Your body is constantly breaking itself down, catabolism, and building itself up, anabolism. Your body breaks down its own, endogenous, collagen and builds it up. By consuming collagen, your body can break it down rather than breaking down your endogenous collagen. The metabolites may or may not be used to build new tissue, but the benefit from it is supposed to be by decreasing catabolism without affecting anabolism.

I thought something similar, but with amino acids. I thought they would be directly used to make new proteins. After me wasting ten minutes of class time arguing with my teacher, this is how she explained it to me. The end results of metabolism may be used to build new amino acids, or in this case collagen, but the value comes from decreasing catabolism.