to begin with i think you have to applaud any business that enters an established market place with a fresh approach, which is what paragon has appeared to have done with their unique auction pricing format. rather than charge traditional consignment fees based on lot hammer prices, paragon will instead require consignors to "advertise" their lots in paragon's auction catalogs by purchasing "ad space" ranging from $300 to $1,500 a pop (buyers will not be charged any fees). at first blush this seems like an interesting angle, but will work, does it even make sense?
interestingly, the vast majority of items sold at most big sports memorabilia auction houses typically fetch $1,000 or less. for example, in nine auctions conducted by lelands from 01/2008 through 11/2009, a whopping 80% of the lots sold went for $1,000 or less. further, an incredible 95% of the lots sold fetched $3,000 or less.
so let's say a consignor wants to list an item with paragon that's expected to bring $1,000. paragon's cheapest option is a 1/6 page ad that runs $300. this of course equates to a hefty 30% cost to the seller, a percentage well above the typical auction house consignment fee. even though it's possible to chisel this price down to $167 if you're willing to go for paragon's $1,500 full page ad with a 9 item max option, the cost to the seller is still about 17% which isn't much different than what other auction houses charge - but keep in mind that this option will only get the seller a 1/9 page ad. needless to say the numbers get even worse for consignors wanting to list items in the $750 or lower range.
even with a big ticket lot, say a $10,000 item, paragon's model still doesn't appear to be a great deal for the consignor. for example, i would imagine that someone listing a $10k item would want a full page ad - but at $1,500 a pop it's still a 15% cost to the consignor. as would be expected, things begin to look much better for consignors wanting to list $15k, $20k, $25k, etc. items - but this comes at a hefty cost to paragon i would imagine...
big ticket lots typically make up a tiny percentage of an auction house's inventory (2% or less) yet these lots can be responsible for more than 30% of the house's revenues - in other words big ticket lots can often make or break an auction. for example, in the nine leland auctions mentioned earlier, only 1.2% of the lots sold went for $10k or more, yet these lots were responsible for almost a full third of leland's revenue. another example would be hunt: in eleven auctions conducted by hunt from 03/2008 through 02/2010, only 2.8% of their lots sold for $10k or more, yet these lots were responsible for 43% of hunt's revenue.
but given paragon's "ad" model with a $1,500 max ad price, paragon won't be able to generate the same sort of revenue contribution on big ticket items, not by a long shot, which might be tough for paragon given how expensive quality catalogs are to produce and distribute.
then there are the obvious questions such as what happens if your item doesn't sell after you've placed your $300 ad? hard to imagine that paragon could afford to issue refunds or even issue credits for subsequent catalog ads. and what about ad placement? how does one ensure that their ad is placed in the most desirable and advantageous section of the catalog, right hand page vs left hand page, front or back pages vs middle pages, top or bottom of the page, etc.? i suppose paragon could take a stab at first come first served, but i'm not sure how that would sit with most consignors, especially when they're paying the same amount of money for an ad, say $1,500 a pop for example.
paragon seems to feel confident that no buyer fees will generate frenzied bidding or, as they put it, will make bidding much more intense - should be interesting to see if that pans out. and if it does, will the end result be a downward adjustment to the current market value of collections that may have been artificially inflated by past 15%-20% buyer's juice? whatever the case, auctions houses need buyers - will no buyer's fees produce this in droves? will be interesting to watch.
here's a look at a couple of random catalog pages - the photo on the left is a single page ad from gfc's last auction (glove) and the photo on the right is a 4-lot ad from a huggins & scott catalog. the glove sold for $5,400 - had this ad been in the paragon catalog the cost to the consignor would have been 28% ($1,500 full page ad / $5,400) as opposed to gfc's 20% consignor's fee. the baseballs sold for $300, $650, $700 and $450. a 1/4 page ad in paragon's catalog is $400, $375 if you're willing to buy a full page. combined ad cost to the consignors would have been 76% or 71% respectively compared to huggins & scott's 17.5% consignor's fee.
here are a couple of more random catalog pages - the photo on the left is a 6-lot ad from huggins & scott (jerseys) and the photo on the right is a 4-lot ad from gfc. the jerseys sold for $500, $275, $800, $900, $600 and $900. a 1/6 page ad in paragon's catalog runs $300 or $250 if you opt for full page $1,500 deal. combined ad cost to the consignors would have been 45% or 38% respectively with paragon compared to huggins & scott's 17.5% consignor's fee. the bats sold for $1,735, $0 (no sale), $270 and $264. combined ad cost to the consignors would have been 71% and 66% respectively with paragon compared to gfc's 20% consignor fee.
here's an auction house comparison derived from published auction results - the main point is to compare the price ranges lots sold for as a percentage total lots sold. for example, let's take a look at the lelands column, from top to bottom: 9 auctions were sampled, average lot price was $988, 63.6% of the lots sold went for $500 or less, 80.3% went for $1,000 or less, 94.5% went for $3,000 or less, etc... some interesting info imo.
...
interestingly, the vast majority of items sold at most big sports memorabilia auction houses typically fetch $1,000 or less. for example, in nine auctions conducted by lelands from 01/2008 through 11/2009, a whopping 80% of the lots sold went for $1,000 or less. further, an incredible 95% of the lots sold fetched $3,000 or less.
so let's say a consignor wants to list an item with paragon that's expected to bring $1,000. paragon's cheapest option is a 1/6 page ad that runs $300. this of course equates to a hefty 30% cost to the seller, a percentage well above the typical auction house consignment fee. even though it's possible to chisel this price down to $167 if you're willing to go for paragon's $1,500 full page ad with a 9 item max option, the cost to the seller is still about 17% which isn't much different than what other auction houses charge - but keep in mind that this option will only get the seller a 1/9 page ad. needless to say the numbers get even worse for consignors wanting to list items in the $750 or lower range.
even with a big ticket lot, say a $10,000 item, paragon's model still doesn't appear to be a great deal for the consignor. for example, i would imagine that someone listing a $10k item would want a full page ad - but at $1,500 a pop it's still a 15% cost to the consignor. as would be expected, things begin to look much better for consignors wanting to list $15k, $20k, $25k, etc. items - but this comes at a hefty cost to paragon i would imagine...
big ticket lots typically make up a tiny percentage of an auction house's inventory (2% or less) yet these lots can be responsible for more than 30% of the house's revenues - in other words big ticket lots can often make or break an auction. for example, in the nine leland auctions mentioned earlier, only 1.2% of the lots sold went for $10k or more, yet these lots were responsible for almost a full third of leland's revenue. another example would be hunt: in eleven auctions conducted by hunt from 03/2008 through 02/2010, only 2.8% of their lots sold for $10k or more, yet these lots were responsible for 43% of hunt's revenue.
but given paragon's "ad" model with a $1,500 max ad price, paragon won't be able to generate the same sort of revenue contribution on big ticket items, not by a long shot, which might be tough for paragon given how expensive quality catalogs are to produce and distribute.
then there are the obvious questions such as what happens if your item doesn't sell after you've placed your $300 ad? hard to imagine that paragon could afford to issue refunds or even issue credits for subsequent catalog ads. and what about ad placement? how does one ensure that their ad is placed in the most desirable and advantageous section of the catalog, right hand page vs left hand page, front or back pages vs middle pages, top or bottom of the page, etc.? i suppose paragon could take a stab at first come first served, but i'm not sure how that would sit with most consignors, especially when they're paying the same amount of money for an ad, say $1,500 a pop for example.
paragon seems to feel confident that no buyer fees will generate frenzied bidding or, as they put it, will make bidding much more intense - should be interesting to see if that pans out. and if it does, will the end result be a downward adjustment to the current market value of collections that may have been artificially inflated by past 15%-20% buyer's juice? whatever the case, auctions houses need buyers - will no buyer's fees produce this in droves? will be interesting to watch.
here's a look at a couple of random catalog pages - the photo on the left is a single page ad from gfc's last auction (glove) and the photo on the right is a 4-lot ad from a huggins & scott catalog. the glove sold for $5,400 - had this ad been in the paragon catalog the cost to the consignor would have been 28% ($1,500 full page ad / $5,400) as opposed to gfc's 20% consignor's fee. the baseballs sold for $300, $650, $700 and $450. a 1/4 page ad in paragon's catalog is $400, $375 if you're willing to buy a full page. combined ad cost to the consignors would have been 76% or 71% respectively compared to huggins & scott's 17.5% consignor's fee.
here are a couple of more random catalog pages - the photo on the left is a 6-lot ad from huggins & scott (jerseys) and the photo on the right is a 4-lot ad from gfc. the jerseys sold for $500, $275, $800, $900, $600 and $900. a 1/6 page ad in paragon's catalog runs $300 or $250 if you opt for full page $1,500 deal. combined ad cost to the consignors would have been 45% or 38% respectively with paragon compared to huggins & scott's 17.5% consignor's fee. the bats sold for $1,735, $0 (no sale), $270 and $264. combined ad cost to the consignors would have been 71% and 66% respectively with paragon compared to gfc's 20% consignor fee.
here's an auction house comparison derived from published auction results - the main point is to compare the price ranges lots sold for as a percentage total lots sold. for example, let's take a look at the lelands column, from top to bottom: 9 auctions were sampled, average lot price was $988, 63.6% of the lots sold went for $500 or less, 80.3% went for $1,000 or less, 94.5% went for $3,000 or less, etc... some interesting info imo.
...
Comment