While many people are doing their ordinary day-to-day purchases online, replacing the auctions by big European auction houses like Artcurial or Villa Grisebach with an online experience seems unlikely to be successful. Many auctioneers enjoy the thrill of the live auction, the battling with a competitor and the raising of the famous paddle boards. Auctions can sometimes be more of an event and customer experience than an actual market.
So is there even a chance that an online business model of an auction house would work?
If we follow the recent announcements by the big European auction houses, then the answer can be expected to be yes. By today, four out of the ten biggest European auction houses have built an online platform for auctions, with two additional ones launching their platform this year.
Online auctions can, for example, solve logistical issues. Lately, many items have been offered that can be challenging to the logistics of an auction house and are difficult to present on stage. Furthermore, the catalogues of auction houses are also considered as too costly by now.
The big auction houses saw themselves threatened by platforms such as facebook, on which private people can offer and sell their products. Especially with the emergence of facebook groups specialized on auctioning a certain group of items, the big auction houses saw an upcoming problem of becoming an uneccesary imediator and being skipped in the value chain.
Nevertheless, it is highly unlikely that we will ever see a Banksy or another extremely famous and high-end product on one of the online platforms. With online auctions, the auction houses follow the objective of trying to attract people who are unlikely to ever attend a live auction and therefore broadening their audience and reach. Common products available for online bidding are wine bottles, jewelry, antique furniture and smaller paintings, which are still amongst the more “low priced” products of the auction houses.
While we will not expect online auctions to replace the traditional live auctions, as collectors will still like to take a closer look on their desired item and purchase it in a traditional manner, we can expect that auction houses without an online auction platform will soon loose sales on their minor products. So while your new favorite Banksy will not make it online, maybe your favorite collector wine will.
References
Guzman, N. (2018). ‘Is the future of auction houses online?’. Accessed on 07 October 2019 on https://www.bworldonline.com/is-the-future-of-auction-houses-online/.
Hickley, C. (2019). ‘Going, going, gone online: Europe’s Auction Houses go digital’. Accessed on 07 October 2019 on https://www.theartnewspaper.com/feature/going-going-gone-online.
Hey Marina, first and foremost thank you for your post. As auctions are dating back to 500 B.C. and are one of the major theme of economics, by fulfilling the quest for allocative efficiency it is interesting to see how even the oldest practices are changing. In particular, how the general process of auctions for less expensive goods might be adapting sooner or later.
However, as also read in the paper “Reengineering the Dutch Flower Auctions:
A Framework for Analyzing Exchange Organizations” of Kambil and van Heck, exploring different changes in the Dutch flower market (1998), online auctions might not change to the extend you described. Even for less expensive products, as in your case the wine, it is tricky to establish a fair amount of transparency and authenticity. Moreover, during online auctions the capacities for bidding where kept to a rather small size, through limited accessibility. This will most definitely change, as to an online auctions more and more bidder will have access, which can also cause more manipulation of bidding prices. Lastly, as you said “many auctioneers enjoy the thrill of the live auction, the battling with a competitor and the raising of the famous paddle boards”, this might be invalidated in the online scenario and mitigate the success of auctions. Nevertheless, as times and methods are changing so will the landscape of auctions – it rather a matter of when but rather how!