Not all seemingly new ideas work. One cautionary tale that I heard while here at the World Money Fair in Berlin is the story of the sale of new Polish issues. The National Bank of Poland decided to implement a new online method of sales. To say it was not thought through is an understatement.
Would be buyers of new issues were required to go online in 2010 to bid on them. This replaced the “old-fashioned” method of coins being sold at a fixed issue price through wholesalers, coin shops and other outlets around the country.
As each coin was offered for a period of two weeks, buyers had to keep checking prices to make sure that their bid still would get them a coin. The initial impact of the new system was to drive up prices as former wholesalers and other large buyers wanted to assure themselves of a supply of coins.
This did not sit well with average collectors, who did not like the higher and higher prices being asked. They in essence went on a buyer’s strike. Sales volumes tumbled to half the level of recent prior years. Then with fewer buyers, new issue prices themselves began to fall as buyers simply walked away from the system. Now prices are about two-thirds the level that prevailed before the electronic sales method was adopted.
The icing on the cake was the new method of delivery. Instead of letting collectors continue to keep their traditional business connections, if their bids for coins were successful, they had to go to one of 16 locations to pick up their coins. There was no such thing as shipping.
This system’s days are numbered, but precisely how and when it will be abolished are details that have yet to be worked out.