Unless you are a numismatic enthusiast, you may not know that an extremely rare 1792 penny, the first coin struck inside the Philadelphia mint, sold for $1.2 million yesterday at a coin auction in Illinois run by Heritage Auctions. It is one of only 14 coins of its type still known to be in existence. For Heritage, this was just another day as king of the Internet coin auction business.
Record-setting collectibles sales have become the norm for the Dallas-based auction house, which begin in 1976 as a small company selling rare U.S. coins (still one of its most lucrative categories). It was founded and is still led by Jim Halperin, who dropped out of Harvard to pursue a career as a numismatist, along with fellow coin-enthusiast and businessman Steve Ivy. Over the years, it has grown into a giant business, with $800 million in annual sales, making it the third largest auction house in the United States, topped only by Sotheby's and Christie's.
And Heritage is growing. While fine art has traditionally not been its bread and butter, it has been looking to expand in that field and according to Halperin may even be opening soon in the fine art world's newest mecca: Hong Kong. That is, if they can find a good Asian art specialist (applications are still being accepted.)
For now, however, that remains in the future. So how, exactly, did Heritage go from being a small rare coin house to the massive market-maker that it is now? The answer is: By being different than everyone else.
AMERICA'S AUCTION HOUSE
Heritage has positioned itself over the last 40 years as the All-American auction alternative: While Sotheby's and Christie's are bigger, Heritage's employees emphatically refer to it as the largest auction house established in the United States (the former two were both founded in Britain). According to figures posted prominently on its heavily-trafficked Web site, last year it sold $830 million worth of items in such as memorabilia, art, wine, jewelry, and coins. It is the market leader in niche memorabilia categories like arms and armor, comic books, sports memorabilia, movie posters, militaria, natural history, and space exploration. Yes, Heritage has succeeded by becoming the go-to place where the world goes to buy and sell old space suits over the Internet.
WEB DOMINANCE
Heritage has offices around the world, including in Dallas, New York, San Francisco, Beverly Hills, and Paris, but the auction house is also constantly conducting sales online. According to Halperin, Heritage does about half of its business by dollar value over the Internet, but Web sales make up 80 to 85 percent by lot (worth noting, the $1.2 million coin that just sold attracted 22 Internet or phone bids). It is one of the Web 1.0 success stories that took the novelty of being able to buy random stuff on the Internet and turned it into a big business.
According to the third-party Web analytics company Compete.com, Heritage gets three times as many unique visitors to its Web site at Christie's does, and almost 13 times as many uniques as Sotheby's (the latter of which is currently pouring money into upgrading its online presence). Heritage's 725,000 visitors per month pushes the company into the top 3,000 — or the 99.8th percentile — of American Web sites.
It may not have the sleek features of Sotheby's image-heavy, design-oriented site or Phillips de Pury's (frustrating) minimalism, but Heritage's Web site gets the job done, and it brings in business in a way that other auction house sites don't. Heritage conducts its sales with less smoke and mirrors than its competitors. "Our goal is to bring collecting mainstream. We stress transparency because we feel that's the way to make bidders more comfortable," Halperin told ARTINFO.
OBSCURE CASH COWS
Bidders seemed very comfortable indeed during last month's vintage comic auction — another category in which Heritage excels. Held in New York's Fletcher-Sinclair House (which houses the Ukrainian Institute of America), Heritage sold the Billy Wright Collection of comics, just recently discovered in pristine condition in a basement closet of the late collector's family. The 345 items — mostly published between 1936 and 1941 — went for more than $3.5 million, nearly twice the $2 million low estimate. Over three days of comic sales Heritage brought in a record $8.8 million.
In other words, whatever its future may hold, as long as there are obscure troves of classic comics to find under the bed, Heritage should do just fine.