The Evolution of the Online Art Market: Data, Personalization and Trust
“Buy Now” Signifies a Broader Market Shift
One of the most interesting and potentially far-reaching art market developments to emerge from the tumult of 2020 was Sotheby’s launch of a new online e-commerce venture called “ Buy Now.”
The platform allows consumers to purchase fine art and other luxury items directly at fixed prices, with no intermediate auction bidding process necessary.
It is a good example of how traditionally staid brick-and-mortar art businesses are rethinking and reinventing their business models with a “digital-first” approach to be more resilient in the face of ongoing social distancing measures and potential viral resurgences and more attentive to the expectations of today’s digitally native consumer.
The decision by the 277-year-old auction house to adopt a fully-fledged e-commerce model could mark the beginning of a new chapter in their long history and have an outsized influence on the future direction of the art trade.
“Buy Now” Signifies a Broader Market Shift
The embrace of the e-commerce business model on Sotheby’s part has multiple layers to unpack. It is a conscious decision by the auction house to move from a seasonal auction sales cycle to a year-round, always available sales model, thus being more in tune with the more immediate gratification needs of the digital consumer.
It features a range of luxury goods, from fine art to jewelry and fine wines to classic cars, giving collectors many more choices, a more “ complete luxury experience,” and offering broader audience appeal to bring in potential new buyers.
The strategy appears to be paying quick dividends; in December 2020, it was reported that 56% of buyers on the platform were brand new to Sotheby’s. Less obvious perhaps, but no less significant, is the opportunity “Buy Now” affords Sotheby’s to become better acquainted with its clientele by gathering and leveraging customer data from their online footprint.
From a strategic standpoint, the last aspect has long-term implications beyond revenue figures and audience growth.
It is part of a broader shift from the more customary in-person sales model used by galleries, art fairs, artists, and glitzy evening auctions to a more dynamic, data-driven digital sales model and to the way consumer trust operates within that digital model.
Traditionally, art galleries, dealers, auction houses, and artists have developed relationships with collectors and earned their trust largely through face-to-face, social interactions, and these relationships have always been at the root of the in-person sales model.
How well these parties know a collector — their background, tastes, interests, past buying habits, and typical spending range — and the strength of their relationship plays an important part in their ability to strike a successful art deal with them.
The success and dependability of this in-person sales model, however, has plummeted under the twin pressures of pandemic curbs and ever more time spent online in a digital era.
Physical encounters between art purveyors and collectors have been few and far between over the past year, sapping a key source of how trust and relationships with collectors are typically developed and nurtured.
In the absence of physicality, a data-informed digital sales model offers opportunities to learn about customers from their data and online interactions, fosters deeper client engagement through more personalized digital experiences, and ultimately earns their trust.
This strikes me as one of the most important value propositions of the “Buy Now” platform to Sotheby’s and why it could be a game-changer for the art industry. What are some of the ways that digital marketplaces for art like “Buy Now” can be designed and leveraged to earn the trust of collectors?
Trust Through Transparency, Inclusivity, and Accountability
Renowned trust expert Rachel Botsman, in her book Who Can You Trust, argues that we are entering a new era of “distributed trust,” whereby trust flows horizontally to people, programs, and bots via digital platforms and networks rather than vertically to institutions.
In this era, systems must become more “transparent, inclusive, and accountable” and be designed to “put people first.” Online marketplaces for art that are designed and implemented to follow these guiding principles are more likely to earn the trust of collectors.
One of the ways to put people first is to focus on giving them more control over their preferences and data, engaging them in how their data will be used in specific ways, and how that use will accrue benefits to them.
This can be achieved through onboarding flows for first-time users that offer collectors various ways to personalize their experience by, for example, specifying the types of collectibles, fine art genres, artists, or brands they like.
Options to scale the amount of contextual information a user will see while browsing for artworks or the amount and kinds of personalized content they see upon entering their home screen (e.g., news feeds, recommended works, upcoming flash sales, etc.) help communicate to consumers how their data will be used to improve their experience and situate them as co-creators in the customer journey.
Another way in which systems can be designed to put people first is with the help of what Botsman refers to as “trust pauses.” Trust pauses introduce intentional friction into systems, so that users are forced to make a conscious decision when signing up for a service or handing over personal information.
Introducing a spinning circle to slow users down when signing up for things or a pop-up prompt when a user clicked through a long ‘terms and conditions’ statement too quickly are examples of trust pauses that Botsman believes make people more mindful and more conscious of their actions and choices within an online system.
Building transparency into online marketplaces for art means being clear and open about what data is taken from collectors and what happens to that data after it is taken. Hence, why privacy policies explaining how data is used, and openness about the use of data to benefit consumers, by providing more personalized experiences, for example, is so important.
Selling it to third parties without user consent, on the other hand, diminishes transparency and is a violation of privacy rights. Respecting consumer data privacy expectations and complying with data privacy regulations like GDPR, designed to give users more choice and control over their data, improves people’s belief in the platform being trustworthy.
Aside from transparency, what people are looking for in all sorts of institutions and informational systems is inclusivity. In the art world context, inclusivity means ensuring platforms for art are open and equally accessible to everyone and that the work of female and minority artists is given adequate representation.
Calls for under-represented classes of artists to be included in art market events like art fairs apply just as well to online marketplaces for art and how their work is surfaced on those platforms.
Online marketplaces that bring strangers together in frictionless ways have at times suffered from a lack of accountability when things go wrong. On this front, online marketplaces for art should consider using forms of third-party verification to endorse works for sale (a role art advisors, dealers, and auction houses have typically played in the traditional art market).
Interestingly, since Sotheby’s typically sells artworks largely through a consignment process, there is a de facto level of accountability built into their Buy Now platform since it means Sotheby’s acts as a third party responsible for selling the work, and thus also responsible if the sale goes wrong.
This might help to give the platform an edge in the trustworthiness factor over other online marketplaces for art.
The need for companies to develop close relationships and cultivate trust with their customers is important in many corridors of commerce but is especially true for the art trade, where enormous sums of money can trade hands and where wealthy collectors will often rely on the guidance and expertise of advisors before deciding to buy or sell a work of art.
As the art business continues to evolve digitally and the art market moves online, and as we enter a new era of “distributed trust,” it is critical for art companies to develop online solutions consumers consider trustworthy.
Designing online art marketplaces to put people first, respect consumer privacy expectations and be more transparent, inclusive, and accountable are ways to demonstrate trustworthiness and earn consumer trust. In a time when institutional trust is waning, having such a focus is a clear competitive advantage.