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.
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.”
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 rdf_Descriptions 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 rdf_Description 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.
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 rdf_Description 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 rdf_Description 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.”
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.
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.”