Chris Maier (
Wed, 12 Jul 2000 13:21:27 -0400

11 employees! Geez....must be hell for them to take and process orders now.
----- Original Message -----
From: Ben Koshy <>
To: Gundam Mailing List <>
Sent: Wednesday, July 12, 2000 1:11 PM
Subject: [gundam] ActionAce.Com Article

> Here's an article from the South China news:
> ----------------------------------------------------
> <snip snip>
> Garrett Faber is ready to tell all about the goings-on at the ActionAce
> board, but first he wants to know if his questioner has any Gundam model
> kits for trade.
> "I recently began to collect them and now I'm hooked," he wrote from his
> America Online e-mail address.
> Mr Faber and his friends, going by names such as Jedikranma and Krillin,
> were regulars on the chat board and AceExchange, along with about 40 to 60
> other fans of Japanese animation and toys.
> For these users, ActionAce was a godsend, a place where they could get
> hard-to-find toys and commune with like-minded folk at the same time. They
> were loyal, coming to the site to read comics, chat with their friends,
> trade and make the occasional purchase from the e-commerce side of the
> Unfortunately, this was not enough to sustain ActionAce, which had a staff
> of about 75 and operated from a 45,000 square-foot office/warehouse space
> Richmond, California.
> The company began life as in January 1997, when Casey Lau
> and John Wong decided to try selling Japanese action figures and comic
> online. Before starting the site, the pair, who were comics fans
> sold issues that they bought in Asia to collectors in the US through sites
> likeEbay.
> In mid-1998, David Haines joined as chief executive, bringing with him
> venture capital that would help the company gain a higher profile, and, at
> the end of 1999, he moved most of its operations to California.
> The move presumably served the dual purpose of lowering the company's
> shipping costs to its North American customers and giving the company a US
> address from which to launch a Nasdaq stock market listing bid sometime
> year.
> Going by some measures, ActionAce had been doing quite well. A sales run
> rate of about US$2 million annually, profit margins of 45 per cent or more
> on many items, average site visits lasting more than 10 minutes - very
> "sticky" for the Web, where people can click away anytime they like - and
> good word-of-mouth from customers who liked the prices and raved about
> getting their orders within a week.
> And on looks alone, the site put rivals like to shame. It
> heavy traffic, too: the site had 3.5 million to five million monthly page
> views, and 50,000-100,000 unique visitors each month. So why is the site
> up for sale?
> "The obvious source of trouble was, as with so many dotcom companies now,
> matter of burn rate," according to a former employee who worked on
> ActionAce's "Zine" section, which created the content that kept users
> onto the site.
> "ActionAce was going through its funding faster than it was bringing in
> capital via sales or other investments. But they were by no means alone,
> that most existing e-commerce companies have the same problem, and that is
> why so many are failing," he said.
> An attempt to go mass-market and compete with companies like Toys R Us and
> eToys by offering items such as figurines featuring characters from The
> Simpsons and Star Wars also did not go over well, industry sources said.
> For one thing, such toys offered far lower margins than hard-to-find
> Japanese items that had not yet been officially released in the US.
> According to former employees, investors turned off the tap on June 21,
> forcing the company to lay off most of its staff and stop taking orders or
> updating content on the site. The chat board remained functional for the
> week or so, playing host to discussion threads lamenting the closure.
> This week, the site reopened for business with 11 employees, including
> at the warehouse, Mr Haines, chief financial officer Steven Blair and
> operations chief Eileen Kiyota.
> The idea is to sell off the e-commerce side of the business and continue
> a developer of three-dimensional gaming software, according to Hanson
> managing director of ActionAce investor AsiaTech Ventures.
> ActionAce's other institutional investors include Pacific Century
> CyberWorks' CyberWorks Ventures and a private equity unit of ING Barings.
> ActionAce had been partnering an online gaming company called
> and sources indicated that ActionAce had made plans to acquire 3dgroove.
> Cheah declined to comment on whether ActionAce has already completed the
> acquisition.
> However, he pointed out that companies like Quake have done well by
> licensing 3D rendering engines that allow other people to develop games.
> Software margins "could potentially be huge", Mr Cheah said. "How big is
> Microsoft's margin, compared to's margins?"
> Online gaming may offer bigger margins with low overhead, but it may be
> as competitive an arena as e-commerce. Games giant Hasbro, for example, is
> busy developing into a showcase for games that it owns, such as
> Battleship, Scrabble, Risk and Monopoly. Any newcomers will have to
> with the likes of the already-popular Quake and Ultima.
> The two potential buyers for the toy sales part of ActionAce are both
> California-based e-commerce companies, and Entertainment
> Whatever incarnation ActionAce takes on now, it probably will not involve
> co-founders Mr Lau and Mr Wong, both of whom have reportedly left the
> company. As for the fans, Jedikranma was very excited at the prospect of
> site reopening. The question is whether there are enough people like him
> sustain the business.
> -
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