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In-state firms find new dollars through internet.

WANT TO HAVE SOME GOOD CLEAN fun on a rainy day? Log onto eBay and search the category Weird Stuff, limiting the results to Arkansas sellers.

Last week, you could buy a "A REAL HEART SHAPED POTATO BORN YEAR 2006" from someone in Alexander, a "CURSED POSSESSED Concrete Armadillo Yard Art Decor LOOK" from an undisclosed Arkansas location or "PAPER CLIP Check out description, yes this is weird" from someone in Conway.

And that's just in Arkansas.

Maybe you'd prefer Weird Stuff from Tajikistan. You might find "CIA BOOK OF DIRTY TRICKS--EBOOK" or "Weird Obtuse NLP Guru's almost lost huge package!"

The Internet has not only empowered the buyers and sellers of Weird Stuff; it has, much more importantly, turned the world into one giant marketplace. And Arkansas-based companies are taking full advantage of the potential to market their goods--and make money--in the global bazaar.

Obviously, big players like Wal-Mart and Dillard's have, if somewhat belatedly, entered the Web world to cater to the rising numbers of online buyers. The number of visitors to walmart.com in October rose 15 percent over year-ago levels, while visits to dillards.com rose 24 percent, according to comScore Media Metrix of Reston, Va., which measures Internet use. Although visitors are not necessarily buyers, the numbers illustrate the increasing attraction of the two Web sites.

The Internet, however, is also proving to be a great leveler between the retail giants, with their deep advertising and marketing pockets, huge array of goods and monumental inventories, and smaller, often niche businesses--businesses like Don Keathley's Antique Warehouse in Botkinburg.

Keathley opened his business, on U.S. Highway 65, 24 years ago. He began selling over the Internet six or eight years ago at the suggestion of his son Matt, a business major who, after leaving college, designed the Antique Warehouse Web site, www.antiquewarehouse.com.

"It got to the point where to be competitive in business," Keathley said, he had to begin conducting business online, both buying and selling.

Now, 20-25 percent of his sales are made over the Internet. "It's usually more of the big-ticket items. A lot of the tourists going up and down the road usually are buying just a dish or other small item," Keathley said.

And because his online presence has led to a rise in the sale of the more profitable, more expensive items--entire dining room sets, for example--his profit margin has increased 20 percent.

"Our Web site has approximately 500 images on it," Keathley said, nowhere near his entire inventory. But someone looking for a stained-glass window --Antique Warehouse has 5,000 in stock--can browse the 100 or so images of stained glass windows on the site and then e-mail Keathley telling him which window most closely resembles what he'd really like, what colors he'd like to predominate and the dimensions needed. That information allows Keathley to, in turn, send the customer images that more closely match his criteria.

The Antique Warehouse Web site allows people who might never visit in person to virtually visit.

"We shipped stained-glass windows a couple of weeks ago to New Zealand," he said. "It was a lady who had seen our Web site. We're known worldwide for having the largest inventory of stained glass in the country. She was having some custom kitchen cabinets built. And she had all the cabinets built but she hadn't had the doors made yet." The woman wanted 12 matching stained-glass panels to serve as doors. After a six-month search, Antique Warehouse was able to provide them.

"The biggest thing is advertising," Keathley said. "We were lucky enough to get in early enough that we were able to lock in" the domain name. There are antique warehouses all over the country but "I'm the only one who has the Web site antiquewarehouse.com." And while people may not remember the telephone numbers from his TV ads, they will remember the Web site.

The Art Market

Richard Gipe, a co-founder and president of Art Exchange, a wholesale and retail online fine art dealer based in Hot Springs, has seen his revenue rise from $750,000 in 2003 to $1.4 million in 2005. And "this year, we're on track to do $2.3 million," he said.

Profit has followed suit, soaring from only $35,000 in 2005 to a projected $300,000 in 2006.

Gipe and his brother, Roger, founded Art Exchange in 1995 as a traditional brick-and-mortar wholesale and retail fine art dealer. But Richard Gipe, formerly an investment banker, said that "when I got in the art business I started looking for the [art] exchanges so you could actually find something that someone wanted, and there was none. So that's where the idea came from."

He and his brother carefully researched the art exchange concept between 1995 and 1999.

Art Exchange has had a Web site since its founding, "so we were pioneers of art sales over the Internet, but the concept that is now Art Exchange is very different from the bricks-and-mortar art sales process," Gipe said. While performing research, a consensus developed that "a business-to-business exchange model was what would in the long term work since there was no exchange in the art space. Pre-Internet, it would have been cost-prohibitive to build one. Post-Internet, it's a robust database search engine."

Gipe "put his investment banker hat back on and started raising some capital. We've raised about $3 million from 'angel' and venture capital investors to date, and that and our cash flow have enabled us to build the company."

The redesigned Web site, based on the b-to-b model, went live in June 2000. It "was heavy on design and light on development," Gipe said, and in 2002, Art Exchange debuted another redesign. The current Web site, www.art-exchange.com, "really starts, for the first time, merging design, development and marketing--all three pieces."

Art Exchange now focuses primarily on the wholesale side of the art market, serving, as it says on its Web site, "the needs of the Supply Side of the fine art market (artists, publishers and other sellers) and the Buy Side (designers and dealers)."

Gipe said the old art gallery model of selling fine art was, because galleries were limited by space considerations to showing just a few artists, "a ridiculous model, but it's the only way they could do it before the Internet." His Web site can display 10,000 artists and 100,000 different artworks, and customers can search by extremely specific criteria, such as medium, size, predominate color, artist name, title and subject.

Gipe compares his business model to the way that real estate is now marketed online, a method that allows home buyers, for example, to search for houses by state, city, size, amenities, price, etc.

"We think this is a windfall," said Gipe, who forecasts revenue for 2007 at $3.2 million with $700,000 in profit. "It will change the way the art business is done."

Auctioning on eBay

Gary Robertson opened his Snappy Auctions on McCain Boulevard in North Little Rock in June 2005. It's a franchise of a Nashville, Tenn., company that opened in 2003 to, according to its Web site, "respond to a real demand: bringing together the millions of people who use eBay every day to buy products and the millions of people who have items that they would like to sell, but may not have the time or expertise to sell on eBay."

Robertson, a former insurance salesman, "wanted to get off the road and get away from the late nights, thinking this would be the answer to that. It hasn't been."

Even though his business is right next to Pier One, walk-in business has been only moderate "and I'm not seeing really an increase from when we opened. This time last year was when we started having a kind of spike in business, which was just before Christmas."

But since then, Robertson said, business "has been just OK. You know all this stuff that you hear on the radio about how you can make fortunes by selling on eBay, I'm sure that there are people out there that are doing that, but it's not in this. I'm not saying that to prevent another franchisee from opening up because I'm sure that's going to happen, but it's a fact. It's just been a marginal business."

He has two years left on his lease, "so that may force me to be on a two-year plan, but I'm just not seeing enough of a reason to continue this for months and years down the road."

"I think without a doubt that 90 to 99 percent of the public out there has items that they feel like they need to move on," Robertson said. "Then you have to get in the categories of are they worth selling on eBay or are they not. Well, most of them probably aren't worth selling on eBay because we turn lots of people away because we have to have a minimum expectation of $50 on an auction. If it's less than that, the time and effort that goes in to it comes out of my pocket. So we send a lot of folks away."

The items that sell best on eBay, Robertson said, are collectibles, "things that are a little harder to find" and that may not have a market in Arkansas.

If some of the "PowerSellers" on eBay are making a living at it, Robertson doesn't know how they're doing it. He speculates that they may operate out of their homes, saving on overhead costs, and that they probably started by selling items they found at garage sales.

But "I didn't get in this business to get in my car at 5:30 in the morning and start hitting garage sales. Snappy's initiative has been more along the lines of commercial [sales], ... going to businesses that have excess inventory and such as that. We haven't really explored that option."

"I don't think that the concept is a bad concept, because I really believe for the people who come in here and the items that we sell, they seem to be really appreciative. They really don't have an outlet," he said. "It's a valuable service."

But whether he can continue to provide the service is another question.

"The business is a good, valid business, but we're just not bringing in the number of quality items on a daily basis that we need to sustain the business on a reasonable level."

"The consignment eBay market is here to stay, but our timing may not be the best," Robertson said.

Timing Is Everything

And timing in online sales and marketing may be everything.

In the late 1990s, PetQuarters Inc., a pet supply retailer based in Lonoke, made a good effort at competing with big pet e-commerce businesses such as petsmart.com. But the lack of steady revenue doomed it, and it fell, along with many others, in the dot-com bust.

There's no doubt that the potential for Arkansas business to make money by marketing online is there. There's also no doubt that it, like all business endeavors, carries risks. But e-commerce is not going away.

As Richard Gipe of Art Exchange says: "It's the new economy. It's the direction the world is going."

BY JAN COTTINGHAM

jcottingham@abpg.com
Wal-Mart and Dillard's Web Traffic

 October 2005 October 2006 Change

Wal-Mart Stores Inc. 23,688,097 27,124,771 14.5%
Dillard's Inc. 1,548,004 1,916,763 23.8%
Total U.S. Audience * 169,314,974 173,257,639 2.3%

Source: comScore Media Metrix, a division of comScore
Networks Inc.

* All persons at US home/work/college-university locations
COPYRIGHT 2006 Journal Publishing, Inc.
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 2006 Gale, Cengage Learning. All rights reserved.

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Title Annotation:Marketing Resource
Author:Cottingham, Jan
Publication:Arkansas Business
Date:Nov 20, 2006
Words:1948
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