Sold!

By SmallBusinessComputing Staff | Posted January 01, 2001
by Chirs Sandlund

Call it the eBay Effect. The once-genteel antique business is undergoing dramatic changes thanks to that enormous online flea market. Even dealers who might want to pretend the Internet doesn't exist still feel its presence. And if you think, oh, pity for them, you're missing the point.

These dealers' response to online auctions provides important lessons for positioning and restructuring a company in the Internet economy. Sites for auctioning, bartering, group buying, and other unorthodox sales methods have been multiplying, and business may never be the same. Increasingly, companies are turning to auctions to sell not just knickknacks but new consumer goods such as cameras and computers. (Antiques and collectibles no longer represent the majority of sales at the online auction house.) More business-to-business transactions are moving on line, as well. The eBay Effect may affect you sooner than you think.

Think of eBay -- and other auction sites, including Yahoo's and Amazon's -- as a new channel for selling your goods. While they obviously are distinct from a storefront, auctions are also separate from your Web site.

Not all online sales are created equal. Sales in an auction have their own rules and need to be monitored carefully to ensure you're getting the best price and that you're selling the right products on line. Besides that, auctions and other online schemes throw out the window what once seemed an inviolable rule of sales: static pricing. You have even less control over pricing in an auction than you do in your regular business. Most stores see how many products they can sell for a set price, but will only occasionally modify that price for a customer. In contrast, buyers set the price at an auction and vary it constantly, often minute by minute.

For anyone accustomed to dealing in list prices, this can come as a bit of a shock. Watch how antique dealers operate on line, however, and you can learn how to protect yourself. The lessons they've learned adapting to this new technology-fueled age, and the problems and benefits of the online marketplace suddenly become clear.

The Database Blues
To sell on line, all you need is inventory and a mouse. To track online sales accurately, however, you need a database. This might seem like common sense, but established businesses frequently have to be brought kicking and screaming to the realization that if you want the benefits of technology, you've got to invest time and money.

Traditional antique dealers have always collected data about their inventory, but often kept it in handwritten notes. Moving that information from paper notebooks and index cards to a computer database is no easy task when you're dealing with thousands or millions of items. Edith Reynolds is in the middle of indexing the 25,000 to 30,000 antiquarian books of the John Bale Book Company in Waterbury, Conn., which she co-owns with her husband, Dan Gaeta.

Gaeta travels the New England countryside looking for books, while Reynolds manages the company in the basement of an old department store. She has two staff members dedicated solely to cataloging the collection. With each cataloger indexing 40 books per day, Reynolds says it will take another year before all her current inventory is done. She appreciates the time and effort her two catalogers have dedicated to the task. "It's kind of a thankless job," she says.

Thankless is the kindest adjective for the effort that Miriam Levy Eatchel's staff went through. Three years ago she merged China Town, her Salt Lake City store, with Houston's David Lackey Antiques and China Matching. The two owners' goal was to create a Web supersite at edish.com for collectors of china, crystal, and flatware. While the China Town inventory was already entered in a custom application database, records for Lackey's inventory were stored in a cigar box. With 15 employees, the two stores spent months cataloging Lackey's china. "Somebody cried every day for the first month," Eatchel says.

A Thousand Tiny Travails
Many businesses get caught between old ways of doing business and the developing online auction world. John Thurmond's Collectorholics/Toy Kingdom in Grandview, Mo., is an example. Following traditional industry wisdom, he has developed a stock of 3.5 million toys, jewelry, and other ephemera over the past 20 years.

"There's no way I can know where everything is," he says of items scattered among various warehouses. "I've got inventory out my wahzoo."

But know he must, if he wants to be ready for what's coming. Thurmond can see the online world rushing in, and he's prepared for it. Already he makes 80 percent of his income from online sales, and he plans on closing down his remaining two stores within a year to concentrate on Web sales. But he's only bringing a portion of his inventory on line at a time -- to do otherwise would swamp his business.

And databasing the inventory is only the beginning when preparing a business for selling through multiple channels. John W. Coker, a New Market, Tenn., antique dealer who is making about 15 percent of his sales on line, decided to hire a programmer to develop a custom application. After spending $40,000 in development, Coker is still not happy with his application, and constantly tweaks it.

"It seems like every time you turn around, it's another piece for this or another piece for that," he says. He still runs into snafus: 1,600 product descriptions were fouled up when an extra digit was inadvertently added to each database field.

At least his initial design was done correctly. The Microsoft Access database Luan Watkins developed for inventory control of her Gurnee Antique Center, located in Gurnee, Ill., includes such information as where she bought the items, the price she paid for it, and whether it's chipped. It lacks, however, the detailed description and multiple photos of each product that help sell items on eBay. When she wants to auction an item, she removes it from the database and types in that information by hand. Such are the hazards of doing it one's self.

Outlet Outrage
Getting inventory in order is only the foundation for managing online auctions in tandem with offline sales and a Web site. Managing multiple items -- and sales through multiple outlets -- can gobble up every spare minute. Different policies or processes may apply as well, depending on whether the item was sold by auction, through the company site, or at another locale. Multiply the number of customer interactions necessary for a successful sale by the hundreds of items auctioned each week by even a small-sized firm and you've got a full-time job just responding to inquiries. Reynolds estimates that the John Bale Book Company receives at least 1,000 e-mails per week from its online auctions, Web sites, and sales through such online used-book location services as Abebooks.com.

A close look at the auction process makes the problem clear. In a traditional auction, an auctioneer scans the room waiting for potential buyers to bid, and calls out each rise in price. Online auctions have won numerous plaudits for seamlessly automating this portion of the process. Attending an auction on line helps you grasp the steps that must take place after an auction is concluded. The dealer and successful bidder need to make contact and exchange payment for the item or items. Perhaps the bidder (up to this point basically anonymous) needs to provide shipping information. The dealer needs to provide contact information in case there are problems, and he or she must pay the auctioneer a fee. Similar arrangements must be made for sales through any online outlet, whether it's an auction or one of Amazon's zShops.

Reynolds has tried two programs (InVenna Software Inc.'s AuctionAmigo and Auctiva Inc.'s eBud) to automate mailings for her online auctions. These programs identify when auctions are over, e-mail the winner with information on how to pay, and prepare mailing labels for shipping. One major advantage of these applications is that they can tap an existing database and push items onto auction sites.

Reynolds decided against using either for now, however, because she found them too limited. Although they can automate replies to auctions, they can't yet handle her responses to sales at her three Web sites. Instead, the antiquarian bookseller divvies up responsibilities between employees, and each answers queries from a specific source.

"We've managed to keep pace with it," she says. "If we come to a point that we can't, we'll go back to using the automated services full time."

The Future of Antiques
Increasingly, antique dealers rely on application service providers (ASPs) to manage auctions and Web sales simultaneously. Services such as Andale and Auctionworks handle inventory, automate responses to sales, and help better market products.

The major advantage of Andale and Auctionworks is that they allow you to maintain a single database. Each service gives dealers a Web site, while simultaneously allowing them to check items out of their Web-store inventory to be sold at online auctions on eBay and other sites. Technically, there's no reason these sites can't be used at point of purchase in a store front, as long as the inventory stays connected to the Internet. Kimberly Crockett plans to do just that for her Panama City Beach, Fla.-based Oz Wars Toys and Collectibles. Crockett uses Auctionworks.com to manage her online auctions and Web site, and also uses it as a point-of-purchase terminal for her Wizard of Oz, Star Wars, and other popular culture collectibles.

"You can launch a thousand to two thousand items in a few clicks," Crockett says. "Before, I would spend 30 hours a week e-mailing people. There's no way that I could launch as much as I do without it." To get to this nirvana, Crockett spent untold hours at the Web site dutifully inputting her inventory. There's no technological substitute for elbow grease.

Auctionworks charges Crockett 2 percent of sales with a 10-cent minimum and 75-cent maximum fee for auctions. (Sales off of the Auctionworks-managed Web site run a straight 2 percent). Although she is happy with her service, there are two major drawbacks that may make Auctionworks and Andale less desirable for other antique vendors. Neither service yet allows you to upload inventory from an existing database. That means rote entry, and may mean ditching a data-entry project that's halfway done, and starting over.

Also, these ASPs currently lack the ability to extract sales information for QuickBooks or other accounting programs -- a feature that AuctionAmigo supports, even if only in the two-step process of exporting its data to a Concurrent Versions System (CVS) file that can be imported into QuickBooks. These services will likely add more features, including the ability to import and export. When they do, companies will have the ability to manage all sales -- on line and off -- from one source. That's one effect eBay has had that certainly bodes well for the future.

The eBay Aftereffect
But even as businesses adjust policies and technology to deal with the new landscape, it's changing beneath them. The arrival of eBay changed the way antiques and countless other products are sold, but it also profoundly altered the dynamics of the market itself. The supply of new antiques is drying up.

Dealers of heirlooms and curios have always played the role of middlemen. Except for occasional cases of fraud, they didn't create antiques. They acquired them by buying entire estates or picking up inventory from "pickers" -- wholesale buyers who scoured the country looking for items. Although that system hasn't disappeared completely, it's on its last legs. Dealers point to eBay as the reason. Rather than sell to retail antique shops, pickers take their goods straight to the public.

"Right now is the worst buying that I've seen in years," John Thurmond of Collectorholics/Toy Kingdom says. "Everybody's a buyer. Everybody's a dealer." John W. Coker recalls offering a price to one seller for an estate that she thought was worth much more. Her reaction was to say that she would just sell it on eBay.

All these new problems, however, simply stoke dealers' desire to get on line and make this new market work for, and not against, them.

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