knife? Sure...the trolling price didn't work, so they cut a deal. So don't read too much into that. Again, I have seen that for the last 25 years as well.

A better way to gauge the market is see if the dealers are selling the knives for the makers price or are they asking a super high premium (Trolling). The dealers who are selling for the makers price or close to it....always have buyers....ALWAYS.

BTW, so far for the month of July I have sold more $2,000 and $3,000 knives than 3 figure knives. This has the potential for my best July ever!

Go Figure! :D

When looking at the totality of the custom knife market you have to look at all the facts. One is that many of the best knives never make it to the web site.

It is easy to make the market fit what you want when you ignore those factors that don't fit into your theory.
 
Hi Lorien,

Fortunately for collectors, I think prices are going to come way down on many knives. Most higher end collectors are going to have more of a cash cushion, mainly because they are generally well off. Unfortunately for collectors, some of their favorite makers may disappear off the face of the planet in order to pursue other options in order to put food on the table, bringing with them their investment value.
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On which knives do you think that prices are going to come way down?

Are you referring to the primary or secondary market?
 
Lorien said:
Fortunately for collectors, I think prices are going to come way down on many knives. Most higher end collectors are going to have more of a cash cushion, mainly because they are generally well off. Unfortunately for collectors, some of their favorite makers may disappear off the face of the planet in order to pursue other options in order to put food on the table, bringing with them their investment value.
Click to expand...

Perhaps for new collectors however not so fortunate for established collectors as their collections will be devalued. :eek:
 
Les, I'll bet the kind of knives that will come down in price will be the fashionable ones. As for the market, I think the secondary market will be decimated and/or gutted. Once estate sales, (forgive me, parents) of this large population of largely affluent baby boomers start to happen, that could affect things either way in the primary market.

Kevin, yikes eh?:eek:

Art is ageless, and knives which achieve that level will always increase in value. When the economy goes sideways, and these knives are suddenly on the market due to desperate owners needing to liquidate, I would like to be there to buy them!
shit, I sound like such a vulture:o
 
Les Robertson said:
Hi Joe,

A problem with the "SOLD" thing is, in my case I offer a 7 day inspection period.

Two days there, 7 days with the client, 2 -3 days if the return it = 11 - 12 days.

Another example is...I want it, next day..I can't swing it....next day I'll take it...payment to follow...sorry I can't take it, next day...Ok I got to have it here is my CC info. So do you go and mark the knife sold...in stock...sold....in stock...sold. You get the picture.

A quick email to the dealer and/or maker is always the best way to check and see if it is in.

Another issue is the amount of knives on a site. Sites range from a few to well over 100. Lots of work to get those knives cataloged, photographed, manipulated, and on to the site.

I know with my site, on occasion I will send the updated pages and one page out of 10 will not update.
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Les, I can see where this can become quite cumbersome, but I still like the 'Sale pending' notification until the dealer has or has not sold the knife in question. Not many sites with this feature, I know.

It seems like in today's internet world, we expect things to happen right now. Breaking news, sport's scores, etc., are posted instantly. The more updated the website, the better the customer feels connected and wants to return.

- Joe
 
I see the future of "highly collectible" knives being somewhat like the market for highly collectible firearms, such as factory engraved Colt Single Action Army revolvers. The types of knives I would put in this category are Warenskis, Morans, etc. And many of the high end living masters are going to feel the pinch as their direct and dealer sales falter.

But I expect the "highly collectible" knives to hold their value in periods like this, though perhaps not sell steadily. And very high end art daggers which, as Lorien mentions, have enough artistic interest to carry them will probably join in not going down so much as just not selling so steadily.

But lots of other areas of knife sales are in for real trouble. Just like any market, now is the time to be positioned to buy rather than sell.
 
And as for outdated websites that do not do instant updates, they should all fade away. Owners of such sites who do not invest the time or money to make the experience decent for the buyer - well, they should just fade away, too.
 
Lorien said:
Les, I'll bet the kind of knives that will come down in price will be the fashionable ones. As for the market, I think the secondary market will be decimated and/or gutted. Once estate sales, (forgive me, parents) of this large population of largely affluent baby boomers start to happen, that could affect things either way in the primary market.

Kevin, yikes eh?:eek:

Art is ageless, and knives which achieve that level will always increase in value. When the economy goes sideways, and these knives are suddenly on the market due to desperate owners needing to liquidate, I would like to be there to buy them!
shit, I sound like such a vulture:o
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I don't think the sky is going to fall. Downturns, recessions are a part of life. Negative talk and press only fuel them.
 
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Hi Joe,

At this point it just isn't feasible to update pending and/or sold knives prior to payment and inspection periods...which is why you don't seen many doing this. If they are doing the "Sale Pending" thing, this is generally more of a sales technique to move someone to possibly the second choice or to get a person on a waiting list.

Believe it or not this has been done on knives that do not have a "Sale Pending".

if it took more than an email to check inventory on a web site perhaps more focus would be put on that.

Betzner, those who have "instant removal" are being charged a fee (generally they like to you to sign up for them to run your card. Generally the fee for this is around 8%....guess who is paying for this convenience? Yep, thats right it is being passed on to you.

While this is fine for those using a credit card. This does not address those who pay by check, money order and the ever increasing popular Wire Transfer.

Then there are those knives that are traded for which the instant removal can't be used. Shipping and inspection period (on both ends of the trade) eliminate the "instant removal".

So your wish that sites without that will fade away...they will not.
 
You're so right Kevin I totally agree. Don't mean to be a Negative Nelly:o.

Actually, the sagittarian in me is quite the optimist. But I mean, when I say I my nature is somewhat apocalyptic, well there's a certain um, preparedness to my general mindset that sometimes relishes thoughts of bringing out the internal Rambo. I even get it sometimes when I manage to fix something with JB Weld and some duct tape.

Those who invest wisely, (daggers DO seem to hold their value in the long run, and have done for the course of human history, for some probably very interesting reason...) who can weather economic turndowns, recessions and depressions will not have too many problems. duh. But those who invest in the latest trend are already too late, and economic change aside, their collections will likely not last in the long run. Whoah, does this pit dealers against investment collectors in some way? Stream of consciousness, fresh from my brain to your computer screen:)
 
Hi Lorien,

First, people do not "invest" in custom knives. I have had this reinforced over and over again here on Bladeforums.

Consequently, most knives will not hold their value and will almost certainly lose money.

Can you invest in custom knives and make money? Hell yes! However, this is not the prevailing way to purchase custom knives...people buy what they like.

However, it is times like this that will give custom buyers at least a momentary pause before buying a custom knife.

This of course will favor the value priced makers and those who have a proven track record in the after market.

A word about your wanting to clean the bones of those who are desperate to sell their knives.

Once a couple of knives are seen for sale in the after market linger and drop in price. The sharp buyer will notice and understand that the market is telling them that may not be the bargain you think it is. As well it will be difficult any time soon on the internet after purchase...as collectors will know what you paid for it.

BTW estate sales are an excellent place to find great bargains on custom knives.

The problem is that most auction houses don't really know the market for particular knives (you see this with knife dealers at gun shows. They think because it is a "custom" knife it is pure gold. Regardless of who made it. I have a great time with these guys at the shows. Forcing them to either lie through their teeth or finally admit they don't know about it.

So there is a chance you may get a great bargain...however, there is an equal chance it may be overpriced.

Plus you have to be present at the show (unless they produce a catalog and/or utilize the internet). If they do that..your chances of getting a bargain decrease.
 
That post was full of great insights. Thanks Les:)
 
Les Robertson said:
Hi Joe,

At this point it just isn't feasible to update pending and/or sold knives prior to payment and inspection periods...which is why you don't seen many doing this. If they are doing the "Sale Pending" thing, this is generally more of a sales technique to move someone to possibly the second choice or to get a person on a waiting list.

About haft of the dealer sites that I monitor update knives when sold. I won't consider purchase from a site that I have to contact to see if a knife is still available. I do see the problem with marking a knife "sold" prior to final verification of sale, however I think the better websites bite the bullet and do this for the sake of good customer service.

Knife Legends, Blade Gallery, Knife Art, Nordic, Rehoboth are all high quality sites that instantly update sold knives. Now by "better websites" I don't necessarily mean better in that they are the best knife dealers, most reasonably priced, have the best policies etc., but IMO the best knife dealer websites in regard to overall customer website experience, updates, quality of photos, selection of knives, ease of navigation and ease of sale.

I would also say that four of the above mentioned are probably among the very top knife dealer websites in gross sales.

Believe it or not this has been done on knives that do not have a "Sale Pending".

if it took more than an email to check inventory on a web site perhaps more focus would be put on that.

Betzner, those who have "instant removal" are being charged a fee (generally they like to you to sign up for them to run your card. Generally the fee for this is around 8%....guess who is paying for this convenience? Yep, thats right it is being passed on to you.

While this is fine for those using a credit card. This does not address those who pay by check, money order and the ever increasing popular Wire Transfer.

Then there are those knives that are traded for which the instant removal can't be used. Shipping and inspection period (on both ends of the trade) eliminate the "instant removal".

So your wish that sites without that will fade away...they will not.
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Les Robertson said:
Hi Joe,

At this point it just isn't feasible to update pending and/or sold knives prior to payment and inspection periods...which is why you don't seen many doing this. If they are doing the "Sale Pending" thing, this is generally more of a sales technique to move someone to possibly the second choice or to get a person on a waiting list.

Believe it or not this has been done on knives that do not have a "Sale Pending".

if it took more than an email to check inventory on a web site perhaps more focus would be put on that.

Betzner, those who have "instant removal" are being charged a fee (generally they like to you to sign up for them to run your card. Generally the fee for this is around 8%....guess who is paying for this convenience? Yep, thats right it is being passed on to you.

While this is fine for those using a credit card. This does not address those who pay by check, money order and the ever increasing popular Wire Transfer.

Then there are those knives that are traded for which the instant removal can't be used. Shipping and inspection period (on both ends of the trade) eliminate the "instant removal".

So your wish that sites without that will fade away...they will not.
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Hi Les,

Arizona Custom Knives is one of the online dealers that uses a "Sale Pending" system. I'm sure it differs a bit from dealer to dealer, but I just wanted to clarify something so nobody is misinformed. I'm not sure what this 8% number represents or where it is coming from, but we certainly aren't passing along any additional costs to our customers because we use "Sale Pending" or real-time stock.

For us, marking items "Sale Pending" when an order is placed serves two purposes. It keeps the item in view of our customers, so that if a sale falls through others will have seen the knife and those interested will be notified. It also guarantees that even if a knife sells immediately, it will still be prominently displayed for ten days so that the knifemaker is properly represented.

I hope this helps clear things up.
 
I know we live in an age of instant info and all that, but I can't imagine seeing a knife I really wanted on a dealer's site and refusing to send an inquiring e-mail as to it's availablity because, gosh, that would be just too onerous a task to place upon my narrow shoulders. Seriously, I can't even begin to conceive that.

Even in the case of dealer sites that do post up the somewhat ambiguous "sale pending" notifications, there is still going to be a time lag between the point when that "sale" becomes sufficiently certain as to be "pending" and the update to the site reflecting that fact. Point is, you're still going to have to make an inquiry of some kind and there is no guarantee in either case that the knife will still be avialable.

I just timed it - it took me 15 seconds to type: "If that knife is still available, I'll take it." I'm a busy guy, but.... y'know.... I can squeeze that into my day. :)

Roger
 
Hi Chris,

When I checked into it last time. For the company to monitor your system and handle the transactions (credit card).

The CC fee was around 3%

The fee for the company to monitor the site and handle the transactions was 4-5 % depending on the service.

Selling factory knives helps to absorb this as the margin is much bigger. If you were selling only custom knives the 8% would be almost intolerable.

Again, the above system address cc and perhaps paypal.

However, checks, money orders and wire transfers still have to be put in manually.

When I checked into this it was 2-3 years ago, perhaps things have gotten less expensive.

As well if someone is looking at the knife and it goes from Sale Pending to For Sale. They will ask themselves "What's wrong with that knife?"

Every business model is different and each operates in the way they see best to service their client base.
 
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