Sotheby’s released some numbers this morning touting their growth in online sales. Here’s the top bullet point:
- Online Buyers Spend $155 Million at Sotheby’s in 2016, Up Nearly 20% from Prior Year
To put that in perspective, Sotheby’s had $4.1bn inauction sales in 2016. So so-called online buyers are 3.8% of Sotheby’s business. To Sotheby’s the significance of these sales are not the volume of business driven but the way that online sales facilitate customer acquisition. Here are the relevant stats for that point of view:
- 52% of All Online Bidders Are New to Sotheby’s Driving Overall Record Number of New Clients in 2016
- The Bowie/Collector auction totaled $41.1 million 62% of bidders participated online, and 71% were new to Sotheby’s
- 19% of All Lots Sold at Sotheby’s in 2016 Are Purchased Online
That last number is important. To look at it positively, Sotheby’s is moving the low end of it’s business—19% of the lots that account for only 3.8% of the value—into a more efficient system. So improvement in online sales is more about controlling costs than expanding sales volume.
This is a message that Sotheby’s CEO has been sending to Wall Street for some time. Here’s he is again on message in today’s release:
“Embracing technology more effectively, both internally and through client-facing products, has been at the heart of our strategy over the past 18 months and our results speak for themselves,” said Tad Smith Sotheby’s CEO. “We look forward to 2017 and continuing to deliver the best service in the industry and results for our clients and shareholders.”
On the negative side, the results do somewhat speak for themselves. Online sales—to the extent that the rubric has any meaning for the auction business because so much of the business of staying in touch with clients takes place electronically—isn’t going to be a meaningful game-changer for the fine art and luxury auction business.
All three auction houses need new sources of revenue. These numbers should make it clear that ‘online’ will not be that new revenue source that gives the auction houses greater profit margins and fuels growth.