Sotheby’s and eBay announced in July that art and collectibles from Sotheby’s New York auctions will be live-streamed for eBay’s 145 million active buyers on a new section of eBay’s website. The precise details of the deal remain confidential but according to an eBay spokesman, Sotheby’s will pay eBay a commission on each sale made via eBay’s website.
The announcement comes more than 10 years since Sotheby’s previous partnership with eBay, which lasted mere months before Sotheby’s Chief Executive was forced to admit that “there are simply not as many people prepared to buy authenticated fine art online as we had hoped”. So has this changed?
Sotheby’s COO, Bruno Vinciguerra, told the New York Times that while the previous deal may have been ahead of its time, “the growth of the art market, new generation technology and our shared strengths make this the right time for this exciting new online opportunity… to make our sales more accessible to the broadest possible audience around the world.”
Certainly, the previous partnership was prior to the arrival of the smartphone and appetite and comfort with buying luxury items online has grown since 2002, but will this translate into art? In March 2014, a report published by the European Fine Art Foundation found that online sales of art and antiques constituted only 5% of the $65.9 billion fine art market in 2013. However, the report forecasts an increase of 25% a year for the next few years.
Research by specialist insurers Hiscox in April 2014 revealed “growing confidence in buying art ‘sight unseen’”, concluding that the next generation of art buyers is likely to make its first purchases online. Furthermore, 39% of those surveyed found buying art online less intimidating than via a physical gallery or auction. However, 90% still admitted purchasing from a physical space before braving an online purchase, so perhaps the new partnership between Sotheby’s and eBay will not only offer an easy way into the art world for twenty-something smartphone/e-commerce users but also provide the physical reassurance that an online-only platform could not?
Notably, Christie’s has already made significant progress in hosting online sales. In 2013, Christie’s hosted 49 online-only sales (accounting for $20.8 million) up from just seven in 2012, and Steven P. Murphy, Christie’s Chief Executive, has said that “thirty percent of … buyers this year were new to Christie’s, and one-third of that group came to us online.”
So why doesn’t Sotheby’s go it alone too?
Sotheby’s website does already cater for online bidding, which featured on 17%of all lots offered in 2013. However, its online strategy has been widely criticized, not least by its largest shareholder, Daniel Loeb, who wrote in October 2013 that: “There is a demoralizing recognition…that Sotheby’s is not at the cutting edge – demonstrated by the company’s inability to even develop a coherent plan for an internet sales strategy, much less implement one”.
Sotheby’s is not alone in choosing to team up with a more experienced online partner before venturing further into the world of online sales. Phillips too, made strides into digital sales in July 2014 via a three-way partnership with online-auctioneers, Paddle8, and Tumblr.
For its own part, eBay’s existing online-auction unit accounted for over half of its $16 billion turnover in 2013. Devin Wenig, president of Global eBay Marketplaces, has said “we want eBay to be a destination, not just a utility,…If you look at what we were selling 10 years ago, it’s really different now”. So Sotheby’s will be the new “anchor tenant” in eBay’s growing stable of auction houses (which already includes Doyle New York, Freeman’s, Garth’s Auctions Inc. and Swann Auction Galleries), lending cachet and authenticity to its ambitions for expanding even further into high-value, luxury goods.
Josh Baer, an art adviser who worked with eBay in shaping its art initiatives, stated that the deal with Sotheby’s was not aimed at the ultra-high end artworks generally sold in Sotheby’s evening sales. Sotheby’s handles all manner of estate property as part of its daily business, and now, “besides being able to sell the Renoirs and Picassos, Sotheby’s will also be able to have a platform to dispose of grandma’s silver and china to a huge audience.”
Sotheby’s numbers its traditional customer pool at over 100,000, while eBay boasts circa 145 million users. Despite Sotheby’s decision in 2006 to focus on the high end of its business, figures show that more than half of all lots sold by Sotheby’s in 2013 were priced in the $5,000 and $100,000 range. Meanwhile, eBay’s own company figures show that over 3,500 auctions close at more than $5,000 each day. This deal could therefore expand Sotheby’s reach far beyond its existing client base into a huge global community of previously untapped but clearly affluent ‘art-curious’ online bidders.
However, despite all the positive forecasts and figures, this is not simply a question of the difference a decade has made to the online art market; the 2014 collaboration looks to be of a very different kind to the 2002 venture. When comparing the two, Mr Vinciguerra said: “In 2002, not only did we build a dedicated network of dealers but…a dedicated business organization with marketers—back office—and we developed our own technology, which involved hundreds of people and millions of dollars. Now we will leverage our current sourcing, content, and expertise and will rely on eBay in terms of broadening our reach, marketing online to millions of people, and developing state-of-the-art technology across the increasingly diverse number of platforms—devices—that people are using.”
Coming in the wake of eBay’s much publicised data-breach earlier in 2014, Mr Vinciguerra acknowledged that there were ongoing security concerns about identity theft, fraud, and non-payment. However, he emphasised that “eBay is at the forefront of developing secured transactions” and that Sotheby’s would “benefit from [eBay’s] know-how….[and] extensive database of bidder/buyer behavior and payment history”. Initially, at least, all transactions will be executed directly with Sotheby’s, with users subject to the same screening processes as Sotheby’s face-to-face customers. However, Jason Nielsen, of online auction site Proxibid and previously vice president of North American operations at PayPal, told Artnet News that Sotheby’s would need to be extremely vigilant where security is concerned due to the “lack of knowledge in the area of Risk Management in the fine art space”.
Nevertheless, both parties clearly think they have everything to gain, making this new partnership one for our ‘watch list’!