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How difficult is it to start a (successful) auction company these days?

Dennis88Dennis88 Posts: 5,797 ✭✭✭
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

Comments

  • lasvegasteddylasvegasteddy Posts: 10,408 ✭✭✭
    "would you try to start an auction company in the numismatic world if you had the capital available?"

    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
    everything in life is but merely on loan to us by our appreciation....lose your appreciation and see


  • BAJJERFANBAJJERFAN Posts: 31,088 ✭✭✭✭✭
    eBay could use some competition.
    theknowitalltroll;
  • CoinosaurusCoinosaurus Posts: 9,630 ✭✭✭✭✭
    Didn't work for Legend, and they are anything but amateurs.

    If it was easy, anyone could do it.
  • coinsarefuncoinsarefun Posts: 21,736 ✭✭✭✭✭
    I have one up and running but haven't had a chance
    to promote it and get people to list coins. BTW it's free for nowimage

    It's set up simaliar to EBay and the stores are free too


    LuxuryAssets4Sale







  • blu62vetteblu62vette Posts: 11,925 ✭✭✭✭✭
    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.
    http://www.bluccphotos.com" target="new">BluCC Photos Shows for onsite imaging: Nov Baltimore, FUN, Long Beach http://www.facebook.com/bluccphotos" target="new">BluCC on Facebook
  • crypto79crypto79 Posts: 8,623
    To do it well it would need to stand up credibility like PCGS did in its early days.

    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.
  • ElcontadorElcontador Posts: 7,535 ✭✭✭✭✭
    You need consignors
    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
    "Vou invadir o Nordeste,
    "Seu cabra da peste,
    "Sou Mangueira......."
  • joebb21joebb21 Posts: 4,746 ✭✭✭✭✭
    (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.
    may the fonz be with you...always...
  • crypto79crypto79 Posts: 8,623


    << <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
  • BAJJERFANBAJJERFAN Posts: 31,088 ✭✭✭✭✭


    << <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.
    theknowitalltroll;


  • << <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
  • PerryHallPerryHall Posts: 46,231 ✭✭✭✭✭


    << <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.

    Worry is the interest you pay on a debt you may not owe.
    "Paper money eventually returns to its intrinsic value---zero."----Voltaire
    "Everything you say should be true, but not everything true should be said."----Voltaire

  • roadrunnerroadrunner Posts: 28,303 ✭✭✭✭✭
    Just ask some of the large, former standalone auction houses that couldn't compete any longer in the current market.

    Keeping one seems pretty hard as well.
    Barbarous Relic No More, LSCC -GoldSeek--shadow stats--SafeHaven--321gold
  • WTCGWTCG Posts: 8,940 ✭✭✭
    Another necessity many forget is that all auction companies need strong financial resources besides startup capital. To be able to get the best consignments and the most bidders auction companies need to have the resources to pay all their consignors on time without exception, have the ability to grant cash advances to consignors and to allow some of their biggest bidders to carry a running payables balance. A successful auction company needs the ability to do all that without financially imploding.
    Follow me on Twitter @wtcgroup
    Authorized dealer for PCGS, PCGS Currency, NGC, NCS, PMG, CAC. Member of the PNG, ANA. Member dealer of CoinPlex and CCE/FACTS as "CH5"
  • 123cents123cents Posts: 7,178 ✭✭✭
    Yahoo auctions were very good till they went to free listings and then the auction site went to pot. People kept listing the same junk over and over and...image
    image
  • ColonialCoinUnionColonialCoinUnion Posts: 10,087 ✭✭✭
    How are you guys defining "successful"?
  • Dennis88Dennis88 Posts: 5,797 ✭✭✭


    << <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
  • derrybderryb Posts: 36,941 ✭✭✭✭✭
    good market for an established TPG to broaden their horizons. If I were a major TPG I'd consider it for coins I had certified.

    The government is incapable of ever managing the economy. That is why communism collapsed. It is now socialism’s turn - Martin Armstrong

  • bidaskbidask Posts: 14,017 ✭✭✭✭✭
    Why would I want to go anywhere elseto consign my coins besides Heritage or maybe SB ?
    I manage money. I earn money. I save money .
    I give away money. I collect money.
    I don’t love money . I do love the Lord God.




  • SonorandesertratSonorandesertrat Posts: 5,695 ✭✭✭✭✭
    "So what do you think, would you try to start an auction company in the numismatic world if you had the capital available?"

    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.
    Member: EAC, NBS, C4, CWTS, ANA

    RMR: 'Wer, wenn ich schriee, hörte mich denn aus der Engel Ordnungen?'

    CJ: 'No one!' [Ain't no angels in the coin biz]
  • lkeigwinlkeigwin Posts: 16,892 ✭✭✭✭✭
    Ian and Great Collections deserve big kudos. I am really impressed.

    I have no idea if it's working and worth the effort. But I think it's running well and been done right. image
    Lance.
  • NewEnglandRaritiesNewEnglandRarities Posts: 1,133 ✭✭✭✭


    << <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.

    New England Rarities...Dealer In Colonial Coinage and Americana
  • RedTigerRedTiger Posts: 5,608
    A person or a group of people interested in starting a new company, need to ask themselves what their edge is. What will the new company bring to the table that isn't already being offered? Is it location, level of service, guarantees/warranties, price? If it is mostly price, as some on this thread are talking about, does the new company have an edge as far as costs, suppliers? If no, then it is a plan to flush money down the toilet.

    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.
  • TwoSides2aCoinTwoSides2aCoin Posts: 44,364 ✭✭✭✭✭
    Let's start the bidding off at one dollar. PM me with your offers and we will go for 24 hours. Now let me go find a coin.


    Be right back image
  • ianrussellianrussell Posts: 2,492 ✭✭✭✭✭
    This is an interesting thread (and I'm flattered by some of the comments about GC).

    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
    Ian Russell
    Owner/Founder GreatCollections
    GreatCollections Coin Auctions - Certified Coin Auctions Every Week - Rare Coins & Coin Values
  • SonorandesertratSonorandesertrat Posts: 5,695 ✭✭✭✭✭
    "...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.
    Member: EAC, NBS, C4, CWTS, ANA

    RMR: 'Wer, wenn ich schriee, hörte mich denn aus der Engel Ordnungen?'

    CJ: 'No one!' [Ain't no angels in the coin biz]
  • blu62vetteblu62vette Posts: 11,925 ✭✭✭✭✭


    << <i>Why would I want to go anywhere elseto consign my coins besides Heritage or maybe SB ? >>




    Lower fees, better images, etc......
    http://www.bluccphotos.com" target="new">BluCC Photos Shows for onsite imaging: Nov Baltimore, FUN, Long Beach http://www.facebook.com/bluccphotos" target="new">BluCC on Facebook
  • ianrussellianrussell Posts: 2,492 ✭✭✭✭✭


    << <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
    Ian Russell
    Owner/Founder GreatCollections
    GreatCollections Coin Auctions - Certified Coin Auctions Every Week - Rare Coins & Coin Values
  • BAJJERFANBAJJERFAN Posts: 31,088 ✭✭✭✭✭


    << <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.
    theknowitalltroll;
  • Well, not to toot our horn. But we have invested over 7 figures into our website/software/advertising etc. Our site and been up and running for two years now, and we have thousands of customers.
    Hope to see you there.
    I'm Just Sayin"


    http://www.coinshop.com

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