Over the past 10 years businesses have transferred most, if not all, of their transactions to online platforms in order to increase the efficiency of their operations and to improve consumer experience. Even the companies that maintain a brick and mortar presence have channeled significant funds into their digital strategy. As always, the art market lags behind.
RELATED: Art Jargon Explained: Provenance
Early actors looking to move their businesses online had limited success. In the late 90’s Sotheby’s was one of the first companies to explore the online universe and teamed up with EBay in order to launch an online auction platform. Unfortunately, the in-person auction and gallery experience retained a stable hold on art sales. Even today, most collectors still prefer to view an artwork in person before committing to buy it.
Art collectors have named several advantages to participating in art auctions and art transactions online as opposed to buying from some of the big name firms. Online, there is no need to fashion oneself as someone “in the know” or to be part of the “art world”. The strong intimidation factor that often discourages potential buyers disappears when people can buy art in their own comfort zone.
Will The Online Market Grow?
Most of the work sold online ranges from approximately $1,000 - $50,000. Commission rates tend to be lower than with the brick and mortar auction houses. TEFAF’s 2015 art market report states that over $3 billion was spent on online art sales worldwide. This amounts to approximately 6% of total art transactions worldwide. It is expected that this number will increase rapidly over the coming years.
Therefore there is much optimism among investors in online gallery and auction businesses. According to the 2014 Hiscox Online Art Trade Report, startups have raised funds from investors in tech and financial firms in the range of $3 to $57 million. Data from several online art auction forums suggests that these investments may be focused on potential art buyers with demographics that were previously unexplored.
Online businesses are gaining more traction, for good reason. Just make sure that when you are considering an online purchase that the company is reputable and that they are backed by a brick and mortar presence.