Online Presence a Must for Auction Houses in a Buyers’ Art Market
Auction houses need to reach out to savvy art collectors online to grow their market share.
The Hiscox Online Art Trade Report 2018 notes that online art sales reached an estimated US$4.22 billion in 2017, up 12% from the year before. There are both challenges and opportunities for auction houses who operate solely online and for traditional ones expanding to the digital realm to remain relevant in the art market.
Here are some key trends from the report:
Confidence increases among repeat online art buyers. There are signs that active online buyers are buying more frequently and at higher prices. In 2018, the share of online art buyers paying an average price above US$5,000 per new art object increased to 25%, up from 21% in 2017.
Price transparency is key for new buyers. Existing collectors are used to secrecy and a lack of transparency when it comes to pricing. However, in this year’s survey, 90% of new buyers said that price transparency was a key attribute and criteria when buying art online.
Traditional auction houses continue to grow their online presence in 2017. Last year, Christie’s, Sotheby’s and Phillips all saw global auction sales increase by 25%. However, the growth in online sales for the auction houses was less impressive at 15.6%. Bucking this trend is Heritage Auction. One of the largest online sales platforms for art and collectibles, it saw sales grow by 25.8%, from US$348.5 million in 2016 to US$438.3 million in 2017.
Increasing competition expected in the online auction market. Half of all online platforms said that the online auction market was going to be the area facing the most intense competition this year. With Artsy making significant investment in the online auction business, competition with other auction aggregators such as Invaluable, LiveAuctioneers and thesaleroom.com is increasing.
Cryptocurrencies are the predicted entry point for blockchain. 60% of online platforms feel that cryptocurrencies as a payment method will be the way blockchain technology initially enters the online art market. Currently, only 7% currently accept cryptocurrencies as payment and only 8% have embedded blockchain technology into their businesses.
Third-party marketplaces gain popularity. Three-quarters of galleries used third-party marketplaces to sell art online in 2018 (up from 59% in 2017 and 41% in 2016). 19% are now using these marketplaces as an outlet for at least half of their online sales.
To adapt to the changing art market, an online presence is a must for auction houses. “When nine out of ten people start their purchase behavior on the internet, that is where you have to be,” says Pontus Silfverstolpe, one of the two founders of Barnebys, the world’s largest art auction search engine that hosts 3000 unique auction houses globally. “That is where the action is, that is the future of auctioneering. Those who don’t understand that will go to the wall, and those whose online service is not transparent, easy to use and service orientated will fail.”
Sandy Ma, Head of Sale for 20th Century & Contemporary Art & Design, Phillips Asia, comments, “The art market has embraced the interconnectivity that the Internet has endowed on us and, at Phillips, our goal is to seamlessly connect our clients to our live sales and exhibitions. We are expanding the way one can bid in a live sale and have done this in a way that nobody else has. Our website currently offers the most client-friendly bidding platform in the industry. From anywhere in the world and from any mobile device clients are able to bid live, as well as place advance bids. Phillips’ client base is growing tremendously as a result.