Long before the days of the internet, auction platforms and hobby stores, it was a very simple arbitrage market for collectible shoes, artwork, games, and cards. The market wasn’t efficient at pricing hobbyist collectibles.
Finding rare cards was difficult, it was only available through newspaper ads, neighbors, acquaintances, and hobby stores. Rarity was empowered by the proximity of where, and how you can buy a product. Baseball cards’ popularity grew in the 1970s – 1990s and spurred the growth for new hobby stores to sell the trendy commodities. It costs very little to produce baseball cards, and it was easy to sell paper cards for a significant profit.
During the dial-up internet era in the late 90s, consumers were not familiar with the internet and suspicious of buying products online. Consumers still trusted a local hobby store over the internet. Hobby stores took advantage of customers’ distrust of the internet products and sell the same merchandise for a much higher price.
There were many times, I paid a premium price at the store over the listed “official card price index” report from hobbyist magazines. It wasn’t easy to buy from the internet, there was no way to confirm or guarantee that the money you paid online was going to honored. It was common for hobby stores to list the same merchandise at higher prices than the market’s selling price.
Over time consumers started trusting online marketplaces like eBay and slowly collectible items became price efficient. Sports card revenues hit their peak in 1991 at $1.2 billion, and the cards were flooding the market. Since then, it has dropped to under $200 million and Hobbyist lost interested in baseball cards. The saturation of hobby stores hit a peak after owners realized there were more baseball cards than they could sell. Hobby stores started looking like junk storage rooms and most baseball cards lost its value.
Savvy-experienced store owners who recognize the early demise of their baseball cards quickly sold their entire inventory and stores. The market gave plenty of signals that Baseball and collectible cards were not worth much. The hobby store owners that were smart made it out with a decent profit and shift their attention to the next collectible thing. The new owners who took over the hobby stores were the last ones holding the bankruptcy bag.