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| The e-commerce ticket for coin and bullion investors THESE SHARES TURN COLLECTIBLES INTO INVESTIBLES by Rob Schmidt For coin and bullion investors, the idea behind these companies is familiar. Just as stocks in gold-mining companies are a proxy for owning gold, these stocks are a proxy for owning rare coins, bullion, and other investment-grade products. As the market for high-end collectibles expands and people become more and more comfortable buying and selling online, these stocks could appreciate. Letās take a closer look at these e-commerce leaders: Service. Collectors Universe companies authenticate and grade such items as coins, sports cards, stamps, and autographs. This assures buyers that the collectibles they purchase have the qualities they expect.
Content. Collectors Universe produces reports and other information on the rarity, quality, and trading history of collectibles. This information helps to educate customers and generate excitement about the field. Commerce. Collectors Universe holds multi-venue auctions over the Internet, by telephone, and in person. These include regular weekly auctions and periodic premium auctions for rare and valuable collectibles. Much of this activity takes place at the Collectors Universe Web site. Visitors can enter any of 16 collectible "universes" modeled on the original Coin Universe. These universes offer auctions and galleries, price guides, news, and more. Collectors Universe has contracted to provide eBay with authentication and grading services for coins, sports cards, sports memorabilia, and stamps. Impressed by these strategies, Inter@ctive Week named Collectors Universe the highest-ranking Internet company in the collectibles category and 102nd of the Internet 500 overall.
In March 2000, Collectors Universe acquired Bowers and Merena and appointed renowned coin dealer Q. David Bowers as a director. Coin Universe will operate Bowers and Merena as one of its divisions. Commenting on the acquisition, David Hall, chairman of Collectors Universe, said, "Strategically, this is a very important and defining event for our company. Bowers and Merena is the number one auction company in the rare coin market and David Bowers is arguably the most famous coin dealer of all time." In the world of rare coins, the purchase of Bowers and Merena by Collectors Universe is like the purchase of Time Warner by AOL. It is the event that demonstrates the revolutionary domination of the new economy over the old. GREG MANNING AUCTIONS
INC. (WWW.GREGMANNING.COM) To complement its auctions, GMAI plans to bolster its Web site with content. It has opened retail galleries for sports cards and memorabilia, diamonds, and art and will introduce others soon. It will supplement these with articles from sources such as Global Stamp News, Coin Connoisseur, and Certified Collectibles Group.
GMAI has begun offering thousands of fine collectibles daily on Amazon.com Auctions and zShops. Browsers can bid on items at Amazon or on a specially created Web page at www.gregmanning.amazon.com. The offerings include rare sports trading cards, coins, stamps, and Hollywood memorabilia. GMAI says itās "aggressively leveraging its position as a preeminent stamp and collectibles auction house to become the dominant mid- to high-end fine collectibles auction company." It plans to expand by adding new auction formats, offering additional collectible lines for auction, and broadening its international auctioning and e-commerce. DALLAS GOLD & SILVER
EXCHANGE (WWW.DGSE.COM) DGSE made its initial Internet foray in 1995. On its main Web site, DGSE auctions jewelry from its stores. It has launched a more exclusive alternative, FirstJewelryAuctions.com, where jewelry manufacturers and vendors can sell to each other and to the public. In March 2000 DGSE acquired Fairchild International and Fairchild Estate Buyers. It plans to sell Fairchildās fine vintage watches on a new Web site called VintageWatchAuctions.com.
DGSE also maintains the US Bullion Exchange site. This site supplies free, real-time prices for 250 precious metal products, including scrap sterling silver, gold krugerrands, and the Platinum American Eagle. In addition, DGSE is one of 100 charter merchants at Amazon.com, where it has auctioned off 250 items a week to Amazonās eight million customers. DGSE gets its inventory from pawn shops, individuals, and estates as well as major wholesalers. It recently acquired the Silverman Group, a leading professional liquidator. DGSE expects Silvermanās going-out-of-business and retirement sales to provide a steady stream of goods with a high return on investment. Through another subsidiary, eye media, DGSE has developed its Virtual Auctioneer software to support e-commerce transactions, including Internet auctions, exchanges, and online stores. Using Virtual Auctioneer, DGSE is building sites such as FirstCoinAuctions.com, SilvermanLiquidations.com, and a portal called e-JewelryAuctions.com. The company also markets the program to other Internet developers. It has licensed it to such sites as Virtualhomesite.com, Oldwheels.com, and BikerBoy.com. DGSE can feed jewelry from liquidations and other sources through its physical stores and onto the Internet. Its fiscal 1998 revenues totaled $16.4 million and are projected to hit $50 million by 2002. Behind the hype These developments are spurring the demand for collectibles. Coins are becoming hip again as the US Mint and others market their wares energetically. New categories of collectibles, from "classic" computers to Pokmon cards, are constantly emerging. As the figures show (see sidebar), revenues of e-commerce firms are soaring, but profits are not. Expect the usual e-ticket volatility until competition shakes out the players. Despite÷or perhaps because of÷this volatility, shrewd investors will want to keep an eye on developments in collectible dealing online. Companies may come and go, but the Internet revolution is here to stay. Rob Schmidt is a freelance writer on business and high-tech subjects. He wrote on the U.S. Mint in the Summer issue.
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Three coin-related "dot-com" companies made a splash on the Nasdaq stock
exchange in 1999. Each extols its auction expertise and Internet savvy
as reasons to buy its stock. Each is poised to benefit from the vast
potential of e-commerce.
The three dot-coms each have a different focus. Collectors Universe
emphasizes its authentication skills and online content. Greg Manning
Associates Inc. promotes its global reach and touch-tone phone ability.
Dallas Gold & Silver Exchange specializes in jewelry, gems, and metals.
COLLECTORS UNIVERSE (WWW.COLLECTORS.COM)
GMAIās divisions and subsidiaries include Greg Manning Auctions Inc.,
Ivy & Mader Philatelic Auctions Inc., and Cee-Jay Auctions. Its Teletrade
subsidiary, voted "Best Rare Coin Site" in a Coin Connoisseur poll,
conducts auctions via touch-tone phone and the Internet simultaneously.
Combining these with in-person, mail, and fax auctions, GMAI can reach
98% of the potential bidders in the US.