Search, Seat Inventory Build TicketCity
October 1, 2005 by David F. Carr Baselinemag.com
A Web-based application helps the ticket broker efficiently search for and buy hard-to-find tickets.
Randy Cohen's aha moment came in 1987. Shortly after he graduated from the University of Texas, the school's basketball team made it into the Top 10. When the Longhorns were scheduled to play the then-top-ranked Arkansas Razorbacks at Texas' Frank Erwin Center, Cohen saw his opportunity.
Betting that the game would sell out, he bought 100 tickets at $7 each and sold them a week later for $15, turning a quick $800 profit. By 1990, Cohen launched a ticket brokering business that would eventually be named TicketCity.com.
Though it has a ".com" in its name, a relic of the dot-com boom years, TicketCity.com takes about 80% of its orders over the phone. And yet the Web applications it built for its online customers—both consumers and professional ticket brokers—to pool, search and buy event tickets are now in the hands of its internal sales staff and spurring the company's productivity.
This year, TicketCity.com expects to do more than $20 million in sales with 21 full-time employees and three part-timers.
TicketCity caters to people who have decided they absolutely have to get into an event where the tickets, or at least the best seats, are sold out. Called "scalping" when it's done by some shady character in the alley behind the stadium, reselling tickets has turned into big business for firms like StubHub, which says it does about $100 million in sales, and TicketsNow, which is projecting 2005 revenues of $125 million to $150 million. These businesses typically aren't subject to anti-scalping laws as long as they pay sales tax and otherwise behave like good corporate citizens.
Purchases average more than $600 and can range up to a few thousand dollars, with a profit margin of about 30%, says CEO Cohen. During a conversation in early September, he reads off a few of the latest sales on his computer screen—$720 for four tickets to University of Texas vs. Texas Tech football, $150 for one ticket to the Austin City Limits music festival, and $2,850 for six tickets to a Texas/Oklahoma football game.
Personal Service for High Rollers
That's why so many sales come by phone rather than the Web, he says: "There are questions you have to answer before someone parts with their $1,000 bill."
The ticket inventory comes from season tickets the company buys on speculation, as well as those it purchases from season ticket holders, other brokers or, sometimes, individuals. Major events like the Super Bowl actually don't have the best profit margin, Cohen says, because TicketCity might pay $2,000 for a ticket it will sell for $2,200.
To help its outside brokers manage their client relationships, TicketCity.com built in 1988 what it claims was the first Web application that ticket brokers could use to pool their inventory so they all would have access to tickets to major events, while also getting access to more customers.
It's that application, repeatedly refined over the years—and now known as RealTimeTicketing—that fueled TicketCity's growth. The software allowed TicketCity to grow beyond its regional base in the Austin, Tex., area and do business on a national and even international scale, handling tickets to everything from University of Texas games to World Cup soccer matches. And because it tracks the ticket inventory on each game and the profit margin on sales, the Web-based system gives Cohen the tools to manage his business more efficiently.
The company uses the same technology internally, so its salespeople can look up which tickets are available for a given event while they're talking on the phone to customers. The application includes accounting, invoicing and shipping functions, as well as integration with Federal Express label printing.
We've found huge efficiencies in this for our own office," says Clark Kothlow, TicketCity's chief financial officer. During big events like the Super Bowl, TicketCity typically sets up a temporary office near the site of the event where buyers can pick up tickets and sellers can drop them off. Having the company's core business on the Web means employees can log in from that location to post sales and update ticket inventories.
But Zach Anderson, the marketing vice president who oversees TicketCity's Web development, says the Web experience wasn't always good. One mistake TicketCity made was entrusting the early Web software development to a consulting firm that produced an application which couldn't easily be scaled up to support large numbers of brokers. "We were first to market with our product, but our advantage wasn't exactly a strong position," he says.
Once burned, TicketCity hired its own small staff of developers and database administrators. And though it still contracts out some projects, it manages them more carefully, Anderson says: "We always understand that accountability falls to us."
Development of RealTimeTicketing began in 2000, with the application going live in 2001. A rewrite, which started in the summer of 2004 and went live this spring, streamlined the database table structure for faster performance. In a relational database, performance is based on choices such as what data goes in which table and how tables containing different types of data, such as customers and invoices, are related.
These refinements have put more information at each salesperson's fingertips and shaved the time it takes to close a sale.
Part of TicketCity's pitch to brokers is that in exchange for listing their tickets, brokers gain access to a system to run their business. Brokers pay a $395 setup fee, and TicketCity takes 8% on sales.
But not everyone wants to trust their business data to someone else's Web site, so TicketCity needed an alternative. Brokers who prefer not to use the Web application can still list their wares by regularly transmitting files containing their inventory to TicketCity. Typically, the process is automated, with updates arriving in an e-mail account monitored by the RealTimeTicketing application every 5 to 10 minutes.
The system is efficient enough for TicketCity to do millions in business with a relatively lean staff. But the staff is also kept small by Cohen's instinct for frugality.
So while competitors such as StubHub invest in aggressive radio advertising and brand-building campaigns, Cohen holds back partly because if an ad campaign succeeded in bringing in more calls, he would have to hire more people, potentially torpedoing sales per employee and, ultimately, profitability.
As Cohen puts it: "I don't want to hire until my belt is so tight I'm exploding out of it."
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