Business
Plan Revealed by AntiquesAmerica.com
BOSTON, MASS. - This is the second article in a two part series
on AntiquesAmerica.com. Last week's Antiques and the Arts
Weekly contained the first part that examined the history of
the firm and its innovative Internet programs created in
affiliation with museums.
Staffing
Some impressive names are mentioned in connection with
AntiquesAmerica.com. Those include Sumpter Priddy, Graham Hood,
and the Keno brothers. These and other prominent individuals
either serve on boards that meet quarterly, or on boards whose
members might be asked to evaluate an occasional article over the
telephone. For example, Leslie Keno works fulltime as Sotheby's
senior specialist and director of business development for
American furniture and decorative arts. Keno serves on consulting
boards, but he is not a member of the daily staff. The two All
Stars of the antiques field who work daily at the firm are
Jonathan Fairbanks and Betsey Garrett.
A few management people have some trade experience and regional
visibility such as Lisa Freeman, vice president of content and
Douglas Jenkins in the sales department. However, overall the
median age of the 38-member staff is probably around thirty, and
most appear to have no experience as independent dealers in the
trade. Some such as Jennifer Hanes, Josh Eldred, and Tim Nylander
are the children of recognizable members of the field (Lee Hanes,
Bob Eldred, and Jane Nylander).
Dekkers Davidson became the first CEO on April 7. The core of
senior management that has been hired since April appears to have
advanced business skills. Their potential Achilles' heal is
antiques market inexperience.
There is some evidence of discord between the team assembled by
the founder and the team assembled by the capital investment
firm. One example surfaced when a letter from Christine Crossman
Vining appeared in Antiques and The Arts Weekly (see
September 1 issue). In that letter, the former vice president of
member trade services stated, "My resignation was due solely to
profound philosophical differences with the current senior
management staff of AntiquesAmerica.com."
There has also been some disagreement over Aida Moreno, the
controversial former producer of the Antiques Roadshow. In
mid February, WGBH notified Antiques and The Arts Weekly
that Moreno was working at AntiquesAmerica.com through a firm
called NetVentures. The paper was prepared to publish that
report. However, on February 24, Tavener, founder of
AntiquesAmerica.com, called with a strong denial that Moreno was
associated with his firm. In August, CEO Dekkers Davidson
acknowledged that since February 21, Moreno has been a partner of
NetVentures, the investment company that bought
AntiquesAmerica.com, and since April she has sat on the strategic
advisory board of AntiquesAmerica.com.
Real universities have healthy debates about the scope and
sequence of topics, and this virtual university has similar
debates. Jonathan Fairbanks is an accomplished painter who earned
his first degree in fine art. He would like the site to have a
deep and broad body of fine art material. He stated, "We will
have a lot of material on American art, American schools of art,
and individual artists. We will also have European and Asian art.
You better believe there will be Impressionists on our site."
Lisa Freeman, vice president of content, has a different
perspective on fine art. She commented, "It comes down to a
question of how much. We have an antiques site, and first order
of business needs to be the decorative arts. We will have fine
art, but it will be a matter of balancing the degree and focus.
We will do fine art in conjunction with the decorative arts."
Market Design
While AntiquesAmerica.com founder Julien Tavener envisioned an
intellectual Web site without retail sales, new CEO Dekkers
Davidson plans to make AntiquesAmerica.com a high-powered
commercial and educational Web site. Davidson stated, "This will
be a highly profitable venture. We will begin turning a profit
within two years."
Davidson is pleased with the interest shown since the prototype
of the site launched on May 1. He stated, "What you see on our
current site is a sneak preview of the final site. By the end of
the year we will mount a major media campaign to coincide with
the launch of the full site. It is encouraging to see the robust
use that we get on weekends. We had a big spike in use on
Memorial Day weekend. We are also pleased with weekday use. Our
help and advice section gets about one hundred hits a day. We
will not do appraisals, but we will offer a list of appraisers
when asked."
He then continued, "We are starting small, but we will hugely
expand. The July 4, 1900 issue of The New York Times was
fourteen pages. Look at today's Times. We have a
commitment, and we will have a similar growth as the media
changes. Our long-term goal is developing an interactive site.
That is a remarkably engaging medium, and soon that will be
possible with computer technology."
Davidson wants the site to serve a wide range of users who are
interested in antiques. He stated, "This site is now an excellent
facility for supporting commerce. We will avoid the eBay
problems. Seventy percent of their sales are below fifty dollars,
and that does not support proper monitoring. We will not offer
low-end collectibles. We are planning for the average sale to a
retail customer to be around $500, and we expect that the average
sale to a dealer will be substantially more. We will have peer
review and substantial performance criteria."
Davidson acknowledged that the number of antiques dealers is
difficult to establish because the definition is so variable. He
stated, "There seems to be 35,000, maybe 40,000, fulltime
antiques dealers. However, we know that another 200,0000
taxpayers file with the IRS as part-time antique dealers." Even
within AntiquesAmerica.com, there is some inconsistency in
applying the term antiques dealer.
Davidson defined his market plan by stating, "We will have three
revenue sources. First, this fall we will open a virtual antiques
gallery. By the end of the year there will be two hundred dealers
displaying their merchandise and providing condition reports.
They will continue to sell through other venues such as shows and
their own Web sites, but we hope they put their entire
inventories on our Web site. These will be dealers who we regard
as knowledgeable, and merchandise will be vetted. Our revenue
will come from commissions charged when merchandise sells. Our
commission structure is on a sliding scale that varies with
selling price, but the commissions are in the range of ten
percent."
He then continued, "Second, next summer we will open a general
store that will feature books, goods and services for the
antiques trade such as conservation services. It will include a
gift shop. Third, a year after that we will introduce advertising
and sponsorship to the site. By the end of 2001, we will have a
million visitors a month. Advertising revenue will become
significant in 2002."
Davidson was pleased to announce the company's first e-commerce
sale. He stated, "We opened our 'Wanted to Buy' section in
August, and that has generated good interest. September 5 we had
our first business transaction on the site. Later in the fall we
will open the Virtual Gallery that features merchandise that
dealers own. We require that participating dealers post at least
twenty-five items to join the site."
Collecting the Commission
The AntiquesAmerica.com policy that allows dealers to offer the
same merchandise in other venues might ultimately render some
commissions uncollectible. A similar practice was an element that
was instituted at the International Antiques Mart in Byfield,
Mass. A decade ago, that huge group shop was the most
revolutionary antiques venture in the New England. At that shop,
some space was rented for a flat fee, some was rented for a fee
and commission, and some was rented exclusively for the
commission. The firm has dissolved.
Sometimes the seller or buyer undercut commissions that were due
to the International Antiques Mart. Perhaps an exhibitor would
say to a client, "I really need to charge that price because the
shop charges me a fifteen percent commission. Of course my
inventory rotates. I was thinking that I would bring that item to
the Rhinebeck show and as I recall you always shop there...Sure I
could cut fifteen percent from the price once I get it out of the
shop." The shop lost a commission.
Leigh and Leslie Keno.
Buyers who wanted lower prices occasionally devised tactics that
ultimately manipulated ethical dealers who wanted to be honorable
and pay appropriate commissions. Without mentioning that he had
seen an item in the mart, a client would call a dealer on the
phone and say, "Hey look, my sister-in-law is coming to visit us,
and she has been through a lot lately. She collects Sandwich
glass, and I would like to get her a nice colored whale oil lamp.
Is there any chance you might be bringing something like that
when you come down to the Orleans show?" When the dealer packed
Byfield merchandise for the show, he innocently took the vase.
The shop lost a commission.
These examples were raised with Davidson, and acknowledged that
practices that skirt commissions were an issue for him and his
investors. He responded, "Certainly if people by-pass the system,
we will lose revenue. We expect that skirting the system is more
prone to be a one-time thing. We believe there is a high degree
of honor in the antiques community, and most people will not try
to deny us our proper commissions. To a great extent, we will
rely on self-enforcement. If people bypass the system, word
travels. We will eventually hear about it."
He then continued, "The other thing we can do is to look for a
pattern and monitor. If a dealer repeatedly removes objects from
the site three days after a customer inquiry, then we might
examine that situation more closely. At the extreme, we could
have someone call a dealer about an item on the site and attempt
to cut a deal on the side. However, I would rather incentivize
people rather than relying on enforcement. We will have
inducements that reward dealers with higher sales volumes."
E-commerce Issues
As an e-commerce site, AntiquesAmerica.com is a late arrival on
the scene that already has individual dealership sites, auction
sites, and group retail sites. Davidson does not rule out a later
entry into the auction business, but for now the commercial
thrust is toward a group retail site. In joining the field, the
company has to deal with the problems that are specific to that
market.
A major problem for dealers exhibiting at group retail sites is
that tired merchandise becomes harder to move. Often the success
or failure of an antiques business is determined by its ability
to convert tired merchandise quickly to cash. Traditionally this
has been accomplished by moving merchandise to remote markets.
The problem with unique merchandise pulled off the Internet
market is that it may be spotted elsewhere by one person who
spreads the word, "It's dog. It sat on the Internet for six
months without a bite."
Most Internet antiques retailing sites are thriftily managed with
no frills. By contrast, AntiquesAmerica.com operates an Internet
university as well as its commercial site. The company's annual
operating budget might be in the $4 million range. To break even
by charging a ten percent commission rate, the site would need to
sell $40 million in antiques. For comparison, Skinner Auctions
and Appraisals, and Northeast Auctions each have annual sales
totals in the range of $25 to $30 million.
Ask the Expert
The Web site has a feature called "Ask the Expert" with three
potential tiers of response. Questions emailed to the site are
received by Mason McBrien or his assistant. They research answers
in a library of 500 volumes and usually respond by email within a
few days. If they need further information, they go to Jonathan
Fairbanks or Betsey Garrett for assistance.
If those experts can not answer the question, Mason calls an
affiliated expert. For example, art pottery expert David Rago
would be asked to answer the question, "One of vases stamped Teco
that does not have the little needle crystals in the glaze. Was
this a later Teco piece, or is it a possible forgery?"
The Encyclopedic Concept
The core concept of AntiquesAmerica.com is universality. It
strives to be encyclopedic with all the information and
merchandise that a specialized scholar or casual collector could
want. It aspires to function as a combination encyclopedic
museum, university, and department store. That is ambitious.
A parallel concept is the encyclopedic museum. That concept began
with the Ashmolean Museum, now affiliated with Oxford University.
Most American encyclopedic museums were founded between 1850 and
1920. In modern times, the emphasis has been toward specialized
museums such as the Arts and Crafts Museum in New Jersey or the
Kendall Whaling Museum in Massachusetts. However, on the Internet
some encyclopedic commerce sites such as eBay have been
extraordinarily successful by incorporating navigational systems
that get users quickly to their special area of interest.
It is impossible for this site to equal the knowledge found at
specific sites dedicated to a single focus. For example, this
site will not attempt to match the images and information about
Vincent van Gogh available at www.vangoghgallery.com. There has
to be a finite limit to the information at an encyclopedic site.
The firm has experienced interesting growth. The growth of each
new layer has triggered another round of decision making, and the
component parts of the company have shifted to a new alignment.
This is healthy evolution. On a revolutionary voyage into
uncharted waters, the ship's wheel must be turned to avoid
unanticipated shoals and to enter the most profitable ports.
Ultimately the most important experience that CEO Dekkers
Davidson brings to the company may be his experience as a trustee
of St. Lawrence University. At real universities, presidents
shift courses to strike balances. They conduct budget meetings
with a careful eye for balancing sources of funding with the cost
of services. At AntiquesAmerica.com, Davidson faces the daunting
task of matching the cost of information provided against the
increased level of commercial activity attracted by that
information.
Clarifications
In the final print version of Part I of this series, the word
'computer' was substituted or changed to 'commuter' with the
effect of significantly altering the sense of a paragraph. That
paragraph addressed the second of four advantages that
AntiquesAmerica.com had over other Internet startup firms.
Second, Boston has a tremendous infrastructure of high-speed
computer service tubes. These tubes are packed with bundles of
fiber optic lines that carry massive quantities of data. The
communication function of a large Web site, such as
AntiquesAmerica.com aspires to become, requires moving huge
quantities of data and high numbers of messages simultaneously
during peak hours.
To meet this function, company headquarters must directly connect
to a high-speed tube. In Boston, Julien Tavener was able to find
an inexpensive business location with an underground tube passing
immediately in front of the building. In contrast, Web sites
located in some cities pay a super premium to rent real estate
adjacent to high-speed computer tubes. The cost of extending a
high-speed tube to a remote location is extremely high.
As for the commuter system in Boston, we chose to withhold
comment.
Johanna MacBrien has requested that we make a second
clarification regarding the Spotlight feature presented by the
Content division of AntiquesAmerica.com. We interviewed MacBrien
some months ago at AntiquesAmerica.com. At that time she carried
some authority, and she spoke with an evangelical zeal.
In July we requested a photograph of MacBrien, and also an
interview with her. A company spokesperson responded that the
firm did not have a photograph of MacBrien, and, since she was on
leave, she was not available for an interview. The spokesman
suggested an interview with Lisa Freeman, vice president of
content.
When Ms Freeman was interviewed, she spoke in terms such as "The
team does..." or she stated, "Another feature we have..."
Reflecting the tone of that interview, we wrote in part 1 of the
series, "A strong content feature with some market material is
the Spotlight section managed by Lisa Freeman."
The morning after part 1 was posted on the Internet, MacBrien
called to clarify the facts regarding her position within the
Content division. She explained, "I commission the articles. I
edit the articles. I solicit the multimedia people. I edit the
multimedia programs. Other people deserve credit too, like Trevor
Sparks. He actually does the interviews and gets the pictures,
but I edit his work."
