How difficult is it to start a (successful) auction company these days?
Dennis88
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We have HA, SB, Teletrade, eBay and others competing in the same market as well as their own individual specialties. I was skeptical when GreatCollections started, but applaud them for becoming the new big thing in the numismatic auction world. Ian Russell almost makes it look easy to start a successful auction company, but I wonder if it is really that easy to start a new auction company in a market such as this one.
So what do you think, would you try to start an auction company in the numismatic world if you had the capital available?
Dennis
So what do you think, would you try to start an auction company in the numismatic world if you had the capital available?
Dennis
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if i had the capital...i'd just buy a sweet bike and find a new girl and just take off to the coast
as to the question though
nah i'm sure drama and headaches await
If it was easy, anyone could do it.
to promote it and get people to list coins. BTW it's free for now
It's set up simaliar to EBay and the stores are free too
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Ian is doing an amazing job at GreatCollections but I am sure it has not been easy. The marketing pushes I have seen from him I have not seen from any other auction.
I would arrange exclusive distribution contracts with top dealers (not just their junk but the good stuff too, become their web interface) for pennies just to get traffic up, I would offer over the top value to set us apart and I would buy out a known product and revamp it like collectors corner and use the great collections model while incorporating the EBay direct sell option but at higher rates then the send in to sell model. Next I would use PayPal's biggest competitor and use that as leverage to get a cut of the action. Just Food for thought.
You need to let people know you're out there
You have to offer terms as good, if not better than the competition
You have to be able to image coins well, or have access to someone who can do this
You need to have staff to help you do this
All of this requires start up capital
You must have some people skills, as well as be able to deal with unreasonable people, unlike many people in numismatics
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"Sou Mangueira......."
Ian has been around for awhile and because of his friendly personality has made many friends.
Good friendships with dealers of nice coins will bring in consignments that attract bidders.
Keep building up those relationships and greatcollections takes off.
Other things to consider is that Greatcollections has all the coins on campus and is much safer than ebay (points for them there)
Kudos to him.
<< <i>(in my opinion) The biggest thing is bringing in coins that people care to see.
Ian has been around for awhile and because of his friendly personality has made many friends.
Good friendships with dealers of nice coins will bring in consignments that attract bidders.
Keep building up those relationships and greatcollections takes off.
Other things to consider is that Greatcollections has all the coins on campus and is much safer than ebay (points for them there)
Kudos to him. >>
Agreed but he needs to develop a direct sell model (different cost structures of course) if he is going to compete with the big boys. And he needs more coins to include raw as one of the best parts about ebay is all the coins get looked over hard as gems do end up in the junk pile over there. Not so much on GC
<< <i>(in my opinion) The biggest thing is bringing in coins that people care to see.
Ian has been around for awhile and because of his friendly personality has made many friends.
Good friendships with dealers of nice coins will bring in consignments that attract bidders.
Keep building up those relationships and greatcollections takes off.
Other things to consider is that Greatcollections has all the coins on campus and is much safer than ebay (points for them there)
Kudos to him. >>
This. One isn't going to do well selling 1881-S Morgans in ms64 which are available everywhere you look. One needs to attract better material. Also like successful dealers, be able to find raw coins which will grade and be able to be sold by the house for a profit.
<< <i>Judging by the amount that have come and gone it is not easy.
Ian is doing an amazing job at GreatCollections but I am sure it has not been easy. The marketing pushes I have seen from him I have not seen from any other auction. >>
I would agree has the marketing effort put forth by GreatCollections exceeds anything I have seen in the numismatic market
<< <i>Didn't work for Legend, and they are anything but amateurs.
If it was easy, anyone could do it. >>
They were new at running an auction company which makes them amateurs.
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Keeping one seems pretty hard as well.
Authorized dealer for PCGS, PCGS Currency, NGC, NCS, PMG, CAC. Member of the PNG, ANA. Member dealer of CoinPlex and CCE/FACTS as "CH5"
<< <i>How are you guys defining "successful"? >>
Obtaining a presence in the numismatic world where collectors and dealers actually consider consigning stuff to your company and have an operating profit after a reasonable amount of time...5-10 years probably.
Capital must be one of the most important parts of any start-up business but especially in a highly competitive market where marketing can make or break you in, literally, weeks. Like WTCG pointed out it's not as simple as listing coins on a website, receive payment, and pay the consignor. There's so much more that comes along.
Dennis
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No way. Given the current state of the numismatic auction market, starting yet another auction firm would mean trying to live off scraps. Collectors who have good coins, and choose to sell them via the auction route, will tend to gravitate towards the firms with well-established track records for generating more intense bidding, rather than a newbie.
RMR: 'Wer, wenn ich schriee, hörte mich denn aus der Engel Ordnungen?'
CJ: 'No one!' [Ain't no angels in the coin biz]
I have no idea if it's working and worth the effort. But I think it's running well and been done right.
Lance.
<< <i>
<< <i>Judging by the amount that have come and gone it is not easy.
Ian is doing an amazing job at GreatCollections but I am sure it has not been easy. The marketing pushes I have seen from him I have not seen from any other auction. >>
I would agree has the marketing effort put forth by GreatCollections exceeds anything I have seen in the numismatic market >>
I agree 100%.
In general, I would think it would be very hard today to start a successful auction firm, especially with the strong competition already in the marketplace. I applaud Ian at GreatCollections for what Im sure was, and still is, a ton of work and hopefully the hard work is paying off. He really is doing a great job!
Starting a new company today, the real tricky part IMHO would be getting consigned coins of quality with Heritage/SB/GreatCollections already having the reputation of getting results for quality coins.
The coin business isn't all that big to begin with, and coin auctions are a fraction of that. Any new group will have a business plan with estimates as far as likely market share, likely start up costs, possible gross and profits. The new group also might think about what existing companies might do in response to a new company. In response to a new company that is competing mostly on the basis of price or specials, the bigger established companies can almost certainly lower their prices or offer price matching to anyone that is thinking of leaving until the start up goes under.
As far as Great Collections, it was started with an industry insider that was well liked and trusted. An outsider can't buy those kind of relationships and trust. A new firm that operates that way, with people sending in coins would almost have to be started by another well trusted insider.
As far as one of grading companies getting into the business, why bother? They already have close working relationships with Teletrade and Heritage. Why mess with some of your best customers? Heritage and Teletrade are two of the TPGs biggest customers in terms of sending in raw coins for grading.
Be right back
In addition to all of the reasons posted by others, technology is an important part of the business. It's costly too.
I disagree with RedTiger about one thing. I think the coin market is huge in the U.S. (it's a multi-billion dollar industry), and I'm surprised there are not more auction houses. It's a lot of hard work, and I'm definitely pleased with where we are at after only 12 months (we launched the auction platform in April 2011). We plan to continue to grow the business and appreciate everyone's support.
Capital cannot be underrated either, especially for an auction house. I remember a discussion with a new dealer about a year ago who thought he could open a coin store with a very small amount of money (from memory it was $15-20k). I knew he was wrong and tried to suggest that he is going to need multiples of his projected capital to even have a chance. I've not heard from this guy since. We could not have started GC without having more than enough capital.
- Ian
Owner/Founder GreatCollections
GreatCollections Coin Auctions - Certified Coin Auctions Every Week - Rare Coins & Coin Values
Wow, it seems to me that this guy was off by above a factor of 20-25, unless his business plan included deriving a significant fraction of his business income from auction representations, appraisals, etc.
RMR: 'Wer, wenn ich schriee, hörte mich denn aus der Engel Ordnungen?'
CJ: 'No one!' [Ain't no angels in the coin biz]
<< <i>Why would I want to go anywhere elseto consign my coins besides Heritage or maybe SB ? >>
Lower fees, better images, etc......
<< <i>"...I remember a discussion with a new dealer about a year ago who thought he could open a coin store with a very small amount of money (from memory it was $15-20k). I knew he was wrong and tried to suggest that he is going to need multiples of his projected capital to even have a chance. ..."
Wow, it seems to me that this guy was off by above a factor of 20-25, unless his business plan included deriving a significant fraction of his business income from auction representations, appraisals, etc. >>
Yes, he was way-off in my opinion.
- Ian
Owner/Founder GreatCollections
GreatCollections Coin Auctions - Certified Coin Auctions Every Week - Rare Coins & Coin Values
<< <i>Didn't work for Legend, and they are anything but amateurs.
If it was easy, anyone could do it. >>
Legend didn't go it on their own, they partnered up with Morphy auctions. Apparently it wasn't a good match or they didn't get suitable consignments. I still have the one coin I purchased through them, a 1900-S Morgan PCGS 64 CAC. The one I already had was nicer.
Hope to see you there.
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