A New Direction for Collectors
by Mark Elliot - Tuck '97
| The Virtual Comic Book Convention -
A New Direction for Collectors by Mark Elliot - Tuck '97 | |
The Basic Concept: A Centralized
Marketplace for Both New and Back Issues
Ever since Superman's rocket landed near the Kent's farm in the
1950's, comic book characters have been an integral part of American
culture. Comic books are also an enormous business, and collectors
spend billions every year in the United States to buy both new
and back issues for their collection. There are a number of easily-accessible
sources both through the Internet and through traditional channels
for new issues as they come out. However, collectors often have
a hard time finding the back issues they need to fill their collections.
An on-line centralized comic book marketplace for both new and
back issues could efficiently bring sellers and buyers together
and create the following advantages:
= Value Creation
The Current Market: A Huge Decentralized
Search
New Issues
The tradition of running to the local comic store or newsstand
as soon as the latest issues arrive is still alive and well. However
there are a number of mail-order and Internet services which allow
customers to place orders and receive books directly. One of the
most successful on-line services is Westfield Comics,
which stated as a direct mail-order service for collectors over
fifteen years ago. The advantages of ordering new comics directly
are twofold: 1) By ordering a month in advance, the customer is
assured he/she will never miss an issue which could sell out in
a store; 2) Through low overhead and large volumes Westfield offers
comics to its customers at a 30%+ discount to the cover price.
About three years ago, Westfield offered dial-up ordering software
for windows which allowed users to place their monthly orders
through a dial-up modem and proprietary software created for Westfield.
The company had since added direct, Internet ordering
for it's customers. Westfield's on-line success can be attributed
to it's large pre-existing customer base and high volumes which
have translated into lower costs and prices.
Back Issues
In the U.S. there are thousands of independent comic book stores and over a thousand conventions held every weekend. Dealers generally pay $30 - $100 for a table at a convention and spend the day buying, selling and trading back issues with collectors who generally pay about $5 for admission. Often a collector will have to visit dozens of dealers at a few conventions to find a specific book he is looking for. Older, high priced ($500 and up) books can be especially difficult to find.
A few of the larger dealers have set up an Internet presence in
an attempt to sell back issues, however their efforts are very
sparse and focus on recent, low priced issues. Searching for comics
on line can be as frustrating as going to numerous conventions
since each site only has that dealer's books for sale.
One of the best sites for back issues is Legionnaire Collectible Comic Books
which has a strong selection and scanned images of the covers
so that buyers can get a feeling for the condition of the books.
Lone Star Comics
is another retailer attempting to sell back issues online through
a somewhat cumbersome searchable database of it's cheaper back
issues and a "vault" section with really high priced
($200 - $2000) books for sale.
The Concept in Detail: Bringing
Buyers and Sellers Together
How can value be created in this market? Instead of stores and
dealers each creating a web site which either lists the comics
they want to sell or asks for users to send in a "wish list"
I would propose a central clearing house whereby collectors could
enter the comics they are searching for and the dealers enter
their back issue inventories and prices. This would be a large
one-time investment for the dealers as many have thousands of
comics in inventory. But they will realize benefits the benefits
of reaching customers across the country and being able to sell
rare items much more quickly than before. One the largest dealers
are on-line, the smaller ones will have to follow.
This back-issue marketplace should be combined with an existing
new-issue service such as Westfield or Mile-High Comics
which already has a large customer base visiting at least once
a month to order. Bringing the entire market together for both
new and back issues could create a site which satisfies all of
a collectors needs in one place.
The end product to the customer would ideally be a system whereby
he could login, check off the new issues to order, enter a back
issue he is searching for and a list of dealers with that issue
in stock would pop up. The list would also have asking price and
condition next to each entry. This method would provide the user
an instant answer to their search, as opposed to sending
in a "want list" and waiting for a response. Some sort
of negotiating process via email would the hopefully result in
a transaction. The dealer would send the issue to the "market",
which would verify its condition. The customer would receive it
month later with the regular order.
Revenue Generation: "Chicken
and the Egg"
How can money be made on this idea? Will the dealers pay to list
their selections? Will the customers pay a membership fee? Are
there viable advertisers? Can the service charge a commission
for each successful transaction? It will take time and effort
to create the critical mass which is necessary in any Internet
business to generate substantial revenues. Affiliating with
an established new-issue service is key as this provides instant
access to customers and instant credibility with retailers.
Option One: Charge the Dealers Once to List Books for Sale
This would have to be a very low cost to the dealers at first,
as they will be skeptical of the viability of this channel relative
to the proven comic store or convention. However, affiliating
with an existing service which already has thousands of customers
should help here. Overall, the dealers are not likely to pay for
this service until it is a proven concept.
Option Two: Charge the Customers a Membership Fee
Since customers are used to free ordering service this is not
a likely revenue source. In addition, the customers are used to
buying back issues from stores or conventions which are either
free or very cheap.
Option Three: Charge a Commission for Each Transaction
The benefit of this method is that neither party has to pay until
they actually used the service - which would encourage both buyer
and sellers to try the service without incurring any cost. Despite
the obvious issues with tracking transactions, this may work if
the negotiations are handled through the market without either
side knowing who the counterparty is. They would have to
go through a market clearinghouse to execute a transaction.
Option Four: The Advertising Dollar
Most revenue on the Internet today is generated through advertising,
and the potential exists here for strong advertising support.
All of the major publishers would probably do some advertising,
and the smaller, unknown, up-and-coming publishers would be eager
to target a selected audience of comic readers.
The most likely successful scenario is a combination of a commission
and advertising at first. Once the market reaches a "critical
mass" of dedicated buyers and sellers other revenue sources
should be considered.
Spin-Off Benefits: Next Steps?
Accurate Market Information
A more central marketplace will allow both buyers and sellers
to have more accurate, recent information on transactions. Currently,
price guides come out once a month but the prices are very high
relative to the "real" market. Negotiations often start
as a % discount from guide.
Other Collectible Markets
If this concept proves successful, it could easily be extended
to other collectible markets such as baseball cards, coins, and
stamps. These markets operate in much the same way and could realize
many of the same benefits as the comic market from a centralized,
nationwide, Internet market.
Will collectors ever give up the intangible benefits of going
to conventions just to browse. Do they actually enjoy the
long searches as part of the fun of collecting? The virtual comic
convention works best as a supplement to the traditional sources
of collecting, not as a means to replace it. By offering a free
service which allows both buyer and sellers to extend their search
beyond their immediate area, I believe this concept has the potential
to replace smaller weekly conventions and stores which often have
high prices and a poor selection. The large conventions held in
the bigger cities will always remain central to the comic collecting
world.
