A frequent riposte from traditional auction houses to the rapidly growing online art marketplace is that online auctions can never replicate for high end buyers the value proposition offered by ‘bricks and mortar’ auction houses.
Auctionata is a Berlin-based startup that is setting out to prove them wrong. Founded in 2012 by Alexander Zacke, Auctionata’s approach is designed to reassure consignors and bidders that buying and selling high value artworks online is as good as – or even better – than the experience offered by traditional auction houses, either in their physical or online salesrooms.
Ensuring that the virtual user experience is as engaging as a traditional in-person auction is a key area of focus. With capacity for thousands of users, auctions are live-streamed in High Definition, broadcast from Auctionata’s own television studio. Artworks for sale can be viewed in high resolution, and real time information exchange on the bidding activities of participants gives the online bidder an ‘in the room’ auction experience.
Their weekly Friday afternoon auctions will be familiar to the company’s 2,600 Twitter followers – lots and results are tweeted on @auctionata in real time.
The story so far
In an interview with Art Market Technology, Zacke shared some numbers which he says demonstrate the success of the Auctionata value proposition:
- Sales volume has increased from $1.65 million in 2012 to $16.5 million in 2013
- User registrations are approaching 60,000 users from over 100 countries
- Platform traffic has increased by 40 percent since its February 2012 launch
- Sell through rate is averaging 70 percent over the 35 online auctions held weekly since May 3, 2013
Interestingly, it’s not only auctions that account for the platform’s growth. Zacke reports that “Auctionata’s eCommerce channel which offers more than 10,000 objects at fixed prices accounted for roughly 25 percent of the company’s 2013 profit margin.”
Trust is a large obstacle for the online sale of high value artworks, and it’s an area where Auctionata wants to differentiate its offering. A global network of over 250 independent experts across 45 countries appraise objects in advance of sale either online, or – for items of higher value – in person. Zacke points to the quality of Auctionata’s valuation services which he believes is evident from its successful attribution and sale of a previously unknown Egon Schiele watercolour in 2013. He adds:
Auctionata’s professional valuation service has conducted more than 40,000 free valuations. Of those, Auctionata successfully acquired 15,000 objects with a merchandise value exceeding more than $45.4 million.
Of most interest to the high end buyer will be Auctionata’s market-leading authenticity guarantee. According to Auctionata:
Auctionata provides buyers with a 25-year guarantee of authenticity on all items listed at our auctions. If arbitration proves a purchased item is not genuine, the buyer can return it to Auctionata within a period of 25 years (starting from the date of delivery) to receive a full refund. Auctionata freely provides buyers with a guarantee that goes far beyond the legal warranty claim.
Zacke’s plans for 2014 include increasing the scale of their existing operations as well as entering new markets:
In 2014 we expect to increase the frequency of our auctions. Our target is to become the German market leader in terms of sales volume. Beyond that, we will continue to systematically pursue our international expansion, building, next to Hong Kong, a full-service location in New York, the center of the international art trade.
The disruption of the art market by technology-driven startups promising greater transparency in art sales was a feature of 2013 which will continue in the coming year (see Technology a key driver in the 2014 art market). Zacke is a firm believer in technology’s capacity to introduce transparency to an often opaque transaction:
The major disruption we continue to see is a greater demand for transparency in online bidding and the art market as a whole. The fact is auction houses expanding into the digital auction space are influencing transparency. The industry can change, and will, if larger players and new startups raise the bar for business in the art world.
Disruption alone is, of course, not a business model. In the coming years, online auction platforms will need to move up the value chain in order to differentiate themselves from the increasingly crowded lower end of the market, as well as to generate sustainable margins. Auctionata appears to be well on the way, attracting and successfully selling high value lots such as the $2.4 million Egon Schiele watercolour while at the same time building sales volume. The company clearly has ambitious growth plans. How the established auction houses respond to startups such as Auctionata – and the ongoing dynamic between the two market sectors – will make for a fascinating 2014.